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Auditor Report of Radico Khaitan Ltd.

Mar 31, 2016

We have audited the accompanying financial statements of RADICO KHAITAN LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2016, the Statement of Profit & Loss and the 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 financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting 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 design, implementation and maintenance of adequate internal financial controls, 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 hereunder.

We conducted our audit in accordance with the Standards on Auditing 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 of 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 the accounting principles 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 financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given 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 in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2016, and 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, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in "Annexure A" a statement on the matters specified in the paragraphs 3 and 4 of the said 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 purposes of our audit;

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

c) The Balance Sheet, the Statement of Profit and Loss and the Cash flow statement dealt with by this report are in agreement with the books of account;

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 31st March 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 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 B";

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 knowledge and information and according to the explanations given to us and such checks as we considered necessary:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 31(i) to 31(iv) to the financial statements.

ii. There are no long-term contracts including derivative contracts, requiring provision for material foreseeable losses, under the applicable law or accounting standards.

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

Annexure-A referred to in the Independent Auditors'' Report to the members of the Radico Khaitan Limited on the financial statements for the year ended 31 March 2016.

(i) (a) The Company is maintaining proper records showing full particulars, including quantitative

details and situation of fixed assets on the basis of available information, read with our comment in (c) below.

(b) The Company has carried out physical verification of its assets in the major plant locations situated at Rampur & Bazpur and also of the assets located at its Delhi Office. We are informed that, prima facie, there are no major discrepancies. However, the reconciliation process of the physically verified assets with SAP maintained fixed assets register is under process. Hence discrepancies, if any, will be adjusted in books once such reconciliation is complete. We are informed that the physical verification of assets at other locations would be carried out in the next financial year. The Company has drawn out a policy of verifying its fixed assets once in three years, which in our opinion, is reasonable in relation to the size of the Company.

(c) According to the information and explanations given to us and the records examined by us, we report that the title deeds comprising of the immovable properties of land and building are held in the name of the Company. However, the Company is in the process of reconciling the land documents with financial records. Hence, the discrepancies, if any, would be ascertained on completion of the reconciliation.

(ii) On the basis of information and explanations obtained, stocks of finished goods and raw materials of the distillery / bottling units have been under physical check by the excise department in coordination with the Company''s supervisory staff at frequent intervals. Other stocks, stores and spares, at various locations have been physically verified by the management during the year. We are informed that no material discrepancy were noticed on such verification.

(iii) 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. Therefore, the provisions of clause 3(iii)(a),(b)&(c) of the Order are not applicable.

(iv) The Company has not given any loan or provided any guarantee or security to parties covered under section 185 of the Companies Act, 2013. In respect of loans, investments, guarantees and security the Company has complied with the provisions of section 186 of the Companies Act, 2013 except to the extent and for reasons explained in note no.45(e).

(v) The Company has not accepted deposits from the public within the meaning of sections 73 or 76 of the Act and hence clause (v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company, pursuant to rules made under sub-section (1) of section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained and the required statements are in the process of compilation. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) According to the records of the Company, the Company has been generally regular in

depositing undisputed statutory dues including Provident Fund, employees'' State Insurance, Income-tax, Sales-tax, Service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities. There were no arrears of undisputed statutory dues as at 31st March, 2016, which were outstanding for a period of more than six months from the date they became payable.

(b) The disputed statutory dues of different years relating to income tax, sales tax, service tax or duty of excise or value added tax or cess, which have remained unpaid as on 31st March, 2016 for which appeals are pending as under:

Nature of the Dues

Amount (Rs.lacs)

Period to which the amount relates

Forum where dispute is pending

Sales Tax / Entry Tax/ VAT

4.12

1998-99 & 1999-00

Revision before Allahabad High Court

1.27

1999-00

Trade Tax Tribunal, Moradabad

23.24

2012-13, 2013-14

AP High Court

1,863.50

2007-08

DVAT

Kerala

Commercial Tax

84.13

2014-15

Kerala High Court

Excise Duty

17.37

1981

Allahabad High Court -Luck now Bench

92.38

1995 to 2005

Allahabad High Court -Luck now Bench (Bank Guarantee issued)

59.01

2005-06 to 2008-09

Allahabad High Court -Luck now Bench

19.28

1997-98

High Court of Rajasthan

18.44

2014-15

High Court of Rajasthan

Custom duty

10.73

2015

Commissioner of Customs (Appeals)

Service Tax

15,371.50

July 2003 to March 2012 (including interest and penalty)

CESTAT, Delhi

(viii) On the basis of the verification of records and information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks or debenture holders.

(ix) In our opinion and according to the information and explanations given to us, the Company has not taken any term loans during the year. The Company has not raised moneys by way of public offer (including debt instruments).

(x) Based on the audit procedures performed and representation obtained from the management, we report that no case of material fraud on or by the Company has been noticed or reported during the year under audit.

(xi) The managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion and according to the information and explanations given to us, all the transactions with the related parties are in compliance with section 177 and 188 of the Companies Act, 2013 to the

extent applicable and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures. Therefore, the provisions of clause 3(xiv) of the Order are not applicable.

(xv) According to the information and explanations given to us and the representation obtained from the management, the Company has not entered into any non-cash transactions with directors or persons connected with him. Therefore, the provisions of clause 3(xv) of the Order are not applicable.

(xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under section 45-I of the Reserve Bank of India Act, 1934..

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a 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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.

For V. Sankar Aiyar & Co.

Chartered Accountants

(Firm Regn. No.: 109208W)

Place: New Delhi (M.S. BALACHANDRAN)

Dated: 10-May-2016 Partner

(M. No:024282)


Mar 31, 2015

We have audited the accompanying financial statements of RADICO KHAITAN LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2015, the Statement of Profit & Loss and the 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 financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting 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 design, implementation and maintenance of adequate internal financial controls, 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 thereunder.

We conducted our audit in accordance with the Standards on Auditing 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 a re free of 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, but not for the purpose of expressing an opinion or whether the company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting principles 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 financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given 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 in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31th March 2015, and 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, 2015 ("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 a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

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 purposes of our audit;

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

c) The Balance Sheet, the Statement of Profit and Loss and the Cash flow statement dealt with by this report are in agreement with the books of account;

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 31st March 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of section 164(2) of the Act.

f) 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 knowledge and information and according to the explanations given to us and such checks as we considered necessary:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements -Refer Note 31(i) to 31 (iv) to the financial statements,

ii. There are no long-term contracts including derivative contracts, requiring provision for material foreseeable losses, under the applicable law or accounting standards.

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

Annexure to the Independent Auditors' Report

The Annexure referred to in our Independent Auditor's Report to the members of the Radico Khaitan Limited on the financial statements for the year ended 31 March 2015.

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

(b) We are informed that the management has not physically verified fixed assets during the year. Therefore, reconciliation with the book records and discrepancies, if any, can be ascertained only after the verification is carried out.

(ii) (a) On the basis of information and explanations obtained, stocks of finished goods and raw materials of the distillery / bottling units have been under physical check by the excise department in coordination with the Company's supervisory staff at frequent intervals. Other stocks, stores and spares, at various locations have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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) In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification,

(iii) The Company has granted Rs.1000 lacs as interest free unsecured working capital advance under a specific manufacturing and selling arrangement and Rs.1000 lacs as interest-free unsecured advance to a joint venture company covered under section 189 of the Companies Act, 2013.

In respect of the above:

(a) The working capital advance and the unsecured advance are without any stipulations as to repayment and are interest free.

(b) We are informed that as per the arrangement with the joint venture company, in the absence of any specific stipulation, there is no overdue in respect of the said working capital advance and interest free unsecured loan.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems 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. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control system,

(v) The Company has not accepted deposits from the public within the meaning of sections 73 or 76 of the Act and hence clause (V) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company, pursuant to rules made under sub-section (1) of section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained and the required statements are in the process of compilation. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) According to the records of the Company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Duty of customs, Duty of Excise, Value added tax. Cess and any other statutory dues with the appropriate authorities. There were no arrears of undisputed statutory dues as at 31" March, 2015, which were outstanding for a period of more than six months from the date they became payable.

(b) The disputed statutory dues of different years relating to income tax, sales tax, service tax or duty of excise or value added taxor cess, which have remained unpaid as on 31st March, 2015for which appeals are pending as under:

Nature of Amount (Rs.lacs) Period to which the Dues the amount relates

Sales Tax/ 4.12 1998-99 & 1999-00 Entry Tax 1.27 1999-00

Rajasthan 157.67 2010-11 Sales Tax

Excise Duty 17.37 1981

Excise Duty 92,38 1995 to 2005

Excise Duty 59.01 2005-06 to 2008-09

Service Tax 15,371.50 July 2003 to March 2012 (including interest and penalty)

Nature of Forum where dispute is pending the Dues

Sales Tax/ Revision before Entry Tax Allahabad High Court

Trade Tax Tribunal, Moradabad

Rajasthan Appellate Tribunal, Jaipur Sales Tax

Excise Duty Allahabad High Court - Lucknow Bench

Excise Duty Allahabad High Court- Lucknow Bench (Bank Guarantee issued)

Excise Duty Allahabad High Court- Lucknow Bench

Service Tax CESTAT, Delhi

(c) Based on the information and explanations obtained, the Company has transferred the required amount within time to the Investor Education & Protection Fund in accordance with the relevant provisions of the Companies Act, 1956,

(viii) The Company has no accumulated losses and has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

(ix) On the basis of the verification of records and information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks or debenture holders.

(x) The Company has given a guarantee of Rs.237.60 lacs for loans taken by Radico NV Distilleries Maharashtra, (a joint venture company, in which the Company holds 36% of the paid-up capital) from a bank, On the basis of information and explanations given to us, the terms and conditions whereof are not, prima facie, prejudicial to the interest of the Company.

(xi) The Company has not taken any term loan during the year and hence clause (xi) of the Order is not applicable.

(xii) Based on the audit procedures performed and representation obtained from the management, we report that no case of material fraud on or by the Company has been noticed or reported during the year under audit.

For V. SankarAiyar&Co. Chartered Accountants (Firm Regn. No.: 109208W)

Place: New Delhi (M.S. BALACHANDRAN) Dated:22-May-2015 Partner (M. No:024282)


Mar 31, 2014

We have audited the accompanying financial statements of RADICO KHAITAN LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2014 and the Statement of Profit & 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 the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. The 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 of 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 judgement, 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 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 31st March 2014;

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.

Report on Other Legal and Regulatory Requirements

1 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, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with General Circular 15/2013 dated 13th September 2013 of 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 31st March 2014 and taken on record by the Board of Directors, none of the directors is disqualified as on 31.03.2014 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

2 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 (4A) of the Act, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable, on the basis of information & explanations obtained and such checks as we considered necessary.

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE TO THE SHAREHOLDERS OF RADICO KHAITAN LIMITED FOR THE YEAR ENDED 31st MARCH, 2014

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

(b) The management has physically verified major part of the fixed assets at the distillery at Rampur and other locations (except Delhi Office) once during the year. The assets physically verified are under reconciliation with the book records and discrepancies, if any, can be ascertained only after the

(c) Since there is no substantial disposal of fixed assets during the year, the preparation of financial statements on a going concern basis is not affected on this account.

ii (a) On the basis of information and explanations obtained, stocks of finished goods and raw materials of the distillery / bottling units have been under physical check by the excise department in coordination with the Company''s supervisory staff at frequent intervals. Other stocks, stores and spares, at various locations have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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) In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii (a) The Company has granted Rs.1776.83 lacs as interest free unsecured working capital advance under a specific manufacturing and selling arrangement and Rs.1037.96 lacs as interest-free unsecured advance to a joint venture company. The maximum amounts outstanding during the year aggregated to Rs2399.46 lacs and year end outstanding balance aggregated to Rs.2814.79 lacs respectively.

(b) Keeping in view similar arrangement with other parties, the working capital arrangement financed by the Company is free of interest under a specific manufacturing and selling arrangement. In relation to both advances, there are no other terms and conditions that are prejudicial to the interest of the Company.

(c) There is no stipulation regarding repayment of principal as the amount has been financed under a specific manufacturing and selling arrangement with the party. As mentioned above, the loan has been financed interest free. In the case of interest-free advance also, there are no stipulations regarding repayment of principal.

(d) As mentioned above, there are no stipulations regarding repayment of principal. Accordingly, there is no overdue amount of more than rupees one lac in respect of amount financed to the Company listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties required to be covered in the register maintained under section 301 of the Companies Act, 1956. Hence, sub-clauses (f) and (g) are not applicable.

iv In our opinion and according to the information and explanations given to us, there are adequate

internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and with regard to the sale of goods. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control system.

v (a) According to the information given to us, the particulars of contracts or arrangements during the year that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956 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 the value of rupees five lacs, are of specific requirements of the Company for which alternative sources are not available for comparison of prevailing market prices.

vi The Company has not accepted deposits from the public within the meaning of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed thereunder.

vii An outside agency has carried out internal audit during the year. In our opinion, the internal audit system of the Company is commensurate with the size of the Company and the nature of its business.

viii We have broadly reviewed the books of accounts maintained by the Company, pursuant to rules

made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been maintained and the required statements are in the process of compilation. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix (a) According to the records of the Company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, there were no arrears of undisputed statutory dues as at 31st March, 2014, which were outstanding for a period of more than six months from the date they became payable.

(b) According to the records of the Company and the information and explanation given to us, there are no dues of income-tax, wealth tax, custom duty and cess, which have not been deposited on account of any dispute. Details of disputed dues in respect of sales tax, excise duty and service tax of different years, which have remained unpaid as on 31st March, 2014, for which appeals are pending are as under:

Nature of Dues Year(s) Amount Forum where pending (Rs. in Lacs)

Sales Tax / 1998-99 & 1999-00 4.12 Revision before Allahabad High Court Entry Tax

1999-00 1.27 Trade Tax Tribunal, Moradabad

Excise Duty 1981 17.37 Allahabad High Court – Lucknow Bench

1995 to 2005 92.38 Allahabad High Court – Lucknow Bench (Bank Guarantee issued)

2005-06 to 2008-09 59.01 Allahabad High Court – Lucknow Bench

Service Tax July 2003 to March 1,08,65.61 CESTAT, Delhi 2012 (including interest and penalty)

x The Company has no accumulated losses as at the end of the year and has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

xi On the basis of the verification of records and information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. There are no debentures outstanding in the books of accounts at any time during the year.

xii The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii The Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order are not applicable to the Company.

xiv As regards dealing or trading in shares, securities, debentures and other investments, proper records have been maintained of the transaction of the contracts and timely entries made therein. The shares, securities, and other investments have been held by the Company in its own name except to the extent of exemption, if any, granted under Section 49 of the Companies Act, 1956.

xv The Company has given a guarantee of Rs.1044 lacs for loans taken by Radico NV Distilleries Maharashtra, (a joint venture company, in which the Company holds 36% of the paid-up Capital) from a bank, besides being a coobligant for vehicle loan the balance of which is Rs.35.34 lacs. On the basis of information and explanations given to us, the terms and conditions whereof are not, prima facie, prejudicial to the interest of the Company.

xvi On the basis of verification, information and explanations obtained and on an overall basis, we note that term loans lacs taken during the year were applied for the purpose for which the loans were obtained.

xvii According to the information and explanations given to us, the cash flow statements examined by us and on an overall examination of the financial statements of the Company, we report that funds raised on short term basis have been not been used for long term investments.

xviii During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

xix As the Company has no outstanding debentures during the year, the question of creating securities or charge does not arise.

xxi The Company has not raised any money through public issue of securities during the year and therefore verification of the end use of money does not arise.

xxii Based on the audit procedure performed and the representation obtained from the management, we report that no case of material fraud on or by the Company has been noticed or reported during the year under audit.

For V. Sankar Aiyar & Co.

Chartered Accountants (Firm Regn. No.: 109208W)

Place: New Delhi M.S. BALACHANDRAN

Dated: 30-May-2014 Partner

Membership No: 024282


Mar 31, 2013

Report on Financial Statements

We have audited the accompanying financial statements of RADICO KHAITAN LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2013 and the Statement of Profit & 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 the Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956 ("the Act"). The 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 auditto obtain reasonable assurance about whether the financial statements are free of 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 judgement, 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. 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 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 31st March, 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 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 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, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

2 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 enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable, on the basis of information & explanations obtained and such checks as we considered necessary.

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

(b) The management has physically verified major part of the fixed assets at the distillery at Rampur and other locations (except Delhi Office) once during the year. The assets physically verified are under reconciliation with the book records and discrepancies, if any, can be ascertained only after the reconciliation is complete.

(c) Since there is no substantial disposal of fixed assets during the year, the preparation of financial statements on a going concern basis is not affected on this account.

ii (a) On the basis of information and explanations obtained, stocks of finished goods and raw materials of the distillery / bottling units have been under physical check by the excise department in coordination with the Company''s supervisory staff at frequent intervals. Other stocks, stores and spares, at various locations have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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) In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii (a) The Company has granted Rs. 1 1 55.88 lacs as interest free unsecured working capital advance under a specific manufacturing and selling arrangement and Rs.185.39 lacs as interest-free unsecured advance to a joint venture company. The maximum amounts outstanding during the year aggregated to Rs.3042.17 lacs and year end outstanding balance aggregated to Rs.1341.27 lacs respectively.

(b) Keeping in view similar arrangement with other parties, the working capital arrangement financed by the Company is free of interest under a specific manufacturing and selling arrangement. In relation to both advances, there are no other terms and conditions that are prejudicial to the interest of the Company.

(c) There is no stipulation regarding repayment of principal as the amount has been financed under a specific manufacturing and selling arrangement with the party. As mentioned above, the loan has been financed interest free. In the case of interest-free advance also, there are no stipulations regarding repayment of principal.

(d) As mentioned above, there are no stipulations regarding repayment of principal. Accordingly, there is no overdue amount of more than rupees one lac in respect of amount financed to the Company listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties required to be covered in the register maintained under section 301 of the Companies Act, 1956. Hence, sub-clauses (f) and (g) are not applicable.

iv In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and with regard to the sale of goods. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control system.

v (a) According to the information given to us, the particulars of contracts or arrangements during the year that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956 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 the value of rupees five lacs, are of specific requirements of the Company for which alternative sources are not available for comparison of prevailing market prices.

vi The Company has not accepted deposits from the public within the meaning of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed thereunder.

vii An outside agency has carried out internal audit during the year. In our opinion, the internal audit system of the Company is commensurate with the size of the Company and the nature of its business.

viii We have broadly reviewed the books of accounts maintained by the Company, pursuant to rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been maintained and the required statements are in the process of compilation. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix (a) According to the records of the Company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, there were no arrears of undisputed statutory dues as at 31st March, 2013, which were outstanding for a period of more than six months from the date they became payable.

(b) According to the records of the Company and the information and explanation given to us, there are no dues of income-tax, wealth tax, custom duty and cess, which have not been deposited on account of any dispute. Details of disputed dues in respect of sales tax, excise duty and service tax of different years, which have remained unpaid as on 31st March, 2013, for which appeals are pending are as under:

Nature of dues Year(s) Amount Forum where pending (Rs. in lacs)

Sales Tax/Entry Tax 1998-99 & 1999-00 3.02 Revision before Allahabad High Court

1999-00 6.86 Trade Tax Tribunal, Moradabad

Excise Duty 1981 17.37 Allahabad High Court - Lucknow Bench

1995 to 2005 92.38 Allahabad High Court - Lucknow Bench (Bank Guarantee issued)

2005-06 to 2008-09 56.69 Allahabad High Court - Lucknow Bench

Service Tax July 2003 to March 2012 10865.61 CESTAT, Delhi (including interest and penalty)

x The Company has no accumulated losses as at the end of the year and has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

xi On the basis of the verification of records and information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. There are no debentures outstanding in the books of accounts at any time during the year.

xii The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii The Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order are not applicable to the Company.

xiv As regards dealing or trading in shares, securities, debentures and other investments, proper records have been maintained of the transaction of the contracts and timely entries made therein. The shares, securities, and other investments have been held by the Company in its own name except to the extent of exemption, if any, granted under Section 49 of the Companies Act, 1956.

xv The Company has given a guarantee of Rs.5640 lacs for loans taken by Radico NV Distilleries Maharashtra, (a joint venture company, in which the Company holds 36% of the paid-up Capital) from a bank, besides being a coobligant for vehicle loan the balance of which is Rs.75.04 lacs. On the basis of information and explanations given to us, the terms and conditions whereof are not, prima facie, prejudicial to the interest of the Company.

xvi On the basis of verification, information and explanations obtained and on an overall basis, we note that term loans of Rs. 10,000 lacs taken during the year from banks for capital expenditure have not been utlised for the stated purpose to the extent of Rs.2436.54 lacs.

xvii According to the information and explanations given to us, the cash flow statements examined by us and on an overall examination of the financial statements of the Company, we report that funds raised on short term basis have been not been used for long term investments.

xviii During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

xix As the Company has no outstanding debentures during the year, the question of creating securities or charge does not arise.

xx The Company has not raised any money through public issue of securities during the year and therefore verification of the end use of money does not arise.

xxi Based on the audit procedure performed and the representation obtained from the management, we report that no case of fraud on or by the Company has been noticed or reported during the year under audit.

For V. Sankar Aiyar & Co.

Chartered Accountants

(Firm Regn. No.: 109208W)

M.S. BALACHANDRAN

Place: New Delhi Partner

Dated: 28-May-2013 Membership No: 024282


Mar 31, 2012

1. We have audited the attached Balance Sheet of RADICO KHAITAN LIMITED as at 31st March, 2012 and also the Statement of Profit and Loss and Cash Flow Statement of the Company 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 the 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We report that

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company, so far as 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in section 211 (3C) of the Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors are prima facie, disqualified as on 31.03.2012 from being appointed as directors of the Company in terms of section 274(1 )(g) of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts and read with the significant accounting policies and notes thereon, 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 :

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

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

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

4. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Department of Company Affairs, Govt, of India in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we further report on the matters specified in the paragraphs 4 and 5 of the said Order as under :

a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The management has physically verified major part of the fixed assets at the distillery at Rampur and other locations once during the year. The assets physically verified are under reconciliation with the book records and discrepancies, if any, can be ascertained only after the reconciliation is complete.

c) Since there is no substantial disposal of fixed assets during the year, the preparation of financial statements on a going concern basis is not affected on this account.

ii a) On the basis of information and explanations obtained, stocks of finished goods and raw materials of the distillery / bottling units have been under physical check by the excise department in coordination with the Company's supervisory staff at frequent intervals. Other stocks, stores and spares, at various locations have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

b) In our opinion, 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) In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii a) The Company has granted Rs. 1963.03 lacs as interest free unsecured working capital advance under a specific manufacturing and selling arrangement and Rs.1000 lacs as interest bearing unsecured advance to a joint venture company. The maximum amounts outstanding during the year aggregated to Rs.3028.86 lacs and year end outstanding balance aggregated to Rs.3028.86 lacs respectively.

b) Keeping in view similar arrangement with other parties, the working capital arrangement financed by the Company is free of interest under a specific manufacturing and selling arrangement. In relation to both advances, there are no other terms and conditions that are prejudicial to the interest of the Company.

c) There is no stipulation regarding repayment of principal as the amount has been financed under a specific manufacturing and selling arrangement with the party. As mentioned above, the loan has been financed interest free. In the case of interest bearing advance also, there are no stipulations regarding repayment of principal and interest of Rs.56.38 lacs has accrued but not due as at the year end.

d) As mentioned above, there are no stipulations regarding repayment of principal. Accordingly, there is no overdue amount of more than rupees one lac in respect of amount financed to the Company listed in the register maintained under section 301 of the Companies Act, 1956.

e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties required to be covered in the register maintained under section 301 of the Companies Act, 1956 except interest free working capital advance taken from a joint venture company (ceased to be a joint venture w.e.f.: 3rd February, 2012) under a specific manufacturing and selling arrangement. The maximum amount outstanding during the year was Rs,384.08 lacs and year-end outstanding balance was Rs.360.42 lacs.

f) In our opinion and according to the information and explanations given to us, other terms and conditions for such advances are not prima facie prejudicial to the interest of the Company.

g) In respect of the advances taken, there is no repayment schedule and is interest free. Thus question of principal amount due for repayment and payment of interest do not arise.

iv In our opinion and according to the information and explanations given to us, there are 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 with regard to the sale of goods. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control system.

v a) According to the information given to us, the particulars of contracts or arrangements during the year that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956 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 the value of rupees five lacs, are of specific requirements of the Company for which alternative sources are not available for comparison of prevailing market prices.

vi The Company has not accepted deposits from the public within the meaning of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under.

vii An outside agency has carried out internal audit during the year. In our opinion, the internal audit system of the Company is commensurate with the size of the Company and the nature of its business.

viii We have broadly reviewed the books of accounts maintained by the Company, pursuant to rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been maintained and the required statements are in the process of compilation. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix a) According to the records of the Company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, there were no arrears of undisputed statutory dues as at 31st March, 2012, which were outstanding for a period of more than six months from the date they became payable.

b) According to the records of the Company and the information and explanation given to us, there are no dues of income-tax, wealth tax, custom duty and cess, which have not been deposited on account of any dispute. Details of disputed dues in respect of sales tax, excise duty and service tax of different years, which have remained unpaid as on 31st March, 2012, for which appeals are pending are as under:

Nature of Year Amount Forum where dues (Rs. in lacs) pending

Sales Tax / Entry Tax 1998-99 3.02 Revision before & 1999-00 Allahabad High Court

1999-00 6.86 Trade Tax Tribunal, Moradabad

Excise Duty 1981 17.37 Allahabad High Court - Lucknow Bench

1995 to 2005 92.38 Allahabad High Court -

Lucknow Bench (Bank Guarantee issued)

2005-06 to 2008-09 56.03 Allahabad High Court - Lucknow Bench

Service Tax July 2003 to 8259.47 CESTAT. Delhi March 2009 (including Interest and Penalty)

x The Company has no accumulated losses as at the end of the year and has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

xi On the basis of the verification of records and information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. There are no debentures (other than unsecured FCCBs which were repaid during the year) outstanding in the books of accounts at any time during the year.

xii The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii The Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order are not applicable to the Company.

xiv As regards dealing or trading in shares, securities, debentures and other investments, proper records have been maintained of the transaction of the contracts and timely entries made therein. The shares, securities, debentures and other investments have been held by the Company in its own name except to the extent of exemption, if any, granted under Section 49 of the Companies Act, 1956.

xv The Company has given a guarantee of Rs.5640 lacs for loans taken by Radico NV Distilleries Maharashtra, (a joint venture company, in which the Company holds 36% of the paid-up Capital) from a bank. On the basis of information and explanations given to us, the terms and conditions whereof are not, prima facie, prejudicial to the interest of the Company.

xvi On the basis of verification and information and explanations obtained, on an overall basis, the term loans taken have been applied for the purpose for which they were obtained.

xvii According to the information and explanations given to us, the cash flow statements examined by us and on an overall examination of the financial statements of the Company, we report that funds raised on short term basis have been not been used for long term investments.

xviii During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

xix As the Company has no outstanding debentures during the year (other than unsecured FCCBs, which were repaid during the year), the question of creating securities or charge does not arise.

xx The Company has not raised any money through public issue of securities during the year and therefore verification of the end use of money does not arise.

xxi Based on the audit procedure performed and the representation obtained from the management, we report that no case of fraud on or by the Company has been noticed or reported during the year under audit.

For V. Sankar Aiyar & Co.

Chartered Accountants

ICAI Firm Regn. No. 109208W

Sd/-

Place: New Delhi (M.S. Balachandran)

Date : 30.05.2012 Partner

M.No. 024282


Mar 31, 2011

1. We have audited the attached Balance Sheet of RADICO KHAITAN LIMITED as at 31st March, 2011 and also the Profit and Loss Account and Cash Flow Statement of the Company 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 the 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We report that

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary the purposes of our audit;

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

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

(d) 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 section 211 (3C) of the Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors are prima facie, disqualified as on 31.03.2011 from being appointed as directors of the Company in terms of section 274(1)(g) of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to Note no. 15 of Schedule 18 regarding managerial remuneration of the years 2009-10 and 2010-11 exceeding the limit approved by the Central Government and read with the significant accounting policies and notes thereon, 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 :

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

ii in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

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

4. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Department of Company Affairs, Govt. of India in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we further report on the matters specified in the paragraphs 4 and 5 of the said Order as under :

I. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The management has physically verified major part of the fixed assets at the distillery at Rampur and other locations once during the year. The assets physically verified are under reconciliation with the book records and discrepancies, if any, can be ascertained only after the reconciliation is complete.

c) Since there is no substantial disposal of fixed assets during the year, the preparation of financial statements on a going concern basis is not affected on this account.

ii a) On the basis of information and explanations obtained, stocks of finished goods and raw material of the distillery / bottling units have been under physical check by the excise department in coordination with the Company's supervisory staff at frequent intervals. Other stocks, stores and spares, at various locations have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

b) In our opinion, 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) In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties required to be covered in the register maintained under section 301 of the Companies Act, 1956, except interest free working capital advance given

to a joint venture company under a specific manufacturing and selling arrangement. The maximum amounts outstanding during the year wasRs.1955.81lacs and year-end outstanding balances was Rs.1477.86 lacs.

b) Keeping in view similar arrangement with other parties, this working capital arrangement financed by the Company is free of interest under a specific manufacturing and selling arrangement. There are no other terms and conditions that are prejudicial to the interest of the Company.

c) There are no stipulation regarding repayment of principal as the amount has been financed under a specific manufacturing and selling arrangement with the party. As mentioned above, the amount has been financed interest free.

d) As mentioned above, there are no stipulations regarding repayment of principal as the amount has been financed under a specific manufacturing and selling arrangement with the party. Accordingly, there is no overdue amount of more than rupees one lac in respect of amount financed to the Company listed in the register maintained under section 301 of the Companies Act, 1956.

e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties required to be covered in the register maintained under section 301 of the Companies Act, 1956 except interest free working capital advance taken from a joint venture company under a specific manufacturing and selling arrangement. The maximum amount outstanding during the year was Rs. 422.33 lacs and year-end outstanding balance was Rs.375.68 lacs.

f) In our opinion and according to the information and explanations given to us, other terms and conditions for such advances are not prima facie prejudicial to the interest of the Company.

g) In respect of the advances taken, there is no repayment schedule and is interest free. Thus question of principal amount due for repayment and payment of interest do not arise.

iv In our opinion and according to the information and explanations given to us, there are 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 with regard to the sale of goods. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control system.

v a) According to the information given to us, the particulars of contracts or arrangements during the year that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956 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 the value of rupees five lacs, are of specific requirements of the Company for which alternative sources are not available for comparison of prevailing market prices.

vi The Company has not accepted deposits from the public within the meaning of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed thereunder.

vii An outside agency has carried out internal audit during the year. In our opinion, the internal audit system of the Company is commensurate with the size and nature of its business.

viii We have broadly reviewed the books of accounts maintained by the Company, pursuant to rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been maintained and the required statements are in the process of compilation. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix a) According to the records of the Company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, there were no arrears of undisputed statutory dues as at 31st March, 2011, which were outstanding for a period of more than six months from the date they became payable.

b) According to the records of the Company and the

information and explanation given to us, there are no dues of income-tax, wealth tax, custom duty and cess, which have not been deposited on account of any dispute. Details of disputed dues in respect of sales tax, excise duty and service tax of different years, which have remained unpaid as on 31st March, 2011, for which appeals are pending are as under:

Nature of Year Amount Forum where dues (Rs. in lacs) pending

Sales Tax/ 1998-99 & 1999-00 1.27 Revision before Allahabad High Court

Entry Tax 1999-00 4.12 Trade Tax Tribunal, Moradabad

2008-09 26.31 Writ petition before Allahabad High Court (Bank Guraantee issued for Rs. 75 lakhs)

Excise Duty 1981 17.37 Allahabad High Court – Lucknow Bench 1995 to 2005 92.38 Allahabad High Court – Lucknow Bench (Bank Guarantee issued)

2005-06 to 2008-09 48.67 Allahabad High Court – Lucknow Bench Service Tax July 2003 to March 2008 3179.84 CESTAT, Delhi Penalty on above 3179.84

x The Company has no accumulated losses as at the end of the year and has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

xi On the basis of the verification of records and information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. There are no debentures (other than unsecured FCCBs which are not due for repayment during the year) outstanding in the books of accounts at any time during the year.

xii The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii The Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order are not applicable to the Company.

xiv As regard dealing or trading in shares, securities, debentures and other investments, proper records have been maintained of the transaction of the contracts and timely entries made therein. The shares, securities, debentures and other investments have been held by the Company in its own name except to the extent of exemption, if any, granted under Section 49 of the Act.

xv The Company has given a guarantee of Rs. 41.40 crores for loans taken by Radico NV Distilleries Maharashtra, (a joint venture company, in which the Company holds 36% of the paid-up Capital) from a bank. On the basis of information and explanations given to us, the terms and conditions whereof are not, prima facie, prejudicial to the interest of the Company.

xvi On the basis of verification and information and explanations obtained, on an overall basis, the term loans

taken have been applied for the purpose for which they were obtained.

xvii According to the information and explanations given to us, the cash flow statements examined by us and on an overall examination of the financial statements of the Company, we report that funds raised on short term basis have not been used for long term investments to the extent of Rs. 18.21 crores approximately.

xviii During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

xix As the Company has no outstanding debentures during the year (other than unsecured FCCBs), the question of creating securities or charge does not arise.

xx The Company has not raised any money through public issue of securities during the year and therefore verification of the end use of money does not arise.

xxi Based on the audit procedure performed and the representation obtained from the management, we report that no case of fraud on or by the Company has been noticed or reported during the year under audit.

For V. Sankar Aiyar & Co.

Chartered Accountants

ICAI Firm Regn. No. 109208W

Sd/- Place: New Delhi (M.S. Balachandran) Date : 18.05.2011 Partner

M.No. 024282


Mar 31, 2010

1. We have audited the attached Balance Sheet of RADICO KHAITAN LIMITED as at 31st March, 2010 and also the Profit and Loss Account and Cash Flow Statement of the Company 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 the 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We report that

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary the purposes of our audit;

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

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

(d) 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 section 211 (3C) of the Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors are prima facie, disqualified as on 31.03.2010 from being appointed as directors of the Company under section 274(1)(g) of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to Note no. 16 of Schedule 18 regarding managerial remuneration of the year 2008-09 exceeding the limit and requiring approval of the Central Government and read with the significant accounting policies and notes thereon, 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 :

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

ii in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

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

4. As required by the Companies (Auditors Report) Order, 2003 issued by the Department of Company Affairs, Govt. of India in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we further report on the matters specified in the paragraphs 4 and 5 of the said Order as under :

I. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The management has physically verified major part of the fixed assets at the distillery at Rampur and other locations once during the year. The assets physically verified are under reconciliation with the book records and discrepancies, if any, can be ascertained only after the reconciliation is complete.

c) Since there is no substantial disposal of fixed assets during the year, the preparation of financial statements on a going concern basis is not affected on this account.

ii a) On the basis of information and explanations obtained, stocks of finished goods and raw material of the distillery / bottling units have been under physical check by the excise department in coordination with the Companies supervisory staff at frequent intervals. Other stocks, stores and spares, at various locations have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

b) In our opinion, 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) In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties required to be covered in the register maintained under section 301 of the Companies Act, 1956 except interest free working capital advance given to a joint venture company under a specific manufacturing and selling arrangement. The maximum amount outstanding during the year was Rs. 2132.21lacs and year-end outstanding balance was Rs. 1222.64 lacs.

b) Keeping in view similar arrangement with other parties, this working capital arrangement financed by the Company is free of interest under a specific manufacturing and selling arrangement. There are no other terms and conditions that are not prejudicial to the interest of the Company.

c) There are no stipulation regarding repayment of principal as the amount has been financed under a specific manufacturing and selling arrangement with the party. As mentioned above, the amount has been financed interest free.

d) As mentioned above, there are no stipulation regarding repayment of principal as the amount has been financed under a specific manufacturing and selling arrangement with the party. Accordingly, there is no overdue amount of more than Rs. one lac in respect of amount financed to the Company listed in the register mentioned under register 301 of the Companys Act 1956.

e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties required to be covered in the register maintained under section 301 of the Companies Act, 1956 except interest free working capital advance taken from a joint venture company under a specific manufacturing and selling arrangement. The maximum amount outstanding during the year was Rs. 422.33 lacs and year-end outstanding balance was Rs. 558.66 lacs.

f) In our opinion and according to the information and explanations given to us, other terms and conditions for such advances are not prima facie prejudicial to the interest of the Company.

g) In respect of the advances taken, there is no repayment schedule and is interest free. Thus question of principal amount due for repayment and payment of interest does not arise.

iv In our opinion and according to the information and explanations given to us, there are 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 with regard to the sale of goods. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control system.

v a) According to the information given to us, the particulars of contracts or arrangements during the year that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956 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 the value of rupees five lacs are of specific requirements of the Company for which alternative sources are not available for comparison of prevailing market prices.

vi The Company has not accepted deposits from the public within the meaning of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed thereunder.

vii An outside agency has carried out internal audit during the year. In our opinion, the internal audit system of the Company is commensurate with the size and nature of its business.

viii We have broadly reviewed the books of accounts maintained by the Company, pursuant to rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been maintained and the required statements are in the process of compilation. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix a) According to the records of the Company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, there were no arrears of undisputed statutory dues as at 31st March, 2010, which were outstanding for a period of more than six months from the date they became payable.

x The Company has no accumulated losses as at the end of the year and has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

xi On the basis of the verification of records and information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. There are no debentures (other than unsecured FCCBs which are not due for repayment during the year) outstanding in the books of accounts at any time during the year.

xii The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii The Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order are not applicable to the Company.

xiv As regard dealing or trading in shares, securities, debentures and other investments, proper records have been maintained of the transaction of the contracts and timely entries made therein. The shares, securities, debentures and other investments have been held by the Company in its own name except to the extent of exemption, if any, granted under Section 49 of the Act.

xv The Company has given a guarantee of Rs. 41.40 crores for loans taken by Radico NV Distilleries Maharashtra, (a joint venture company, in which the Company holds 36% of the paid-up Capital) from a bank. On the basis of information and explanations given to us, the terms and conditions whereof are not, prima facie, prejudicial to the interest of the Company.

xvi On the basis of verification and information and explanations obtained, on an overall basis, the term loans taken during the year have been applied for the purpose for which they were obtained.

xvii According to the information and explanations given to us, the cash flow statements examined by us and on an overall examination of the financial statements of the Company, we report that funds raised on short term basis have not been used for long term investments.

xviii During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

xix As the Company has no outstanding debentures during the year (other than unsecured FCCBs), the question of creating securities or charge does not arise.

xx The Company has not raised any money through public issue of securities during the year and therefore verification of the end use of money does not arise. However, during the year the Company has allotted 289.19 lac equity shares of Rs. 2 each under Qualified Institutional Placement (Refer Note no. 5 of Schedule 18B).

xxi Based on the audit procedure performed and the representation obtained from the management, we report that no case of fraud on or by the Company has been noticed or reported during the year under audit.

For V. Sankar Aiyar & Co. Chartered Accountants

Sd/- Place: New Delhi (M.S. Balachandran)

Date : 10.05.2010 Partner

M.No. 024282 ICAI Firm Regn. No. 109208W

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