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2. We conducted our 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 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 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the CompaniesAct, 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 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;
iii. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;
iv. 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 sub-section (3C) of section 211 of the Companies Act, 1956;
v. On the basis of the written representations received from the directors, as on December 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on December 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the CompaniesAct, 1956;
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the CompaniesAct, 1956, 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 affairs of the Company as at December 31, 2012;
b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
c) in the case of Cash Flow Statement of the cash flows for the year ended on that date.
Annexure referred to in paragraph 3 of our report of even date Re: Bata India Limited
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.
(c) There was no substantial disposal of a part of fixed assets during the year.
(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.
(b) 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) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.
(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Companies (Auditor's Report) Order, 2003 (as amended) (the Order) are not applicable to the Company and hence not commented upon
(b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the CompaniesAct, 1956. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us, 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. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.
(v) (a) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.
(vi) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.
(vii) In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, related to the manufacture of Shoes and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.
(ix) (a) 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 other material statutory dues have generally been regularly deposited with the appropriate authorities.
(b) According to the information and explanations given to us, no undisputed dues payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:
Name of the Nature of dues Amount Period to Forum where statute (Rs. million) which the dispute is amount relates pending
Various State MRP-Tax on tax case 16.48 1987-88 to High Court, Chennai Sales Tax Acts 2001-02
Various State Purchase Tax Dispute at 5.10 1984-85 Supreme Court Sales Tax Acts Faridabad
Various State Revenue recovery against 6.70 1994-95 STAT, Kerala Sales Tax Acts non-payment of demand 1998-99 in assessment 1999-00 2000-01
Various State Tax in dispute u/s 92 of 2.78 1991-92 High Court, UP Sales Tax Acts Central Sales tax Act regarding non- submission of forms
Various State Misclassification of Article 21.38 2005-06 to High Court, Kerala Sales Tax Acts for VAT Payment 2006-07
Central Excise Excise Duty demand on 1.50 1987-88 CESTAT-Kolkata Act, 1944 closing balance of exempted footwear.
Central Excise Duty demanded for sale 7.03 1997-1999 Commissioner of Act, 1944 of footwear at domestic Central Excise, Tariff area of which final Chennai hearing before commissioner concluded and order is pending
Central Excise Disallowance for trade 2.75 1995-97 CESTAT-Chennai Act, 1944 discount for sale of footwear to retail outlet
Central Excise Excise duty demanded for 15.56 2004-05 CESTAT-Kolkata Act, 1944 movement of raw material to job worker without payment of duty
Central Excise Disallowing of abatement 9.00 2006 CESTAT,Kolkata Act,1944 @ 40% on MRP for 2007 Institutional Sales. Sale of 2008 Industrial Boots & Mines 2009 Safety Boots. 2010
Central Excise Non compliance of the 21.48 2008 CESTAT,Kolkata Act, 1944 condition of the notification for marking MRP on factory seconds cleared on payment of appropriate C.E duty.
Central Excise Exclusion of sales tax 3.00 2009 CESTAT,Kolkata Act, 1944 @ 8% for payment of an amount equal to 8% /10% on exempted footwear as per CCR 6(3)(b).
Finance Act, Disallowance of Service tax 4.34 2006-2010 Commissioner of 1994 Credit on input service Central Excise, availed for outward Kolkata transportation
Customs Act, Duty demand on account of 10.34 2001 CESTAT-Kolkata 1942 short levy of customs duty (anti dumping duty) for which hearing before commissioner concluded and the order received.
Customs Act, Wrong availment of 81.20 1998-2003 CESTAT-Kolkata 1942 concessional rate of customs duty etc. against which the hearing has not finalized as yet
(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.
(xi) The Company has neither taken any loan from financial institution or banks nor issued any debentures, therefore the provisions of Clause 4(xi) of the Order are not applicable, hence not commented upon.
(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments.Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.
(xv) 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.
(xvi) The Company did not have any term loans outstanding during the year.
(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds have been raised on short-term basis.
(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the CompaniesAct, 1956.
(xix) The Company did not have any outstanding debentures during the year.
(xx) The Company has not raised any money by way of public issue during the year.
(xxi) We have been informed that there have been cash and stock shortages at certain retail locations of Rs.2.11 million and Rs.8.22 million, respectively during the year under audit. The Company has recovered Rs.6.04 million against the said shortages and has made provision for the balance amount in the books of account. Necessary action, such as termination of concerned persons, filing of police complaint, etc. has been initiated by the Company in this regard.
For S.R.BATLIBOI & CO.
Firm Registration No.: 301003E
per Rajiv Goyal
Place: Gurgaon Partner
Date: February 26, 2013 Membership No.: 94549