We have audited the attached Balance Sheet of Pidilite Industries
Limited (`the Company') as at 31st March 2007, the Profit and Loss
Account and also Cash Flow Statement for the year ended on that date
Respective Responsibility of the Management and the Auditors
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.
Basis of Opinion
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 n 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
I. Our report as required by the Companies (Auditors' Report) Order,
2003, as amended by the Companies (Auditor's Report) (Amendment) Order,
2004, issued by the Central Government of India in terms of Section
227(4A) of the Companies Act, 1956 (the `Act') and on the basis of such
checks of the books and records of the Company as we considered
appropriate and according to the information and explanation given to
us by the management, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
II. Further to our comments in the Annexure referred to in above
paragraph, 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
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
iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
iv) 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 Act;
v) 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 is, prima facie, disqualified as on 31st March 2007 from
being appointed as a director in terms of Section 274(1)(g) of the Act;
vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, read together with
notes thereon and attached thereto, give the information reguired by
the Act, in the manner so reguired and give a true and fair view in
conformity with the accounting principles generally accepted in India:
a) in case of Balance Sheet, of the state of affairs of the Company as
at 31st March 2007,
b) in case of Profit and Loss Account, of the profit for the year ended
on that date and
c) in case of Cash Flow Statement, of the cash flows for the year ended
on that date.
For HARIBHAKTI & CO
Membership No. 17000
Date: 22nd May 2007
Annexure to Auditors' Report - March 31, 2007
1. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
2. We are informed that the fixed assets of the Company have been
physically verified by the Management according to a phased programme
designed to cover all the items over a period of three years, which in
our opinion, is reasonable having regard to the size of the Company and
nature of its assets. Pursuant to the programme, physical verification
was carried out during the year and no material discrepancies were
3. During the year, the Company has not disposed off a substantial part
of fixed assets.
4. We are informed that the inventories of the Company have been
physically verified by the management during the year. In respect of
inventories lying with third parties, these have been confirmed by
5. In our opinion, the procedures for physical verification of
inventories followed by management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
6. On the basis of our examination of the records of the Company, we
are of the opinion that the Company is maintaining proper records of
inventories. The discrepancies noticed on verification between the
physical and book records were not material.
Related party transactions
7. The Company has not granted any loans, secured or unsecured to the
companies, firms or other parties covered under Section 301 of the Act.
8. The company has not taken any loans, secured or unsecured from
companies, firms or other parties listed in the register maintained
under Section 301 of the Act.
9. In our opinion and according to the information and explanations
given to us, the transactions that need to be entered in the register
in pursuance of Section 301 of the Act have been so entered.
10. The above transactions are made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
11. In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantee given by the
Company, for loans taken by others from bank or financial institutions
are, prima facie, not prejudicial to the interest of the Company.
12. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business for the
purchase of inventories and fixed assets and for the sale of goods and
services. Further, on the basis of our examination of books and records
of the Company and on the basis of information and explanations given
to us, we have neither come across nor have been informed of any
instances of major weaknesses in the aforesaid internal control system.
13. The function of internal audit, as explained, is being carried out
by outside professionals, which in our opinion, is commensurate with
its size and nature of its business.
14. According to the books and records as produced and examined by us
and in accordance with generally accepted auditing practices in India
and also based on Management's Representation, the Company has been
generally regular in depositing undisputed statutory dues including
Provident Fund, ESIC dues, Investor Education and Protection Fund,
Income Tax, Sales Tax, Wealth Tax, Excise Duty, Service Tax, Education
Cess and other material statutory dues applicable to it.
15. According to the information and explanations given to us, and also
based on Management's Representation, there were no dues of Income Tax,
Customs Duty, Wealth Tax, Excise Duty, Service Tax, Education Cess and
Sales Tax that have not been deposited on account of any dispute except
Name of the statute Amount Forum where dispute is pending
(Rs in Million)
Sales Tax Act
Sales Tax in Various states 44.71 Deputy Commissioner of
Sales Tax (Appeal)
Sales Tax in Various states 16.41 Sales Tax Tribunal
Excise Duty 1.46 CESTAT
16. We are informed that the Central Government has prescribed the
maintenance of cost records by the Company under section 209(1)(d) of
the Act in regard to production of Synthetic Resins. We are of the
opinion that, prima facie, the prescribed accounts and records have
been made and maintained. However, we have not made detailed
examination of the records with a view to determine whether they are
accurate and complete.
17. The Company has neither accumulated losses as at 31st March 2007
nor it has incurred any cash losses during the financial year covered
by our audit and in the immediately preceding financial year.
18. We are informed that the term loans were applied for the purpose
for which the said loans were obtained.
19. Based on our examination of the balance sheet of the company as at
31st March 2007 on an overall basis and as per the information and
explanations given to us, we find that no funds raised on short-term
basis were utilized for long- term investment.
20. Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the course of our
21. The Clauses (iii) (b), (c), (d), (f), (g), (vi), (xi), (xii),
(xiii), (xiv), (xviii), (xix) and (xx) of paragraph 4 and 5 of the
Order are not applicable to the Company and hence not reported upon.
For HARIBHAKTI & CO
Membership No. 17000
Date: 22nd May 2007