Balmer Lawrie and Company

1.  We have audited the attached Balance Sheet of Balmer Lawrie and
 Company Limited (the Company) as at March 31, 2009, and also the Profit
 and Loss Account and Cash Flow Statement for the year ended on that
 date annexed thereto, in which are incorporated the accounts of the
 Regions audited by Branch Auditors in accordance with the letter of
 appointment issued by the Comptroller and Auditor General of India.
 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 the auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement.  An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor’s Report) Order, 2003 (’the
 order’) as amended, issued by the Central Government of India in terms
 of Section 227 (4A) of the ‘Companies Act, 1956’ of India (the Act), we
 enclose in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that :
 
 (i) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (ii) In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books. The related Branch Auditor’s Reports have been forwarded
 to us and have been appropriately dealt with in preparing this report;
 
 (iii) The Balance Sheet, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) In our opinion, the Profit and Loss Account, Balance Sheet and
 Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in Section 211 (3C) of the Act;
 
 (v) This being Government company, the provisions of Section 274(1)(g)
 of the Act relating to disqualifications of directors are not
 applicable, vide Government of India, Department of Company Affairs
 Notification No. GSR 829(E) dated 21 October, 2003.
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 and accounting policies thereon and annexed thereto, 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 the Company’s
 affairs as at March 31,2009;
 
 (b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to Auditors Report
 
 The Annexure referred to in paragraph 3 of the Auditor’s Report of even
 date to the Members of Balmer Lawrie and Company Limited (’the
 Company’) on the financial statements for the year ended 31st March
 2009. We report that :
 
 1. (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a regular programme of physical verification of its
 fixed assets by which plant and machinery are verificed every year, and
 other fixed assets are verified in a phased manner over a period of
 three years which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As explained to us,
 in accordance with this programme, plant and machinery and certain
 other fixed assets were verified during the year and no material
 discrepancies were noticed on such verification.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has not disposed off a substantial part of the
 fixed assets during the year.
 
 2. (a) The inventory of the Company has been physically verified during
 the year by the management. In our opinion, having regard to the nature
 and location of inventory, the frequency of verification is reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the management are reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) On the basis of our examination of the inventory records, in our
 opinion, the Company has maintained proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  As represented to us, there are no companies, firms or other
 parties to be listed in the register maintained under Section 301 of
 the Companies Act, 1956 (’the Act’). Accordingly, paragraphs 4(iii)(b)
 to 4(iii)(g) of the Order are not applicable.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, there is an adequate
 internal control system commensurate with the size of the company and
 the nature of its business, for the purchase of inventory and fixed
 assets and for the sale of goods and services.
 
 Further, on the basis of our examination of the books and records of
 the Company, and according to the information and explanations given to
 us, we have neither come across nor have been informed of any
 continuing failure on the part of the Company to correct major
 weaknesses in the aforesaid internal control system.
 
 5.  In veiw of our comment in paragraph (3) above, paragraphs 4(v)(a)
 and 4(v)(b) of the Order in respect of contracts or arrangements
 referred to in Section 301 of the Act, and transactions made in
 pursuance of such contracts or arrangements exceeding the value of five
 lakh rupees in respect of any party, are not applicable to the Company.
 
 6.  The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 7.  In our opinion, the company’s present internal audit system (a firm
 of chartered accountants has been appointed for the purpose) as
 conducted in a phased manner is commensurate with the size and nature
 of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company in respect of the products of Grease and Lubricants (Petroeum
 products) and Tea Blending where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under Section 209(1)(d) of the Act, and are of the opinion
 that prima facie, the prescribed accounts and records have been made
 and maintained. We have, however, not made a detailed examination of
 such records with a view to determine whether they are accurate or
 complete.
 
 To the best of our knowledge and according to the information and
 explanations given to us, the Central Government under the aforesaid
 Act has not prescribed the maintenance of cost records for any other
 products or services of the Company.
 
 9.  (a) According to the information and explanations given to us and
 the records of the Company examined by us, the Company is generally
 regular in depositing with the appropriate authorities undisputed
 statutory dues including provident fund, investor education and
 protection fund, employees’ state insurance, income-tax, sales-tax,
 wealth tax, service tax, customs duty, excise duty, cess and any other
 material statutory dues applicable to it.
 
 Further, there were no dues on account of cess under Section 441A of
 the Act, since the aforesaid section has not yet been made effective by
 the Central Government of India.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 income-tax, sales-tax, service tax, excise duty and cess as at 31st
 March, 2009 aggregating to Rs. 6,101.52 lakhs, which have not been
 deposited on account of a dispute, are as mentioned in note 15.2(a)
 (Annexure-A) of Schedule 15 to the accounts showing the amounts
 involved and the forum where dispute is pending.
 
 10.  The Company has no accumulated losses as at 31st March, 2009, and
 it has not incurred any cash losses during the financial year ended on
 that date or in the immdiately preceding financial year.
 
 11.  According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank as at the
 balance sheet date. The Company has not debenture holder.
 
 12.  The company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  In our opinion, the provisions of any special statute applicable
 to chit fund/nidhi/mutual benefit fund/societies are not applicable to
 the company.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not dealing or trading in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from bank or financial institutions.
 
 16.  In our opinion, and according to the information and explanations
 given to us, and on an overall basis, the term loans have been applied
 for the purposes for which they were obtained. The Company did not have
 any outstanding term loan as at 31 March, 2009.
 
 17.  On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on short- term
 basis which have been used for long-term investment during the year.
 
 18.  In view of our comment in paragraph (3) above, the question of any
 preferential allotment of shares to parties and companies covered in
 the register maintained under Section 301 of the Act does not arise.
 
 19.  The Company has not issued any debentures during the year and no
 amount is outstanding in respect of debentures as on the balance sheet
 date.
 
 20.  The Company has not raised any money by public issued during the
 year.
 
 21.  During the course of our audit, and according to the information
 and explanations given to us, we have neither come across any instance
 of fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                                        For GUPTA & CO.  
                                                  Chartered Accountants
 
                                                          S. K. GANGULI 
                                                                Partner
 Kolkata, June 15, 2009                           Membership No. : 6622