1 We have audited the attached Balance Sheet of Lotte India Corporation
Limited (the Company) as at December 31, 2011, the Profit and Loss
Account and the 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 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
3 As required by the Companies (Auditor''s Report) Order, 2003 (as
amended), 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 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
a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of the
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
c) the Balance Sheet, Profit and Loss account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
d) in our opinion, the Balance Sheet, Profit and Loss account and Cash
Flow Statement dealt with by this report comply with the Accounting
Standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956.
e) on the basis of written representations received from the Directors,
as on December 31, 2011 and taken on record by the Board of Directors,
we report that none of the directors is disqualified as on December 31,
2011 from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956; and
f) in our opinion and to the best of our information and according to
the explanations given to us, the said financial statements give the
information required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at December 31,2011; and
ii. in the case of the Profit and Loss Account, of the profit for the
year ended December 31, 2011.
iii. in the case of the Cash Flow Statement, of the cash flows forthe
year December 31,2011
ANNEXURE TO AUDITORS'' REPORT (Referred to in our report of even date)
(i) a. The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
b. The Company has a regular programme of physical verification of its
fixed assets by which all fixed assets are verified in a phased
manner over a period of three years. In our opinion, this periodicity
of physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this
programme, certain fixed assets were verified during the year and as
explained to us, no material discrepancies were noticed on such
c. Fixed assets disposed off during the period were not substantial,
and therefore, do not affect the going concern assumption.
(ii) a. The inventory, except for stocks lying with third parties, have
been physically verified by the management during the year. In our
opinion, the frequency of such verification is reasonable. For stocks
lying with third parties at the year-end, written confirmations have
b. The procedures for the physical verification of inventories
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 is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material and have been properly dealt with in
the books of accounts.
(iii) The Company has neither granted nor taken any loans, secured or
unsecured, to or from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company''s
specialised requirements and suitable alternative sources are not
available to obtain comparable quotations, 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 inventories and
fixed assets and with regard to the sale of goods. We have not observed
any major weakness in the internal control system during the course of
(v) a. In our opinion, and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in section 301 of the Companies Act, 1956 have been entered
in the register required to be maintained under that section.
b. In our opinion, and according to the information and explanations
given to us, the transactions made in pursuance of contracts and
arrangements referred to in (a) above and exceeding the value of Rs 5
lakh with any party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the
relevant time except for purchases of certain items of inventories for
the Company''s specialised requirements and for which suitable
alternative sources are not available to obtain comparable quotations.
However, on the basis of information and explanations provided, the
same appear reasonable.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
(viii) According to the information and explanations given to us, the
Central Government has not prescribed the maintenance of cost records
under section 209(1) (d) of the Companies Act, 1956 for any of the
products manufactured by the Company. Accordingly, provisions of Para 4
(viii) of the Order relating to maintenance of cost records under
section 209(1) (d) of the Act are presently not applicable to the
(ix) 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, Customs duty, Excise
duty, Cess and other material statutory dues have generally been
regularly deposited during the year by the Company with the appropriate
authorities. As explained to us, the Company did not have any dues on
account of Investor Education and Protection Fund.
b. According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees''
State Insurance, Income tax, Sales tax, Wealth tax, Service tax,
Customs duty, Excise duty, Cess and other material statutory dues were
in arrears as at December 31,2011 for a period of more than six months
from the date they became payable.
c. According to the information and explanations given to us, the
following dues in respect to Excise duty, Service Tax and Sales Tax
which have not been deposited on account of disputes.
Name of the Nature of Amount Period to
which Forum where
statute the dues (Rs. in l
akhs) the amount the dispute
1944 Excise duty 11.04 2007 Pending before
Act, 1944 Excise duty 115.62 2008 Pending before
1944 Excise duty 77.75 2005 Pending before
1944 Excise duty 0.55 2009 Commissioner of
Act, 1944 Excise duty 12.19 2006 Pending before
Sales Tax Act Sales Tax 19.05 1999-2008 Pending before
Act Income tax 217.24 2005-06 Commissioner of
(x) The Company has accumulated losses at the end of the financial year
which does not exceed 50% of the net worth of the Company. The Company
has not incurred cash losses in the financial year and in the
immediately preceding financial year.
(xi) The Company did not have any outstanding debentures or any
outstanding loans from any financial institution or bank during the
(xii) The Company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi/mutual benefit
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) The Company did not have any term loans outstanding during the
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, we are of
the opinion that the funds raised on short-term basis have not been
used for long- term investment
(xviii) The Company has not made any preferential allotment of shares
to companies/firms/parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the
(xx) The Company has not raised any money by public issues.
(xxi) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
for B S R & Company
Firm Registration No. 128032W
Vikas R Kasat
March 30,2012 Membership No. 105317