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Auditor Report of Shalimar Paints Ltd.

Mar 31, 2016

To the Members of Shalimar Paints Limited Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Shalimar Paints Limited (‘the Company’), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and 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 Standalone 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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with 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 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 there under.

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 from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

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

Emphasis of Matters

(i) The Company has resolved to de-commission its Chennai Plant, due to technical reasons, with effect from 06th April 2015, and depreciation after de-commissioning, has not been charged to revenue. The said assets will be put to use once the plant restarts & depreciation thereon will be charged thereafter.( Note 2.43 of audited accounts)

(ii) The Company, on the basis of external expert opinion, has not provided for income tax for the reasons stated in Note 2.44 of audited accounts.

(iii) The insurance claim of loss for damage of building & inventories due to fire in Howrah Plant is yet to be assessed by the Insurer. Fixed assets and inventories, except the said damaged assets, have been verified & valued fairly during the year by the Company as per its accounting policy with no material discrepancy. (Note 2.45 of audited accounts)

(iv) Some of the debtors, creditors & advances are pending confirmation /reconciliation, and impact of the same, if any, is unascertained.( Note 2.46 of audited accounts) Our opinion is not modified in respect of these matters.

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’ ,a statement on the matters specified in the paragraph 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 the written representations received from the directors as on 31 March 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 from being appointed as a director in terms of Section 164 (2) of the Act;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in ‘Annexure-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 information and according to the explanations given to us:

i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 2.28 to the financial statements;

ii) The Company did not have any long term contracts including derivation contracts for which there are any material foreseeable losses.

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

The Annexure referred to in our Independent Auditors’ Report to the members of Shalimar Paints Limited (the Company) on the standalone financial statements for the year ended 31 March 2016, we report that:

(i) (A) Fire in Howrah factory of the Company during financial year 2013-14 has damaged its fixed assets comprising Building and Plant & Machineries situated therein. The fixed assets register was also destroyed in fire. Re-construction of fixed assets registers on showing full particulars, including quantitative details and situation of fixed assets. Hence, we are unable to comment on para 3(i)(a) of the ‘Order’.

(b) Except damaged fixed assets as stated above, other fixed assets of the Company have been verified periodically by the management during the year in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. Since the complete fixed assets register could not be made available to us for the reason stated in 1(a) above, we are unable to comment on Para 3(1) (b) of the ‘Order’ -whether any material discrepancies on physical verification existed as compared to fixed assets register .

(c) According to information and explanations given to us, and on the test basis examination of records of the Company, the title deeds of immovable properties are held in the name of the company.

(ii) The inventories (except damaged due to fire in Howrah factory) have been physically verified by the management at regular intervals during the year. There were no material discrepancies noticed on physical verification of inventory as compared to the book records.

(iii) The Company is to receive balance consideration money of Rs. 621.21lacs (previous year Rs.499.16 lac) from its subsidiary, Shalimar AdhunikNirman Limited, for transfer of its assets, advances made to the subsidiary & expenses incurred on behalf of the said subsidiary. Till the previous year, advances made /recoverable from subsidiary were non-interest bearing. The Company has decided to charge interest on loans &advances given during the year to its subsidiary.

As per information & explanation given to us there is no schedule of repayment of loan & advances comprising principal and interest thereon. As confirmed by the Company, such loans & advances are repayable on demand, and there is no overdue amount.

Except loan and advances to the aforesaid subsidiary, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnership or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv). In our opinion and according to information and explanations given to us, the Company has complied with the provisions of section 185 & 186 of the Companies Act, 2013 with respect to loans and advances made.

(v) The Company has not accepted any deposits from the public; and hence, para 3(v) of the Order is not applicable.

(vi). The Central Government has prescribed maintenance of Cost Records under Section 148(1) of the Companies Act in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (A) According to the information and explanations given to us and on the basis of our examination of the records of the

Company, amounts deducted / accrued in the books of account in respect of 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 other material statutory dues, as applicable, have been regularly deposited during the year by the Company to the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid statutory dues were in arrears on 31 March 2016 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no material dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax which have not been deposited with the appropriate authorities on account of any dispute, except the following disputed statutory dues aggregating Rs1033.00lacs (Note- 2.28).

Sl No.

Name of the statute

Nature of Dues

Forum where dispute is pending

Amount (Rs.in lacs)

01.

Central Excise Act, 1944

Excise Duty

Various Assessing, Appellate & Tribunal Authorities

302.59

02.

Sales Tax Act

Sales Tax

Various Assessing, Appellate, Tribunal & Revision Board Authorities

676.73

03

Income Tax Act, 1961

Income Tax

Various Assessing, Appellate, Tribunal Authorities

53.68

TOTAL:

1033.00

viii) As per the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to a financial institution, bank, government or dues to debenture holders.

ix) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) and term loan ; hence Para 3 (ix) of the Order is not applicable.

x) Based on the audit procedures performed for reporting on the true & fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud by the Company or fraud on the Company on or by the Company by its officers / employees has been noticed or reported during the year under audit.

xi) Managerial remuneration has been paid / provided by the Company in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

xii) The Company is not a Nidhi Company; hence Para 3 (xii) of the Order is not applicable.

xiii) Transactions with the related parties are in compliance with Section 177 and 188 of Companies Act, 2013, and the details have been disclosed in the Financial Statements etc. as required by the applicable accounting standards. The company has not made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review; hence Para 3 (xiv) of the Order is not applicable.

xiv) The company has not entered into any non-cash transactions with directors or persons connected with him; hence Para 3 (xv) of the Order is not applicable.

xv) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934; hence Para 3 (xvi) of the Order is not applicable.

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’)

We have audited the internal financial controls over financial reporting of Shalimar Paints Limited (‘the Company’) as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls 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 on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the ‘Guidance Note’) and the Standards on Auditing, both issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note which are applicable to an audit of internal financial controls ,require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

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 auditors’ 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 the 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, and adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 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 on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Chaturvedi & Partners Chartered Accountants (Firm Reg. No. 307068E)

Place: New Delhi Anup Kumar Dubey Date: 28th May, 2016 Partner

Mem. No. 054975


Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Shalimar Paints Limited ('the Company'), which comprise the balance sheet as at 31 March 2015, the statement of profit and 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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with 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 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 there under.

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 from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 on 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 policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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 31 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 the written representations received from the directors as on 31 March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and

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 information and according to the explanations given to us:

i) the Company has disclosed the impact of pending litigations on its financial position in its financial statements Refer Note 2.28 to the financial statements;

ii) The Company did not have any long term contracts including derivation contracts for which there are any material foreseeable losses.

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

The Annexure referred to in our Independent Auditors' Report "Report on Other Legal and Regulatory Requirements" to the members of Shalimar Paints Limited (the Company) on the standalone financial statements for the year ended 31 March 2015, we report that:

(i) (a) There has been fire during previous year in the Howrah factory of the Company resulting in damage to its fixed assets comprising Building and Plant & Machineries. The fixed assets register was also destroyed in fire. The Company has commenced the reconstruction of fixed assets register showing full particulars, including quantitative details and situation of fixed assets. Hence , we are unable to comment on para 3(i)(a) of the 'Order'.

(b) Except damaged fixed assets above, other fixed assets of the Company have been verified periodically by the management during the year in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. Since the complete fixed assets register could not be made available to us for the reason stated in 1(a) above, we are unable to comment on para 3(1) (b) of the 'Order' - whether any material discrepancies on physical verification existed as compared to fixed assets register .

(ii) (a) The inventories(except damaged due to fire in previous year) have been physically verified by the management at Regular intervals during the year.

(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) The Company has maintained proper records of inventory. There were no material discrepancies noticed on physical verification of inventory as compared to the book records.

(iii) The Company is to receive balance consideration money of Rs 499.16 lacs [ Note 2.13(ii)] from its subsidiary, Shalimar Adhunik Nirman Limited, for transfer of its assets & expenses incurred on behalf of the said subsidiary. The said due amount is not interest bearing and shown as loan & advances to related party. There is no stipulation as regard repayment schedule , and such loans & advances, as informed , are repayable on demand. Except this, the Company has not granted any loans, secured or unsecured , to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Hence, paragraph 3 (iii) (a) & (b) of the Order, are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

(v) The Company has not accepted any deposits from the public; and hence, para 3(v) of the Order is not applicable.

(vi) The Central Government has prescribed maintenance of Cost Records under Section 148(1) of the Companies Act in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted / accrued in the books of account in respect of 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 other material statutory dues, as applicable, have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no material dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited with the appropriate authorities on account of any dispute, except the following disputed statutory dues aggregating Rs. 917.70 lacs.

Sl Name of the statute Nature of dues Forum where dispute is pending Amount No. (Rs. in lacs)

01. Central Excise Act, 1944 Excise Duty Various Assessing, Appellate & 293.71 Tribunal Authorities

02. Sales Tax Act Sales Tax Various Assessing, Appellate, 576.04 Tribunal & Revision Board Authorities

03. Income Tax Act, 1961 Income Tax Various Assessing, Appellate, 47.95 Tribunal Authorities

TOTAL: 917.70

(c) According to the information and explanations given to us, the amount which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules thereunder, has been transferred to such fund within time.

(viii) The Company does not have any accumulated losses at the end of the financial year, and has incurred cash losses in the financial year; however, in the immediately preceding financial year, there were no cash loss.

(ix) As per the information and explanations given to us , the Company has not defaulted in repayment of dues to financial institutions and banks.

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

(xi) The Company has availed term loans, and the same were applied for intended purposes.

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

For CHATURVEDI & PARTNERS

Chartered Accountants

Firm Reg No-307068E

Anup Kumar Dubey

Place: New Delhi Partner

Dated: 30th May , 2015 Membership No: 054975


Mar 31, 2014

We have audited the accompanying financial statements of Shalimar Paints Limited (''the Company''), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the 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 March 31, 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 the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the 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 March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

The Annexure referred to in our report to the members of Shalimar Paints Limited (''the Company'') for the year ended 31st March, 2014

1. In respect of its fixed assets :

a) There has been fire during the year under audit in the Howrah factory of the Company resulting in damage to its fixed assets comprising Building and Plant & Machineries. Fixed assets register of the Company, as a whole, are reported to be destroyed, and the same are being reconstructed giving full particulars including quantitative details and situation of fixed assets. Hence, we are unable to comment on para 4 (1) (a) of the ''Order''.

b) The extent of damage (with financial implication there of) to affected fixed assets are being surveyed by insurer. However, the Company has made its own estimation of loss due to fire to the extent of Rs. 26.01 lacs (Plant & Machinery) & Rs. 49.92 lacs (Building), and the said amount has been shown as claim receivable. The actual loss can be determined only on receiving report from insurer.

Except above, other fixed assets of the Company have been verified periodically by the management during the year in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. Since the assets register could not be made available to us for the reason stated in 1(a) above, we are unable to comment on para 4(1) (b) of the ''Order'' - whether any material discrepancies (on physical verification) existed as compared to fixed assets register.

c) The Company has not disposed of substantial part of fixed assets during the year under audit and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) The inventories have been physically verified by the management at regular intervals during the year.

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) The Company has maintained proper records of inventory. Due to fire, as reported in (1)(a) above, there has been loss of Rs. 1456.32 lacs on account of damage inventory. The said loss has been estimated by the management which may change on surveyor''s report of insurer. Except this, there were no material discrepancies noticed on physical verification of inventory as compared to the book records.

3. The Company is to receive balance consideration money of Rs. 499.16 lacs [Note 2.17(i)] from its subsidiary, Shalimar Adhunik Nirman Limited, for transfer of its assets & expenses incurred on behalf of the said subsidiary. The said due amount is not interest bearing and shown as loan & advances to related party. Except this, the Company has not granted any loan to companies, firms or other parties covered in the register maintained under section 301of the Companies Act, 1956. Hence, Clauses 4(iii) (a) to (d) of the Order, are not applicable to the Company.

4. The Company has not taken loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act. Hence, Clauses 4(iii) (e), (f) and (g) of the Order, are not applicable to the Company.

5. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventories, fixed assets and also for the sale of goods & services. During the course of our audit, we have not observed any major weaknesses in internal control system relating to these areas.

6. According to information & explanation furnished to us, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under that section. Hence, Clauses 4(v) (a) & (b) of the Order, are not applicable to the Company.

7. The Company has not accepted any deposits from public & accordingly Clause 4(vi) of the Order is not applicable to the Company.

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

9. The Central Government has prescribed maintenance of Cost Records under Section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

10. In respect of statutory dues:

a) The 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 other statutory dues have been regularly deposited with the appropriate authorities. No undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2014 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues on account of income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess, as applicable, aggregating to Rs. 758.57 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl Name of the Nature of dues Forum where dispute Amount No. statute is pending (Rs.in lacs)

01. Central Excise Excise Duty Various Assessing, 315.33 Act, 1944 Appellate & Tribu- nal Authorities

02. Central Sales Sales Tax Various Assessing, 432.18 Tax Act and Appellate, Tribunal Sales Tax Act & Revision Board of various Authorities states

03. Income Tax Act, Income Tax Various Assessing, 11.06 1961 Appellate, Tribunal Authorities

TOTAL: 758.57

11. The Company has no accumulated loss, and has not incurred any cash loss during the financial year covered by our audit or in the immediately preceding financial year.

12. Based on the audit procedures and as per the information & explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

13. According to information & explanation given to us, no loan or advance has been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

14. The Company is not a chit fund or a nidhi or a mutual benefit fund/society. Therefore, clause 4(xiii) of the Order is not applicable to the Company.

15. The Company has not dealt or traded in shares, securities, and hence clause 4 (xiv) of the Order is not applicable.

16. According to information & explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

17. The Company has availed term loans, and the same has been utilized for intended purposes.

18. On an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis have not been used for long-term investment.

19. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

20. The Company has not raised any money by way of public issue or issued debentures during the year under audit.

21. Based on the audit procedures performed for reporting on the true & fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year under audit causing the financial statements to be materially misstated.

For CHATURVEDI & PARTNERS Chartered Accountants Firm Reg No-307068E

Anup Kumar Dubey Place : New Delhi Partner Dated : May 30, 2014 Membership No: 054975


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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 March 31, 2013;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

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

f) since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956, nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The Annexure referred to in our report to the members of Shalimar Paints Limited (''the Company'') for the year ended March 31, 2013

1. In respect of its fixed assets :

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

b) The fixed assets have been verified periodically by the management during the year in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) The Company has not disposed of substantial part of fixed assets during the year under audit and the going concern status of the Company is not affected.

2. In respect of its inventory:

a) The inventories have been physically verified by the management at regular intervals during the year.

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) The Company has maintained proper records of inventory. There were no material discrepancies noticed on physical verification of inventory as compared to the book records.

3. The Company has not granted any loan to companies, firms or other parties covered in the register maintained under section 301of the Companies Act, 1956. Hence, Clauses 4(iii) (a) to (d) of the Order, are not applicable to the Company.

4. The Company has not taken loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act . Hence, Clauses 4(iii) (e), (f) and (g) of the Order, are not applicable to the Company.

5. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventories, fixed assets and also for the sale of goods & services. During the course of our audit, we have not observed any major weaknesses in internal control system relating to these areas.

6. According to information & explanation furnished to us, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under that section. Hence, Clauses 4(v) (a) & (b) of the Order, are not applicable to the Company.

7. The Company has not accepted any deposits from public & accordingly Clause 4(vi) of the Order is not applicable to the Company.

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

9. The Central Government has prescribed maintenance of Cost Records under Section 209(1)(d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

10. In respect of statutory dues :

a) The 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 other statutory dues have been regularly deposited with the appropriate authorities. No undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2013 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues on account of income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess, as applicable, aggregating to Rs.569.46 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl Name of the statute Nature of dues No.

01. Central Excise Act, 1944 Excise Duty

02. Central Sales Tax Act and Sales Tax Sales Tax Act of various states

03. Income Tax Act, 1961 Income Tax

Name of the Statute Forum where dispute is pending Amount (Rs. in lacs)

Central Excise Act 1944 Various Assessing, Appellate & 209.20 Tribunal Authorities

Central Sales Tax Act and Sales Tax Act of Various States Various Assessing, Appellate, 354.81 Tribunal & Revision Board Authorities

Income Tax Act 1961 Various Assessing, Appellate, 5.45 Tribunal Authorities

TOTAL: 569.46

11. The Company has no accumulated loss and has not incurred any cash loss during the financial year covered by our audit or in the immediately preceding financial year.

12. Based on the audit procedures and as per the information & explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

13. According to information & explanation given to us, no loan or advance has been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

14. The Company is not a chit fund or a nidhi or a mutual benefit fund/society. Therefore, clause 4(xiii) of the Order is not applicable to the Company.

15. The Company has not dealt or traded in shares, securities and hence clause 4 (xiv) of the Order is not applicable.

16. According to information & explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

17. The Company has availed of term loan and the same has been utilized for intended purposes.

18. On an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis have not been used for long-term investment.

19. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

20. The Company has not raised any money by way of public issue or issued debentures during the year under audit.

21. Based on the audit procedures performed for reporting on the true & fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year under audit causing the financial statements to be materially misstated.

For CHATURVEDI & PARTNERS

Chartered Accountants

Firm Reg No-307068E

A K Dubey

Place : New Delhi Partner

Dated : May 25, 2013 Membership No: 054975


Mar 31, 2012

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

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

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended), hereinafter, referred to as the 'Order' issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement based on the information and explanations given to us on the matters specified in paragraph 4 and 5 of the said Order.

4. Further to our comments in annexure referred to in paragraph 3 above, we report that :

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

iv) In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards referred in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representation received from directors and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March, 2012 from being appointed as directors in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the annexed accounts read together with Disclosure of Accounting Policies & Notes to Account in Point 1 & 2, respectively, give the information required by the Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting principles generally accepted in India:

(a) in so far as it relates to Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

(b) in so far as it relates to the Statement of Profit and Loss, of the profit of the Company for the year ended on that date ; and

(c) in so far as it relates to the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure to the Auditors' Report Referred to paragraph 3 of our report of even date

1. In respect of its fixed assets :

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

b) The fixed assets have been verified periodically by the management during the year in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) The Company has not disposed of substantial part of fixed assets during the year under audit and the going concern status of the Company is not affected.

2. In respect of its inventory:

a) The inventories have been physically verified by the management at regular intervals during the year.

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) The Company has maintained proper records of inventory. There were no material discrepancies noticed on physical verification of inventory as compared to the book records.

3. The Company has not granted any loan to companies, firms or other parties covered in the register maintained under section 301of the Companies Act, 1956. Hence, clauses 4(iii) (b), (c) and (d) of the Order are not applicable to the Company.

4. The Company has not taken loan, secured or unsecured, from companies ,firms or other parties covered in the register maintained under section 301 of the Act .

5. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of Inventory, fixed assets and also for the sale of goods & services. During the course of our audit, we have not observed any major weaknesses in internal control system relating to these areas.

6. According to information & explanation furnished to us, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under that section.

Hence, Clause 4(v) (b) of the Order is not applicable to the Company.

7. The Company has not accepted any deposits from public & accordingly Clause 4(vi) of the Order is not applicable to the Company.

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

9. The Central Government has prescribed maintenance of Cost Records under Section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

10. In respect of statutory dues :

a) The undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues have been regularly deposited with the appropriate authorities. No undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2012 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues on account of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess, as applicable, aggregating to Rs.604.09 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl Name of the statute Nature of Forum where dispute Amount No. dues is pending (Rs.in lacs)

01.Central Excise Act, 1944 Excise Duty Various Assessing, 292.40 Appellate & Tribunal Authorities

02.Central Sales Tax Act and Sales Tax Various Assessing, 311.69 Sales Tax Act of Appellate,Tribunal various states & Revision Board Authorities

TOTAL: 604.09

11. The Company has no accumulated loss and has not incurred any cash loss during the financial year covered by our audit or in the immediately preceding financial year.

12. Based on the audit procedures and as per the information & explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

13. According to information & explanation given to us, no loan or advance has been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

14. The Company is not a chit fund or a nidhi or a mutual benefit fund/society. Therefore, clause 4(xiii) of the Order is not applicable to the Company.

15. The Company has not dealt or traded in shares, securities, and hence clause 4 (xiv) of the Order is not applicable.

16. According to information & explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

17. The Company has availed of term loan and the same has been utilized for intended purposes.

18. On an overall examination of the Balance Sheet of the Company, we report that funds raised on short- term basis have not been used for long-term investment.

19. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

20. The Company has not raised any money by way of public issue or issued debentures during the year under audit.

21. Based on the audit procedures performed for reporting on the true & fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year under audit causing the financial statements to be materially misstated.

For CHATURVEDI & PARTNERS

Chartered Accountants

Firm Reg No-307068E

A K Dubey Place: New Delhi Partner

Dated: May 07, 2012 Membership No: 054975


Mar 31, 2011

1. We have audited the attached Balance Sheet of Shalimar Paints Limited as at 31st March, 2011, the Profit and Loss Account and also Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended), hereinafter, referred to as the ‘Order' issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement based on the information and explanations given to us on the matters specified in paragraph 4 and 5 of the said Order.

4. Further to our comments in annexure referred to in paragraph 3 above, we report that ,

i) We have obtained all the information and explanations, which to the best of our knowledge and belief

were necessary for the purpose of our audit;

ii) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as

appears from our examination of those books;

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

iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards referred in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representation received from directors, as on 31st March, 2011 and taken on

record by the Board of Directors, we report that none of the directors are disqualified as on 31st March, 2011 from being appointed as directors in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the annexed accounts, read together with Notes on Account in Schedule 19, give the information required by the Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting principles generally accepted in India:

(a) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

(b) in so far as it relates to the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

(c) in so far as it relates to the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure to the Auditors' Report Referred to paragraph 3 of our report of even date

1. In respect of its fixed assets :

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

b) The fixed assets have been verified periodically by the management during the year in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) The Company has not disposed of substantial part of fixed assets during the year under audit and the going concern status of the Company is not affected.

2. In respect of its inventory:

a) The inventories have been physically verified by the management at regular intervals during the year.

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) The Company has maintained proper records of inventory. There were no material discrepancies noticed on physical verification of inventory as compared to the book records.

3. The Company has not granted any loan to companies, firms or other parties covered in the register maintained under section 301of the Companies Act, 1956. Hence, clauses 4(iii) (b), (c) and (d) of the Order are not applicable to the Company.

4. The Company has not taken loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act.

5. In our opinion, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of Inventory, fixed assets and also for the sale of goods & services. During the course of our audit, we have not observed any major weaknesses in internal control system relating to these areas.

6. According to information & explanation furnished to us, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under that section.

Hence, Clause 4(v) (b) of the Order is not applicable to the Company.

7. The Company has not accepted any deposits from public & accordingly Clause 4(vi) of the Order is not applicable to the Company.

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

9. The Central Government has prescribed maintenance of Cost Records under Section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

10. In respect of statutory dues :

a) The 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 other statutory dues have been regularly deposited with the appropriate authorities. No undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2011 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues on account of income tax, sales tax, wealth tax, service tax, custom

duty, excise duty and cess, as applicable, aggregating to Rs. 522.35 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl Name of the Nature of Forum where dispute Amount No. statute Dues is pending (Rs.in lacs)

01. Central Excise Act, Excise Duty Various Assessing, 234.50 1944 Appellate Tribunal Authorities

02. Central Sales Tax Sales Tax Various Assessing, 287.85 Act and Sales Tax Appellate, of various states Tribunal & Revision Board Authorities

TOTAL: 522.35

11. The Company has no accumulated loss and has not incurred any cash loss during the financial year covered by our audit or in the immediately preceding financial year.

12. Based on the audit procedures and as per the information & explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

13. According to information & explanation given to us, no loan or advance has been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

14. The Company is not a chit fund or a nidhi or a mutual benefit fund/society. Therefore, clause 4(xiii) of the Order is not applicable to the Company.

15. The Company has not dealt or traded in shares, securities, and hence clause 4 (xiv) of the Order is not applicable.

16. According to information & explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

17. The Company has availed of term loan and the same has been utilized for intended purposes.

18. On an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis have not been used for long-term investment.

19. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

20. The Company has not raised any money by way of public issue or issued debentures during the year under audit.

21. Based on the audit procedures performed for reporting on the true & fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year under audit causing the financial statements to be materially misstated.

For CHATURVEDI & PARTNERS Chartered Accountants Firm Reg No. 307068E

A K Dubey Partner Membership No. 054975

Place : Delhi Date : 7th May, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Shalimar Paints Limited as at 31st March, 2010, the Profit and Loss Account and also Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended), hereinafter, referred to as the ‘Order’ issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement based on the information and explanations given to us on the matters specified in paragraph 4 and 5 of the said Order.

4. Further to our comments in annexure referred to in paragraph 3 above, we report that

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards referred in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representation received from directors, as on 31st March, 2010 and taken on

record by the Board of Directors, we report that none of the directors are disqualified as on 31st March, 2010 from being appointed as directors in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the annexed accounts, read together with Notes on Account in Schedule 19, give the information required by the Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting principles generally accepted in India:

(a) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

(b) in so far as it relates to the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

(c) in so far as it relates to the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

1. In respect of its fixed assets :

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

b) The fixed assets have been verified periodically by the management during the year in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) The Company has not disposed of substantial part of fixed assets during the year under audit and the going concern status of the Company is not affected.

2. In respect of its inventory:

a) The inventories have been physically verified by the management at regular intervals during the year.

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) The Company has maintained proper records of inventory. There were no material discrepancies noticed on physical verification of inventory as compared to the book records.

3. The Company has not granted any loan to companies, firms or other parties covered in the register maintained under section 301of the Companies Act, 1956. Hence, clauses 4(iii) (b), (c) and (d) of the Order are not applicable to the Company.

4. The Company has not taken loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act.

5. In our opinion, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of Inventory, fixed assets and also for the sale of goods & services. During the course of our audit, we have not observed any major weaknesses in internal control system relating to these areas.

6. According to information & explanation furnished to us, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under that section.

Hence, Clause 4(v) (b) of the Order is not applicable to the Company.

7. The Company has not accepted any deposits from public & accordingly Clause 4(vi) of the Order is not applicable to the Company.

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

9. The Central Government has prescribed maintenance of Cost Records under Section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

10. In respect of statutory dues :

a) The 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 other statutory dues have been regularly deposited with the appropriate authorities. No undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2010 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues on account of income tax, sales tax, wealth tax, service tax, custom

duty, excise duty and cess, as applicable, aggregating to Rs. 381.69 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl Name of the statute Nature of Dues Forum where dispute is pending Amount

No. (Rs.in lacs)

01. Central Excise Act, 1944 Excise Duty Commissioner of Central Excise 149.06

(Appeals)

02. Central Sales Tax Act and Sales Tax Commissioner (Appeals)/ 232.63 Sales Tax Act of various states Appellate Tribunal

TOTAL: 381.69

11. The Company has no accumulated loss and has not incurred any cash loss during the financial year covered by our audit or in the immediately preceding financial year.

12. Based on the audit procedures and as per the information & explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

13. According to information & explanation given to us, no loan or advance has been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

14. The Company is not a chit fund or a nidhi or a mutual benefit fund/society. Therefore, clause 4(xiii) of the Order is not applicable to the Company.

15. The Company has not dealt or traded in shares, securities, and hence clause 4 (xiv) of the Order is not applicable.

16. According to information & explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

17. The Company has availed of term loan and the same has been utilized for intended purposes.

18. On an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis have not been used for long-term investment.

19. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

20. The Company has not raised any money by way of public issue or issued debentures during the year under audit.

21. Based on the audit procedures performed for reporting on the true & fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year under audit causing the financial statements to be materially misstated.

For CHATURVEDI & PARTNERS Chartered Accountants

A K Dubey

Partner

Membership No. 054975

Place : Kolkata.

Date : 28th May, 2010

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