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Godrej Consumer Products

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Mar 16
Auditor's Report (Godrej Consumer Products) Year End : Mar '17

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone Ind AS financial statements of GODREJ CONSUMER PRODUCTS LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as ''Standalone Ind AS financial statements’).

Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act, read with relevant rules issued thereunder,

This responsibility also includes maintenance of adequate accounting records in accordance with the provision 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 standalone Ind AS 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 Ind AS financial statements based on our audit,

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder,

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement,

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS 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 Ind AS financial statements,

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the financial position of the Company as at March 31, 2017 and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date,

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 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 (including other comprehensive income), the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account,

d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act, read with relevant rules issued thereunder,

e) On the basis of the written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 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 standalone Ind AS financial statements - Refer Note 40 to the standalone Ind AS financial statements,

ii, The Company did not have any material foreseeable losses on long term contracts including derivative contracts requiring provision under the applicable law or accounting standards,

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

iv, The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016, Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management - Refer Note 47 to the standalone Ind AS financial statements,

ANNEXURE A TO THE INDEPENDENT AUDITOR’S REPORT

Referred to in Para 1 ‘Report on Other Legal and Regulatory Requirements’ in our Independent Auditors’ Report to the members of the Company on the standalone Ind AS financial statements for the year ended March 31, 2017.

Statement on Matters specified in paragraphs 3 & 4 of the Companies (Auditor’s Report) Order, 2016:

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

b) As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals, In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies reported on such verification are not material and have been properly dealt with in the books of account.

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

ii) The Management has conducted physical verification of inventory (excluding stocks lying with third parties) at reasonable intervals. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable. The discrepancies reported on such verification are not material and have been properly dealt with in the books of account.

iii) The Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties listed in the register maintained under section 189 of the Companies Act. Accordingly, the provisions of sub-clause (a), (b) and (c) of paragraph 3 (iii) of the Order are not applicable, to the Company,

iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to investments made, guarantees given and securities provided,

v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of section 73 to 76, or any other relevant provisions of the Companies Act and the rules framed there under. No order has been passed by the Company Law Board, or National Company Law Tribunal, or Reserve Bank of India, or any Court, or any other Tribunal,

vi) We have broadly reviewed the books of accounts and records maintained by the Company in respect of manufacture of products covered under the Rules made by the Central Government for maintenance of cost records, under section 148 (i) of the Companies Act, 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 records with a view to determine whether they are accurate or complete,

vii) a) According to the information and explanation given to us and the records examined by us, the Company is generally regular in depositing undisputed statutory dues, including dues pertaining to provident fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities, wherever applicable and there are no such outstanding dues as at March 31, 2017, for a period of more than six months from the date they became payable,

b) According to the information and explanations given to us and the records of the Company examined by us, dues of income tax, sales tax, service tax, customs duty and excise duty not deposited on account of dispute are as follows:

Name of Statute Nature of Dues

Amount (Rs.)

Period

Forum where Dispute is pending

Central Excise Act, 1944

Duty on one to one correlation in terms of excisable material purchased and cleared final product with reference to the said material wherein the benefit under notification No, 32 of 99 availed

3,824,264

2002-03

The Hon''ble Supreme Court of India

7,302,990

2001-03

The Hon''ble Supreme Court of India

CENVAT credit availed on Capital Goods

1,755,920

2007-08

CESTAT, Chennai

86,115

2002-03

Advertisement Service- Credit availed as Input

2,837,962

2008-09

Commissioner of Central Excise (Appeals)

Input Service Tax Distribution Credit availed

3,219,974

2006-08

Commissioner of Central Excise (Appeals)

Service Tax not paid on Royalty (Foreign Payment)

27,167,930

2004-08

Commissioner of Central Excise (Appeals)

Cenvat credit availed on goods received from Emox

64,146,884

2007-08

CESTAT, Chennai

Valuation of Soap Noodles transferred from Malanpur factory to Himachal Pradesh factories

144,754,226

2007-12

CESTAT, Delhi

Cenvat credit on input services availed based on the invoices issued by suppliers to the branches prior to registration,

543,416

2007-12

CESTAT, Chennai

Allegations of non- manufacturing of shoe polish brush

6,174,082

2011-12

CESTAT, Chennai

Valuation of Mosquito Repellant supplied from Guwahati factories to Emox Puducherry

55,307,174

2008-12

CESTAT, Kolkata

Excise valuation dispute on account of non compete fees and trademark license fees paid by PGG (JV between Godrej Soaps Limited and Proctor and Gamble) to Godrej

103,600,000

1993-96

The Hon''ble Supreme Court of India

Distribution of Cenvat Credit by Head Office to

243,129,676

2008-12

Commissioner of Central Excise

Other Factories

196,719,214

2006-12

CESTAT, Chennai

Valuation of PHD - Differential demand between Section 4 and 4A valuation

78,976,342

2008-14

Commissioner of Central Excise

Valuation of Combi pack which are marked as Goods for Export

3,045,410

2007-08

CESTAT, Chennai

Central Excise Act,1994

Violation of Target Plus Scheme of Customs

8,249,528

2007-08

CESTAT, Chennai

CENVAT credit availed on the grounds of valuation methodology adopted by one plant while transferring goods from Lokhra plant

14,7762,862

2008-13

CESTAT, Chennai

Self credit taken by Sikkim Unit denied by Asst Commissioner

26,044,314

Commissioner Appeals

CENVAT credit availed on supplementary invoices issued by GCPL to Emox upon payment of differential duty by GCPL,

4,456,848

2009-10

CESTAT, Chennai

CENVAT credit availed on account of account of trading activity conducted

37,845,678

2009-12

CESTAT, Mumbai

Recovery of Service tax on processing activity done by Colortek for Lokhra operations

43,394,056

2009-14

CESTAT, Kolkata

Service Tax on Business Support Service provided by third party

37,552,534

2009-14

CESTAT, Kolkata

Cenvat Credit disallowance on outward transportation

225,200

2014-15

Commissioner of Central Excise (Appeals), Kolkata

Utilisation of Cenvat credit to pay Education Cess and Higher Education Cess demanded back by authorities

22,934,798

2010-16

Commissioner of Central Excise (Appeals), Kolkata

Others

951,996

2007-08

CESTAT, New Delhi

282,382

2008-09

CESTAT, Kolkata

442,266

2003-04

Commissioner of Central Excise (Appeals), Chennai

425,056

2007-08

Commissioner Excise

Central Sales Tax

Sales Tax Dues on account of Classification

34,232,967

2005-07

Appellate Authority

Act, 1956

Head

2009-13

& Value Added Tax Act of Various States

82,519,288

1996-97

2005-09

2011-12

Assessing Officer

3,278,512

2008-2014

Appellate Deputy Commissioner, Vizag and Hyderabad

19,918,004

2009-2011

Commissioner Commercial Taxes, Ernakulum

2124000

1998-99

Deputy Commissioner Appeals

39,157,279

2006-09

High Court, Rajasthan

187,351,651

2005-15

High Court, Andhra Pradesh

2,396,904

2000-05

2006-07

High Court, Madhya Pradesh

784,488

2014-15

Joint Commissioner Appeals, Chennai

12,462,631

2012-13

Joint Commissioner Appeals, Uttarakhand

18,993,960

2015-16

Assistant Commissioner

16,448,458

2013-15

Uttar Pradesh Tribunal

555,281

2013-2015

Andhra Pradesh Tribunal

1,642,753

2000-02

2005-06

Bihar Tribunal

2369744

2013-14

Madhya Pradesh Tribunal

3,208,868

2003-05

Supreme Court of India

Central Sales Tax

Check post case

1,610,000

2010-11

Appellate Authority

Act, 1956 & Value Added Tax Act of Various States

Entry Tax

19,724,486

2005-08

2010-13

Appellate Authority

5,790,286

2005-13

Assessing Officer

1,451,267

1999-00

2005-06

Madhya Pradesh High Court

Non submission of C and F Forms

4,415,747

2002-11

2012-13

Assessing Officer

1,048,019

1997-99

2004-09

Appellate Authority

19,449,405

2009-10

Andhra Pradesh High Court

6,867,888

2003-04

Karnataka High Court

8,212,639

2009-10

Kolkata High Court

Truck Detention cases

314,721

2004-05

UP. High Court

3,126,227

2004-05

2007-10

2013-17

Assessing Officer

370,953

2013-14

Appellate Authority

Other Sales Tax Dues

34,737,177

2001-12

Appellate Authority, West Bengal;

2013-14

High Court, Andhra Pradesh and Tamil Nadu; Assessing Officer; Joint Commissioner (Appeals), Mumbai; Tribunal, Bihar and UP.

Income Tax Act,

Demand based on the order of regular

1,082,401

AY 2010-11

Income - tax Appellate Tribunal

1961

assessment u/s 143(3) of the Act,

Income-tax in dispute pertaining to erstwhile

92,200

AY 2006-07

High Court

Godrej Household Products Limited,

99,136,617

AY 2006-07 to 2010-11

Income tax Appellate Tribunal

viii) According to the information and explanations given to us and based on the documents and records produced before us, there has been no default in repayment of loans or borrowings to financial institutions, banks or debenture holders. There were no loans or borrowings taken from the government during the year,

ix) According to the information and explanations given to us and the records examined by us, no moneys were raised either by way of initial public offer or further public offer (including debt instruments) or term loans by the Company during the year,

x) Based upon the audit procedures performed by us, to the best of our knowledge and belief and according to the information and explanations given to us by the Management, no material fraud on, or by the Company, has been noticed or reported during the year,

xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act,

xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company, Accordingly, paragraph 3(xii) of the Order is not applicable,

xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards,

xiv) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year,

xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him, Accordingly, paragraph 3(xv) of the Order is not applicable,

xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934 and hence the provisions of paragraph 3(xvi) of the Order is not applicable,

For KALYANIWALLA & MISTRY

Chartered Accountants

Firm Registration No, 104607W

Roshni R. Marfatia

Partner

M, No,: 106548

Mumbai: May 9, 2017

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