1. We have audited the attached Balance Sheet of RADICO KHAITAN
LIMITED as at 31st March, 2012 and also the Statement of Profit and
Loss and Cash Flow Statement of the Company 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 the 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 the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. We report that
(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary the purposes of our
(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
(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
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in section 211 (3C) of the Companies
Act, 1956 to the extent applicable;
(e) On the basis of written representations received from the directors
and taken on record by the Board of Directors, we report that none of
the directors are prima facie, disqualified as on 31.03.2012 from being
appointed as directors of the Company in terms of section 274(1 )(g) of
the Companies Act, 1956.
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts and read with the
significant accounting policies and notes thereon, 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 31st March, 2012;
ii in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
iii in the case of cash flow statement, of the cash flows for the year
ended on that date.
4. As required by the Companies (Auditors Report) Order, 2003 (as
amended) issued by the Department of Company Affairs, Govt, of India in
terms of Section 227 (4A) of the Companies Act, 1956, and on the basis
of such checks as we considered appropriate and according to the
information and explanations given to us, we further report on the
matters specified in the paragraphs 4 and 5 of the said Order as under
a) The Company is maintaining proper records showing full particulars,
including quantitative details and situation of fixed assets.
b) The management has physically verified major part of the fixed
assets at the distillery at Rampur and other locations once during the
year. The assets physically verified are under reconciliation with the
book records and discrepancies, if any, can be ascertained only after
the reconciliation is complete.
c) Since there is no substantial disposal of fixed assets during the
year, the preparation of financial statements on a going concern basis
is not affected on this account.
ii a) On the basis of information and explanations obtained, stocks of
finished goods and raw materials of the distillery / bottling units
have been under physical check by the excise department in coordination
with the Company''s supervisory staff at frequent intervals. Other
stocks, stores and spares, at various locations have been physically
verified by the management during the year. In our opinion, 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) In our opinion, the Company is maintaining proper records of
inventory and no material discrepancies were noticed on physical
iii a) The Company has granted Rs. 1963.03 lacs as interest free
unsecured working capital advance under a specific manufacturing and
selling arrangement and Rs.1000 lacs as interest bearing unsecured
advance to a joint venture company. The maximum amounts outstanding
during the year aggregated to Rs.3028.86 lacs and year end outstanding
balance aggregated to Rs.3028.86 lacs respectively.
b) Keeping in view similar arrangement with other parties, the working
capital arrangement financed by the Company is free of interest under a
specific manufacturing and selling arrangement. In relation to both
advances, there are no other terms and conditions that are prejudicial
to the interest of the Company.
c) There is no stipulation regarding repayment of principal as the
amount has been financed under a specific manufacturing and selling
arrangement with the party. As mentioned above, the loan has been
financed interest free. In the case of interest bearing advance also,
there are no stipulations regarding repayment of principal and interest
of Rs.56.38 lacs has accrued but not due as at the year end.
d) As mentioned above, there are no stipulations regarding repayment of
principal. Accordingly, there is no overdue amount of more than rupees
one lac in respect of amount financed to the Company listed in the
register maintained under section 301 of the Companies Act, 1956.
e) The Company has not taken any loans, secured or unsecured from
companies, firms or other parties required to be covered in the
register maintained under section 301 of the Companies Act, 1956 except
interest free working capital advance taken from a joint venture
company (ceased to be a joint venture w.e.f.: 3rd February, 2012) under
a specific manufacturing and selling arrangement. The maximum amount
outstanding during the year was Rs,384.08 lacs and year-end outstanding
balance was Rs.360.42 lacs.
f) In our opinion and according to the information and explanations
given to us, other terms and conditions for such advances are not prima
facie prejudicial to the interest of the Company.
g) In respect of the advances taken, there is no repayment schedule and
is interest free. Thus question of principal amount due for repayment
and payment of interest do not arise.
iv In our opinion and according to the information and explanations
given to us, there are 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 with regard to the sale of
goods. During the course of our audit, we have neither come across nor
have been informed of any continuing failure to correct major
weaknesses in the internal control system.
v a) According to the information given to us, the particulars of
contracts or arrangements during the year that need to be entered into
a register in pursuance of section 301 of the Companies Act, 1956 have
been so entered.
b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements, exceeding the value of rupees five lacs, are of specific
requirements of the Company for which alternative sources are not
available for comparison of prevailing market prices.
vi The Company has not accepted deposits from the public within the
meaning of sections 58A and 58AA or any other relevant provisions of
the Companies Act, 1956 and the Rules framed there under.
vii An outside agency has carried out internal audit during the year.
In our opinion, the internal audit system of the Company is
commensurate with the size of the Company and the nature of its
viii We have broadly reviewed the books of accounts maintained by the
Company, pursuant to rules made by the Central Government for the
maintenance of cost records under clause (d) of sub-section (1) of
section 209 of the Companies Act, 1956 and are of the opinion that
prima facie, the prescribed accounts and records have been maintained
and the required statements are in the process of compilation. We have
not, however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
ix a) According to the records of the Company, the Company has been
generally regular in depositing 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 any other statutory dues with the
appropriate authorities. According to the information and explanations
given to us, there were no arrears of undisputed statutory dues as at
31st March, 2012, which were outstanding for a period of more than six
months from the date they became payable.
b) According to the records of the Company and the information and
explanation given to us, there are no dues of income-tax, wealth tax,
custom duty and cess, which have not been deposited on account of any
dispute. Details of disputed dues in respect of sales tax, excise duty
and service tax of different years, which have remained unpaid as on
31st March, 2012, for which appeals are pending are as under:
Nature of Year Amount Forum where
dues (Rs. in lacs) pending
Sales Tax /
Entry Tax 1998-99 3.02 Revision before
& 1999-00 Allahabad
1999-00 6.86 Trade Tax
Excise Duty 1981 17.37 Allahabad
High Court -
1995 to 2005 92.38 Allahabad High
2008-09 56.03 Allahabad High
Service Tax July 2003 to 8259.47 CESTAT. Delhi
x The Company has no accumulated losses as at the end of the year and
has not incurred cash losses during the financial year covered by our
audit or in the immediately preceding financial year.
xi On the basis of the verification of records and information and
explanations given to us, the Company has not defaulted in repayment of
dues to financial institutions or banks. There are no debentures (other
than unsecured FCCBs which were repaid during the year) outstanding in
the books of accounts at any time during the year.
xii The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xiii The Company is not a chit fund / nidhi / mutual benefit fund /
society. Therefore, the provisions of clause 4(xiii) of the Companies
(Auditors Report) Order are not applicable to the Company.
xiv As regards dealing or trading in shares, securities, debentures and
other investments, proper records have been maintained of the
transaction of the contracts and timely entries made therein. The
shares, securities, debentures and other investments have been held by
the Company in its own name except to the extent of exemption, if any,
granted under Section 49 of the Companies Act, 1956.
xv The Company has given a guarantee of Rs.5640 lacs for loans taken by
Radico NV Distilleries Maharashtra, (a joint venture company, in which
the Company holds 36% of the paid-up Capital) from a bank. On the basis
of information and explanations given to us, the terms and conditions
whereof are not, prima facie, prejudicial to the interest of the
xvi On the basis of verification and information and explanations
obtained, on an overall basis, the term loans taken have been applied
for the purpose for which they were obtained.
xvii According to the information and explanations given to us, the
cash flow statements examined by us and on an overall examination of
the financial statements of the Company, we report that funds raised on
short term basis have been not been used for long term investments.
xviii During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under section 301 of the Act.
xix As the Company has no outstanding debentures during the year (other
than unsecured FCCBs, which were repaid during the year), the question
of creating securities or charge does not arise.
xx The Company has not raised any money through public issue of
securities during the year and therefore verification of the end use of
money does not arise.
xxi Based on the audit procedure performed and the representation
obtained from the management, we report that no case of fraud on or by
the Company has been noticed or reported during the year under audit.
For V. Sankar Aiyar & Co.
ICAI Firm Regn. No. 109208W
Place: New Delhi (M.S. Balachandran)
Date : 30.05.2012 Partner