1) We have audited the attached Balance Sheet of The Bombay Dyeing and
Manufacturing Company Limited as at March 31, 2009 and also the Profit
and Loss Account and Cash Flow Statement of the Company for the year
ended on that date, both annexed thereto. These financial statements
are the responsibility of the Corripanys management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
2) We conducted our audit in accordance with auditing standards
generally accepted in India. These 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 (Auditors Report) Order, 2003, issued
by the Central Government of India in terms of section 227 (4A) of the
Companies Act, 1956, we annex hereto a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
4) Without qualifying our report, we draw attention to the following:
i) Note 9 of Schedule 19 Notes to Accounts, regarding the sale of a
portion of the commercial building under construction to its wholly
owned subsidiary and recognition of revenue there against of Rs. 235.02
crore (including revenue from the undivided interest in the underlying
freehold land therein amounting to Rs. 193.34 crore) in the Profit and
Loss Account. Attention is also drawn to the exclusion of the said
subsidiary from consolidation, based on managements representation
that control over it is temporary, i.e. being held exclusively with a
view to its subsequent divestment in the near future.
ii) Note 19 (iii) of Schedule 19 Notes to Accounts, regarding the
adoption of the principles of hedge accounting enunciated in Accounting
Standard (AS) 30 - Financial Instruments Recognition and Measurement
with effect from April 1, 2008, in respect of derivative transactions
entered into to hedge currency risk. Accordingly, the unrealized losses
amounting to Rs. 37.69 crore on such derivative transactions which
qualify as effective hedges have been recorded in the Hedging Reserve
account. The loss for the year is lower to that extent.
5) Further to our comments in the Annexure referred to in paragraph (3)
above, 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 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 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) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read with the n^es
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 March 31, 2009;
ii) in the case of the Profit and Loss Account, of the loss of the
Company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
6) On the basis of written representations received from the Directors
of the Company as on March 31, 2009, and taken on record by the Board
of Directors, we report that none of the Directors of the Company is
disqualified as on March 31, 2009, from being appointed as a Director
in terms of clause (g) of sub- section (1) of section 274 of the
Companies Act, 1956.
ANNEXURE TO THE AUDITORS REPORT
Annexure to the report of the Auditors to the members of The Bombay
Dyeing and Manufacturing Company Limited on the accounts for the year
ended March 31, 2009 (referred to in paragraph 3 of our report of even
1. (a) The Company has maintained proper records showing
full particulars, including quantitative details and situation of fixed
assets up to the previous year. The particulars of additions during the
year are in the process of being updated.
(b) A major portion of the assets has been physically verified by the
management during the year, which is in our opinion is reasonable,
having regard to the size of the Company and the nature of its assets.
The reconciliation between the book records and physical inventory of
assets verified is still in progress, in view of which, we are unable
to report on the discrepancies, if any.
(c) The fixed assets disposed off during the year are not substantial
and therefore do not affect the going concern assumption.
2. (a) The inventory has been physically verified by the
management during the year. In our opinion, the frequency of
verification is reasonable.
(b) The procedures of physical verification of inventories followed by
the management are generally reasonable and adequate in relation to the
size of the Company and nature of its business.
(c) The Company is generally maintaining proper records of inventory.
The discrepancies noticed on verification between physical stock and
book records were not material in relation to the operations of the
Company and the same have been properly dealt with in the books of
3. (a) The Company had given unsecured loans to two companies
covered in the register maintained under section 301 of the Companies
Act, 1956. The maximum principal amount involved during the year is Rs.
7.5 crore. Of the said loans, one loan amounting to Rs.3.5 crore which
was provided for in earlier years, has been written off and the
year-end balance of the other loan is Rs. 0.5 crore. The company has
also placed an interest free shareholders deposit of Rs.15.22 crore
with a joint venture company, as stated in Note 12 of Schedule 19.
(b) In our opinion and according to the information and explanation
given to us, the rate of interest and other terms and conditions on
which the loans have been granted to companies listed in the register
maintained under section 301 of the Companies Act, 1956 were not prima
facie prejudicial to the interest of the company, at the time when
loans were granted.
(c) As explained to us, in respect of one of the companies, the amount
of Rs 3.5 crore has not been recovered and has been written off during
the year and the other company has been regular in payment of interest,
where the principle amount of Rs 0.5 crore is repayable on call.
(d) According to the information and explanation given to us, except
for the loan of Rs. 3.5 crores referred in paragraph 3 (c) above, which
has been written off during the year, there is no overdue amount for
more than rupees one lakh.
(e) According to the information and explanation 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 Companies Act, 1956. In view of the foregoing, the question
on clauses 4 (iii) (f) and 4 (iii) (g) of the said Order does arise.
4. In our opinion and according to the information and explanations
given to us, the Company has internal control procedures which are
generally adequate, commensurate with the size of the Company and
nature of its business, with regard to purchases of inventory, fixed
assets, and for the sale of goods and services, however the Company is
implementing steps for further strengthening of the same. Further, on
the basis of our examination of the books and records and the
information and explanations given to us, we have not come across any
continuing failure to correct major weakness in the internal control
5. (a) According to the information and explanations given to
us, we are of the opinion that the particulars of contracts or
arrangements that need to be entered into the register maintained under
section 301 of the Companies Act, 1956 have generally been so entered.
(b) According to the information and explanation given to us,
transactions in pursuance of such contracts or arrangements entered
into the register maintained under section 301 of the Companies Act,
1956 and exceeding the value of rupees five lakhs in respect of any
party have been made at prices which are reasonable having regard to
the prevailing market prices or at prices for which similar
transactions have been made with other parties, except for the
transactions where a comparison of prices could not be made since there
was no similar transactions with other parties or transactions of a
special nature where comparable alternative quotation were not
6. In our opinion and according to the information and explanations
given to us, the Company has complied with the provision of sections
58A, 58AA or any other applicable provisions of the Companies Act,1956
and the Companies (Acceptance of Deposits) Rules, 1975 with regard to
the deposits accepted from the public. 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.
7. In our opinion, the Company has an internal audit system,
commensurate with the size and nature of its business.
8. We have broadly reviewed, without carrying out a detailed
examination, the books of accounts maintained by the company pursuant
to the Notification issued /order made by the Central Government for
the maintenance of cost records under section 209(1) (d) of the
Companies Act, 1956 in respect of Textile division of the Company and
are of the opinion that prima facie the prescribed records have been
maintained and the prescribed accounts are in the process of being made
9. (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, Service tax, Excise duty, Customs duty, Cess, and other
material statutory dues applicable to it have been regularly deposited
with the appropriate authorities. According to the information and
explanations given to us, no undisputed amounts were in arrears, as on
31s1 March 2009 for a period of more than six months from the date they
(b) According to the information and explanations given to us, there
are no dues of Sales tax, Income tax, Custom duty, Wealth tax, Service
tax, Excise duty or cess which have not been deposited on account of
any dispute, except as stated below :
No. Name of the statute Nature of Dues Amount
(Rs. in crores)
1 The Income Tax Act, 1961 Tax deducted at 2.64
2 The Wealth Tax Act, 1957 Wealth Tax 023
3 The Customs Act, 1962 Customs Duty 0.64
Customs Duty 0.25
Customs Duty 0.13
4 The Central Excise Act, Excise Duty 0.31
Excise Duty 0.16
Excise Duty 0.25
Excise Duty 0.68
Excise Duty 0.08
Excise duty 0.01
Period to which the Forum where dispute is pending
A.Y. 1995-96 Income Tax Appellate Tribunal,
A.Y. 1993-94 to A.Y. Income Tax Appellate Tribunal,
1989 Deputy Commissioner of Customs,
1997 Commissioner of Customs(Appeals),
1992-93 Commissioner of Customs Bond
1985-86 to 2003-04 Customs, Excise and Service Tax
Appellate Tribunal(CESTAT), Mumbai
1989-90 to 1995-96 Commissioners of Central Excise,
1998-99 High Court, Mumbai
1997-98 to 2000-01 Customs, Excise and Service Tax
Appellate Tribunal(CESTAT), Mumbai
1999-00 to 2000-01 Customs, Excise and Service Tax
Appellate Tribunal(CESTAT), Mumbai
2005-06 Assistant Commissioner of Customs,
10. The Company does not have any accumulated losses at the end of the
financial year. The company has incurred a cash loss of Rs. 138.89
crore during the financial year covered by our audit but not in the
immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
banks, financial institution or debenture holders.
12. In our opinion and according to the information and explanations
given to us, the Company has maintained adequate records where the
company has granted loans and advances on the basis of security by way
of pledge of shares.
13. The company is not a chit fund or a nidhi/ mutual benefit fund/
society. Therefore, the provision of clause 4 (xiii) of the said Order
are not applicable to the Company.
14. According to the information and explanations given to us, proper
records have been maintained of the transactions and contracts and
timely entries have been made therein where the Company is dealing or
trading in shares, securities, debentures and other investments and
such securities are held by the Company in its own name except to the
extent of the exemption granted under section 49 of the Companies Act,
15. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
any guarantees for loans taken by others from banks or financial
institutions are not prima facie prejudicial to the interest of the
16. In our opinion and according to the information and explanations
given to us, the term loans have/are being applied for the purpose for
which they were obtained.
17. In our opinion and according to the information and explanations
given to us and on an overall examination of the balance sheet
of the Company, in our opinion, no funds raised on short term basis
have been used for long term investment.
18. 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.
19. According to the information and explanation given to us, the
Company had issued debentures aggregating Rs. 30 crore during the
previous year, which have been repaid during the year; however no
securities or charge was created in respect of the same.
20. The Company has not raised any money by public issues during the
year. Accordingly, the question of disclosure of end use of such monies
does not arise.
21. Based on the audit procedures performed and information and
explanations given by the management, we report that the Company has
based on certain acts of omission and commission detected, filed suits
against an Executive Director of the Company in the High Court of
Judicature at Mumbai and the matter is subjudice. Other than this no
fraud on or by the Company has been noticed or reported during the
For and on behalf of Kalyaniwalla & Mistry
Viraf R. Mehta
Partner Membership No: 32083
Date: June 30, 2009