Auditors
TO THE MEMBERS OF GODREJ CONSUMER PRODUCTS LIMITED
1. We have audited the attached Balance Sheet of GODREJ CONSUMER PRODUCTS LIMITEDas at March 31, 2011 and also the Profit and Loss Account and the Cash Flow Statement ofthe Company for the year ended on that date annexed thereto. These financial statementsare the responsibility of the Company’s Management. Our responsibility is to expressan opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by theCentral Government of India in terms of section 227 (4A) of the Companies Act, 1956, weannex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. As stated in Note 3, Schedule 16: Notes to Accounts, Godrej Household Products Ltd.(GHPL), an erstwhile 100% subsidiary of Godrej Consumer Products Limited (GCPL) wasamalgamated on March 31, 2011, with GCPL with effect from April 1, 2010, in accordancewith a Scheme of Amalgamation sanctioned by the Hon’ble High Court of Judicature atBombay. These financial statements include the financial statements of the erstwhile GHPLfor the year ended March 31, 2011, which have not been audited by us and have been auditedby another auditor whose report has been furnished to us. Our opinion on the financialstatements, to the extent they have been derived from the financial statements of theerstwhile GHPL, is based solely on the report of the other auditor.
5. Without qualifying our opinion, attention is drawn to Note 3, Schedule 16: Notes toAccounts, regarding the Scheme of Amalgamation approved by The Hon’ble High Court ofJudicature at Bombay whereby the assets and liabilities of the erstwhile Godrej HouseholdProducts Limited have been taken over and recorded at their fair values as on April 1,2010, as determined by the Board of Directors of the Company. In accordance with theScheme of Amalgamation, an amount of Rs. 3776.83 lac on account of fair valuation of loansand advances, an amount of Rs. 5275.00 lac on account of brand amortization and an amountof Rs. 614.42 lac on account of costs and expenses of amalgamation aggregating to Rs.9666.25 lac has been charged to General Reserve instead of charging the same to the Profitand Loss Account. Had this amount been charged to the Profit and Loss Account, the profitfor the year would have been lower by Rs. 9666.25 lac and the General Reserve would havebeen higher by Rs. 9666.25 lac
6. Further to our comments in the Annexure referred to in para 3 above and our commentsin para 4 above, we report that:
a) We have obtained all the information and explanations which to the best of ourknowledge 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 theCompany so far as appears from our examination of such books.
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account.
d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report comply with the Accounting Standards referred to insub-section (3C) of section 211 of the Companies Act, 1956.
e) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read with the notes thereon, give the information requiredby the Companies Act, 1956, in the manner so required and give a true and fair view inconformity 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 March31, 2011;
ii) in the case of the Profit and Loss Account, of the profit of the Company for theyear ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows of the Company for theyear ended on that date.
7. On the basis of the written representations received from the Directors as on March31, 2011 and taken on record by the Board of Directors, we report that none of theDirectors is disqualified as on March 31, 2011, from being appointed as a Director interms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf of
KALYANIWALLA & MISTRY
CHARTERED ACCOUNTANTS
Firm Regn. No.: 104607W
Daraius Z. Fraser
PARTNER
M. No.: 42454
Mumbai: May 2, 2011.
Annexure to the Auditors’ Report
As required by the Companies (Auditor’s Report) Order, 2003, issued by the CentralGovernment of India in terms of section 227 (4A) of the Companies Act, 1956, we furtherreport that:
1. Fixed Assets:
a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets.
b) The Company has a program for physical verification of fixed assets at periodicintervals. In our opinion, the period of verification is reasonable having regard to thesize of the Company and the nature of its assets. The discrepancies reported on suchverification are not material and have been properly dealt with in the books of account.
c) In our opinion, there have been no significant disposals of fixed assets during theyear which affect the going concern assumption.
2. Inventory:
a) The Management has conducted physical verification of inventory (excluding stockslying with third parties) at reasonable intervals. In respect of inventory lying withthird parties, these have substantially been confirmed by them. In our opinion, thefrequency of verification is reasonable.
b) The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
c) The Company is maintaining proper records of inventory and no material discrepancieswere noticed on verification between the physical stocks and the book records.
3. Loans and Advances:
a) The Company had granted unsecured loans to two companies listed in the registermaintained under section 301 of the Companies Act, 1956. The maximum amount involvedduring the year was Rs. 1586.73 lac and the closing balance amounted to Rs. Nil. Theerstwhile Godrej Household Products Limited had granted an unsecured loan, to a partycovered in the register maintained under Section 301 of the Act. The maximum amountinvolved during the year was Rs. 257.14 lac and the year-end balance was Rs. 214.29 lac.
b) In our opinion, the rate of interest and other terms and conditions on which theunsecured loans have been granted to companies / parties listed in the register maintainedunder section 301 of the Companies Act, 1956, are not prima facie prejudicial to theinterest of the Company.
c) The parties to whom the Company had granted loans have repaid / are repaying theprincipal amounts as stipulated and have also been regular in the payment of interest.
d) There is no overdue amount of loans granted to companies / parties listed in theregister maintained under section 301 of the Companies Act, 1956.
e) The Company has not taken any loans, secured or unsecured, from companies, firms orother parties covered in the register maintained under section 301 of the Act.
4. In our opinion and according to the information and explanations given to us, thereis an adequate internal control system commensurate with the size of the Company and thenature of its business, for the purchases of inventory, fixed assets and for the sale ofgoods and services. During the course of our audit, we have not observed any continuingfailure to correct major weaknesses in the internal control system.
5. Transactions that need to be entered in the register maintained under section 301 ofthe Companies Act, 1956:
a) Based upon the audit procedures applied by us and according to the information andexplanations given to us, we are of the opinion that the particulars of contracts orarrangements referred to in section 301 of the Companies Act, 1956, have been entered inthe register required to be maintained under that section.
b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements entered in the registermaintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5.00 lac in respect of any party during the year, have been made at prices which arereasonable, having regard to prevailing market prices at the relevant time.
6. In our opinion and according to the information and explanations given to us, theCompany has not accepted any deposits from the public within the meaning of section 58A,58AA, or any other relevant provisions of the Companies Act, 1956 and the rules framedthere under. No order has been passed by the Company Law Board, or National Company LawTribunal, or Reserve Bank of India, or any Court, or any other Tribunal.
7. In our opinion, the Company has an internal audit system commensurate with the sizeof the Company and nature of its business.
8. We have broadly reviewed the books of account and records maintained by the Companyin respect of manufacture of soaps, cosmetics and toiletries pursuant to the Rules made bythe Central Government for maintenance of cost records, under section 209(l)(d) of theCompanies Act, 1956 and are of the opinion that prima facie, the prescribed accounts andrecords have been made and maintained. We have not, however, made a detailed examinationof the records with a view to determine whether they are accurate or complete. To the bestof our knowledge and according to the information given to us, the Central Government hasnot prescribed maintenance of cost records under section 209(1)(d) of the Companies Act,1956, for any other products of the Company.
9. Statutory Dues
a) According to the information and explanation given to us, the Company is regular indepositing undisputed statutory dues, including dues pertaining to Investor Education andProtection Fund, Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax,Wealth Tax, Service Tax, Custom Duty, Excise duty, Cess and any other statutory dues withthe appropriate authorities. We have been informed that there are no undisputed dues whichhave remained outstanding as at the end of the financial year, for a period of more thansix months from the date they became payable.
b) According to the information and explanations given to us, there are no dues ofincome-tax, sales tax, wealth tax, service tax, customs duty, excise duty or cessoutstanding on account of any dispute, other than the following:
| Name of Statute | Nature of Dues | Amount Rs. lac | Period to which the amount relates | Forum where dispute is pending |
| Central Excise Act, 1944 | Rate differences on account of soap scrap. | 61.54 | 2000-04 | CESTAT |
| Cenvat credit availed on input services. | 10.81 | 2009-10 | Commissioner of Central Excise (Appeal) |
| Excise duty claim in respect of non payment of education cess. | 118.27 | 2004-08 | Assistant Commissioner |
| Others | 21.94 | 1996-99 | Assistant Commissioner |
| | | 2007-08 | CESTAT |
| Excise duty in dispute pertaining to erstwhile Godrej Household Products Limited. | 18.43 | 2002-03, 2006-07 | Commissioner of Central Excise (Appeals), Chennai |
| Sales Tax Act | Interest on sales tax dues. | 12.07 | 2001-02 | High Court |
| Sales Tax Dues | 106.41 | 2004-05 | Sales Tax Authority |
| Sales Tax Dues | 17.58 | 2009-10 | Joint Commissioner (A) |
| Others | 28.62 | 2000-01 | Assistant / Joint/ Deputy Commissioner |
| | | 2002-03 | Sales Tax Authority |
| | | 2007-08 | |
| | | 2003-04 | |
| | | 2005-08 | |
| | | 2009-10 | |
| Sales tax in dispute pertaining to erstwhile Godrej Household Products Limited. | 31.70 | Financial Years 2002-03, 2003-04 and 2004-05 | Supreme Court of India |
| | 66.00 | Financial Year 2004-05 | Commercial Tax Officer (West Bengal) |
| | 502.78 | Financial Years 1998-99, 1999-00, 2001-02, 2002- 03, 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08. | Deputy Commissioner Commercial Taxes (Uttar Pradesh) and Deputy Commissioner Appeals (West Bengal, Maharashtra, Uttar Pradesh, Andhra Pradesh, Punjab, Orissa, Haryana, Jammu and Kashmir) |
| | 29.83 | Financial Years 2001-02, 2002-03, 2003-04, 2006- 07 and 2008-09 | Joint Commissioner (Appeals) (Uttar Pradesh, Orissa, Andhra Pradesh and Tamil Nadu) |
| | 89.52 | Financial Years 1994-95, 1999-00, 2000-01, 2001- 02, 2002-03 and 2003-04 | Sales Tax Tribunal (Bihar, Uttar Pradesh, Delhi, West Bengal, Karnataka) |
| | 1044.43 | Financial Years 1999-00, 2000-01, 2001-02, 2004- 05, 2005-06, 2006-07, 2007-08 and 2008-09 | High Court (Andhra Pradesh, Madhya Pradesh, Kerala, Rajasthan, Karnataka) |
| | 44.11 | Financial Years 2003-04 and 2004-05 | Commissioner (Appeals) (Andhra Pradesh, Bihar, Maharashtra) |
| The Entry Tax Act. | Entry Tax in dispute pertaining to erstwhile Godrej Household Products Limited. | 105.95 | Financial Years 2006-07 and 2007-08 | Supreme Court of India |
| | 22.67 | Financial Years 1999-2000 to 2003-04 | Commissioner (Appeals) (Madhya Pradesh) |
| The Finance Act, 1994. | Service Tax in dispute pertaining to erstwhile Godrej Household Products Limited. | 16.21 | September 2004 to November 2004 and February 2005 to June 2008 | Commissioner (Appeals) |
| Employee’s | Provident Fund in dispute | 252.95 | Financial Years 2005-06 to | Employees Provident Fund Appellate |
| Provident Funds and Miscellaneous Provisions Act, 1952. | pertaining to erstwhile Godrej Household Products Limited. | | 2009-10 | Tribunal, New Delhi. |
| Income-tax Act, 1961 | Appeal against order of regular assessment u/s143(3) of the Act. | 322.71 | Assessment Year 2006-07 | CIT(A) |
| Demand based on the order of regular assessment u/s 143(3) of the Act. | 34.91 | Assessment Year 2008-09 | AO |
| Demand based on the order of regular assessment u/s 143(3) of the Act. | 77.56 | Assessment Year 2009-10 | AO |
| Others | 402.26 | Assessment Year 2003-04, 2006-07, 2007-08 | CIT (A) |
| Income-tax in dispute pertaining to erstwhile Godrej Household Products Limited. | 60.72 | Assessment Year 2003-04 | Assessing Officer |
| | 267.63 | Assessment Year 2006-07 | Income-tax Appellate Tribunal |
| | 106.22 | Assessment Year 2007-08 | Commissioner of Income-tax (Appeals) |
10. The Company does not have accumulated losses as at the end of the financial year,nor has it incurred cash losses in the current financial year, or in the immediatelypreceding financial year.
11. According to the information and explanations given to us and based on thedocuments and records produced before us, there has been no default in repayment of duesto banks or debenture holders. There are no dues to financial institutions.
12. According to the information and explanations given to us and based on thedocuments and records produced before us, the Company has not granted any loans oradvances on the basis of security by way of pledge of shares, debentures or othersecurities.
13. In our opinion and according to the information and explanations given to us, thenature of activities of the Company does not attract any special statute applicable tochit fund and nidhi / mutual benefit fund / societies.
14. The Company does not deal or trade in shares, securities, debentures and otherinvestments.
15. According to the information and explanations given to us and the records examinedby us, the terms and conditions of guarantees given by the Company for loans taken by itssubsidiaries from banks are not prima facie prejudicial to the interest of the Company.
16. According to the information and explanations given to us and the records examinedby us, on an overall basis, the term loan obtained by the Company was applied for thepurpose for which the loan was obtained.
17. According to the information and explanations given to us and on an overallexamination of the Balance Sheet, the Cash Flow Statement and other records examined byus, the Company has used funds raised on short term basis for long term investment. TheCompany has used short term borrowings to the extent of Rs. 6993.26 lac for theacquisition of long term investments.
18. The Company has not made any preferential allotment of shares to any parties orcompanies covered in the register maintained under section 301 of the Companies Act, 1956.
19. The Company has issued unsecured redeemable non-convertible debentures during theyear in respect of which no security is required to be created.
20. The Company has not raised any money through a public issue during the year.
21. Based upon the audit procedures performed by us, to the best of our knowledge andbelief and according to the information and explanations given to us by the Management, nofraud on, or by the company, has been noticed or reported during the year.
For and on behalf of
KALYANIWALLA & MISTRY
CHARTERED ACCOUNTANTS
Firm Regn. No.: 104607W
Daraius Z. Fraser
PARTNER
M. No.: 42454
Mumbai: May 2, 2011.