Report on the Financial Statements
We have audited the accompanying Financial Statements of BLUE BLENDS
(INDIA) LIMITED (the Company), which comprise the Balance Sheet as at
March 31, 2014, the Statement of Profit & Loss and the Cash Flow
Statement for the year then ended and a Summary of Significant
Accounting Policies and other Explanatory Information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these Financial
Statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Principles generally accepted in India including
Accounting Standards referred to in Section 211(3C) of the Companies
Act, 1956 (the Act). This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the Financial Statements that give a
true and fair view and free from material misstatement, whether due to
fraud or error.
Our responsibility is to express an opinion on these Financial
Statements based on our Audit. We conducted our Audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the Financial Statements are free
from material misstatements.
An Audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the Financial Statements. The procedures
selected depend on the Auditor''s judgment, including the assessment of
the risk of material misstatement of the Financial Statements, whether
due to fraud or error. In making those risk assessments, the Auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the Financial Statements in order to design audit
procedures that are appropriate in the circumstances. An Audit also
includes evaluating the appropriateness of Accounting Policies used and
the reasonableness of the Accounting estimates made by Management, as
well as evaluating the overall presentation of the Financial
We believe that the Audit evidence we have obtained is sufficient and
appropriate to provide a basis for our Audit opinion.
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid 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:
(a) In the case of the Balance Sheet, of the state of Affairs of the
Company as at March 31, 2014;
(b) In the case of the Statement of Profit & Loss, 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order) issued by the Central Government of India in terms of Section
227 (4A) of the Act, we give in the Annexure, a Statement on the
matters specified in paragraphs 4 and 5 of the Order.
2. As required by Section 227(3) of the Act, we report that:
(a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose 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, the Statement of Profit & Loss and the Cash
Flows Statement dealt with by this Report are in agreement with the
books of Account.
(d) In our opinion, the Balance Sheet, the Statement of Profit & Loss,
and the Cash Flow Statement comply with the Accounting Standards
referred to in section 211(3C) of the Act.
(e) On the basis of the written representations received from the
Directors as on March 31, 2014, taken on record by the Board of
Directors, none of the Directors is disqualified as on March 31, 2014,
from being appointed as a Director in terms of Section 274(1)(g) of the
Annexure to Independent Auditors'' Report
Referred to in Paragraph 1 under the head of Report on Other Legal and
Regulatory Requirements of our report of even date.
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full Particulars
details including quantitative details and situation of fixed assets on
the basis of information available.
(b) As explained to us, the management during the year has physically
verified the fixed assets in a phased periodical manner, which in our
opinion is reasonable, having regard to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
(c) In our opinion, the Company has not disposed off substantial part
of its fixed assets during the year except sale of leasehold land of
its closed manufacturing unit situated at Panoli and the going concern
status of the Company are not affected.
(ii) In respect of its inventories:
(a) As explained to us, the management has physically verified
inventories during the year. In our opinion the frequency of
verification is reasonable.
(b) In our opinion and according to the information and explanations
given to us, the procedures of 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 has maintained proper records of inventories. As
explained to us, there was no material discrepancies noticed on
physical verification as compared to the book records.
(iii) In respect of the loans, secured or unsecured, granted or taken
by the Company to / from companies, firms or other parties covered in
the Register maintained under Section 301 of the Companies Act, 1956:
a) The Company has given any loans/advances to three such parties
during the year. In respect of loans/advances given to such parties,
the maximum amount outstanding at any time during the year was Rs.
3313.61 lacs and the year-end balance is Rs.1514.27 lacs.
b) In our opinion and according to the information and explanations
given to us, the rate of interest, wherever applicable and other terms
and conditions of the loans/advances given by the Company are prima
facie not prejudicial to the interest of the Company.
c) The principal amounts are repayable on demand and the loans/advances
given are interest free.
d) In respect of the said loans/advances and interest thereon, there
are no overdue amounts.
e) The Company has taken loan from three such parties during the year
and in respect of loans taken from such parties, the maximum amount
payable at any time during the year was Rs.304.62 lakhs and the year
end balance is Rs. 225.26 lakhs.
f) In our opinion, and according to the information and explanations
given to us, the rate of interest and other terms and conditions were
not prejudicial to the interest of the Company.
g) The principal amount of the loan was repayable on demand and
interest, if any, was also payable on demand.
(iv) In our opinion and according to the information and explanation
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business. During the course of our audit, we have not observed any
major weaknesses in internal controls.
(v) In respect of transactions covered under section 301 of the
Companies Act, 1956:
(a) In our opinion and according to the information given to us, the
transactions made in pursuance of contracts or arrangements that needed
to be entered into in the register maintained under 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, where such transactions are in excess of Rs. 5 lakhs in
respect of any party, the transactions have been made at prices which
are prima facie reasonable having regard to the prevailing market
prices at the relevant time.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion the internal audit system of the Company is
adequate commensurate with its size and nature of its business.
(viii) The Central Government has prescribed maintenance of cost
records under section 209(1)(d) of the Companies Act, 1956 in respect
of products of the Company. We have broadly reviewed the accounts and
records of the Company in this connection and are of the opinion that
prima facie the prescribed accounts and records have been made and
maintained. However, we have not made any detailed examination of the
(ix) In respect of statutory dues:
(a) According to the records of the Company, undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs
Duty, Excise Duty, Cess and other statutory dues have been generally
regularly deposited with the appropriate authorities. According to the
information and explanations given to us, no undisputed amounts payable
in respect of the aforesaid dues were outstanding as at 31st March,
2014 for a period of more than six months from the date of becoming
(b) According the information and explanations given to us there are no
disputed dues in respect of Sales Tax, Income Tax, Wealth Tax, Service
Tax and Excise & Custom Duty except following:- 1. Central Excise Duty
of RS.5.25 lacs for financial years 2001-02 and 2002-03.
Company is in appeal before Central Excise and Service Tax Appellate
2. Value Added Tax of Rs.11.69 lacs for financial years 2007-08 and
2008-09. Company is in appeal before Sales Tax Appellate Tribunal,
(x) The Company has accumulated losses of Rs. 4030.93 lacs at the end
of the Current Year (Previous Year Rs. 4563.35 lacs). It did not incur
any cash loss during the current year under report as well as in the
immediately preceding previous year.
(xi) According to the explanations and information given to us, the
Company does not have any outstanding amount payable to any bank or
(xii) In our opinion and according to the information and explanation
given to us, no loans and advances have been granted by the Company on
the basis of security by way of pledge of shares, debentures and other
(xiii) In our opinion the Company is not a chit fund or a nidhi /mutual
benefit fund/society. Therefore, clause 4(xiii) of the Companies
(Auditor''s Report) Order, 2003 is not applicable to the Company.
(xiv) The Company has maintained proper records of transactions and
contracts in respect of trading in securities, debentures and other
investments and timely entries have been made therein. All shares,
debentures and other investments have been held by the Company in its
(xv) The Company has given guarantees for loans taken by others from
banks or financial institutions. According to the information and
explanation given to us, we are of the opinion that the terms and
conditions thereof are not prima facie prejudicial to the interest of
(xvi) The term loans raised by the Company have been applied by the
Company for the purpose for which such loans were obtained.
(xvii) According to the information and explanations given to us and on
overall examination of the Balance Sheet of the Company, we are of the
opinion that the Company has not used the funds raised on short term
basis for long term investment.
(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 Companies Act, 1956.
(xix) The Company has issued 16% Non Convertible Debentures during the
year which have been fully secured and as per information and
explanation provided to us, creation of charge for the same is in
(xx) The Company has not raised any money by way public issue during
(xxi) In our opinion and according to the information and explanations
given to us, no fraud on or by the Company has been noticed or reported
during the year that causes the financial statements to be materially
For P.C. Surana & Co.
Date : 28th April, 2014