1. We have audited the accompanying standalone financial statements of Shalimar Paints Limited (‘the Company’), which comprise
the Standalone Balance Sheet as at 31 March 2025, the Standalone Statement of Profit and Loss (including Other Comprehensive
Income), the Standalone Statement of Cash Flow and the Standalone Statement of Changes in Equity for the year then ended, and
notes to the standalone financial statements, including material accounting policy information and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial
statements give the information required by the Companies Act, 2013 (‘the Act’) in the manner so required and give a true and fair
view in conformity with the Indian Accounting Standards (‘Ind AS’) specified under section 133 of the Act read with the Companies
(Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the
Company as at 31 March 2025, and its loss (including other comprehensive income), its cash flows and the changes in equity for
the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements
section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of
Chartered Accountants of India (‘ICAI’) together with the ethical requirements that are relevant to our audit of the standalone
financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Key Audit Matters
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone
financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Key audit matter
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How our audit addressed the key audit matter
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a.
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Revenue recognition
(Refer Notes 3.3 and 29 for details of revenue recognised
during the year)
The Company’s revenue is derived primarily from
manufacturing, selling and distribution of paints, coatings and
providing related services recognised in accordance with the
accounting policy described in the accompanying standalone
financial statements.
In accordance with the principles of Ind AS 115, Revenue from
Contracts with Customers, (‘Ind AS 115’) revenue from the sale
of products is recognised by the Company when the performance
obligation is satisfied, i.e., when the ‘control’ of the goods
underlying the particular performance obligation is transferred
to the customer. The performance obligations are generally
considered to be satisfied by the management when the buyer
examines the goods after taking delivery in accordance with the
terms and conditions included in the revenue contracts.
Revenue recognition from sale of products also involves
determination of variable consideration on account of volume
discounts and other rebate programs run by the Company,
which requires estimates to be made by the management at
each year end.
Further, the Company and its external stakeholders focus on
revenue as a key performance measure, which could be an
incentive or external pressures to meet expectations resulting
in revenue being overstated or recognized before control has
been transferred.
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Our audit procedures for testing revenue recognition included,
but were not limited to the following:
a) Assessed the appropriateness of the revenue recognition
accounting policies and its compliances with applicable
accounting standards;
b) Obtained an understanding of the management’s
processes and controls relating to revenue recognition;
c) Evaluated the design and tested the operating
effectiveness of Company’s key internal controls relating
to revenue recognition;
d) Performed substantive testing of revenue transactions
recorded during the year using statistical sampling by
verifying the underlying supporting documents including
customer contracts, purchase order, sales order, sales
invoice and proof of delivery through dispatch/shipping
documents;
e) Performed testing of samples of revenue transactions
recorded during specific period before and after year-end
by verifying underlying documents as above, to assess
whether revenue was recognised in the correct period;
f) Performed analytical procedures which include variance
analysis of current year revenue with previous year
revenue and corroborating the variance considering both
qualitative and quantitative factors;
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Key audit matter
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How our audit addressed the key audit matter
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Considering the above factors and the amounts involved, it
required considerable audit efforts in testing revenue recorded
during the year, and therefore, we have identified revenue
recognition as a key audit matter in the current year audit.
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g) Tested on a sample basis rebates and discount schemes
as approved by the management to assess its accounting.
For the samples selected compared that the actual rebates
and discounts recognized in respect of particular schemes
do not exceed their approved amounts;
h) Circularised balance confirmations for invoices
outstanding at the year-end on a sample basis and
reviewed the reconciling items, if any; and
i) Assessed that the adequacy of disclosures made by the
management are in accordance with the applicable
accounting standards.
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b.
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Provision for Obsolescence of inventory
(Refer Notes 3.5 and 12 for details of inventory as at 31 March
2025).
The Company held inventories aggregating Rs. 133.87 crore
as at 31 March 2025 comprising of raw materials, work-in
progress, stock-in-trade, finished goods, packaging materials
and stores, spares and consumables, on which the Company
has recorded an obsolescence provision amounting to
Rs. 6.61 crore as at 31 March 2025.
At each reporting period end, the management assesses
whether there is any objective evidence indicating that the
net realisable value of any item of inventory is below its
carrying value. If so, such inventories are written down to their
net realisable value in accordance with the requirements of
Ind AS 2, Inventories (‘Ind AS 2’).
The factors that the Company considers in determining the
provision for slow moving, obsolete and other non-saleable
inventory include estimated remaining shelf life, product
discontinuances and ageing of inventory, to the extent each
of these factors impact the Company’s business and markets.
The Company considers all these factors and adjusts the
inventory provision to reflect its actual experience on a periodic
basis. The aforesaid determination involves significant
management judgement and high estimation uncertainty on
account of usage of slow moving, obsolete and other non¬
saleable inventory.
Considering the above, provision for obsolescence of inventory
has been considered as key audit matter for the current year
audit.
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Our audit procedures for testing provision for obsolescence of
inventory included, but were not limited to the following:
a) Obtained an understanding of management’s process to
identify slow-moving, obsolete, and other non-saleable
inventory, and process of consequent measurement of
required provision for obsolescence;
b) Evaluated the appropriateness of related accounting
policies adopted by the Company in accordance with the
requirements of Ind AS 2 (‘Ind AS 2’);
c) Evaluated the design, implementation and tested the
operating effectiveness of key controls that the Company
has in relation to aforesaid process;
d) Evaluated the nature, source and reliability of all the
information used by the management for arriving at the
estimates for determination of provision for obsolescence
of inventory and observed physical count at few locations;
e) For the provision made in respect of non-processable
inventory and reprocessing cost to be incurred on re-
processable inventory, discussed with the senior
management the basis of identification of such inventory
along with the judgement and estimates used. We have
evaluated the aforesaid in view of our understanding of
the business and industry conditions. Further, reperformed
computations to validate the accuracy and completeness
of such provision; and
f) Evaluated appropriateness of disclosures made in the
standalone financial statements.
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c.
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impairment assessment of freehold land at Kolkata
In year 2014 the operations in Company’s Kolkata plant were
suspended after a fire incident as a result of which the land at
Kolkata plant is not used to its full capacity.
The aforesaid matter is impairment indicator and triggered a
need for impairment assessment. Management, during the
year ended 31 March 2025, has carried out valuation of land
whereby the carrying amount of the land was compared with
the recoverable value as determined under the principles of
Ind AS 36.
The aforesaid recoverable value has been determined by the
management with the help of an external valuation expert using
market approach and the key assumptions underpinning such
valuation are guideline rate published by state government.
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Our audit procedures for impairment assessment of Howrah
freehold land at Kolkata included, but were not limited to the
following:
a) Discussed with the management, future plans of the
Company with respect to alternate use of the plant and
future revival of operations of the plant;
b) Assessed the appropriateness of the impairment
accounting policies and its compliances with applicable
accounting standards;
c) Obtained an understanding of the management’s
processes and tested the design and operating
effectiveness of internal controls over identification and
impairment test procedures;
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Key audit matter
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How our audit addressed the key audit matter
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Considering the materiality of the amounts involved and
significant degree of judgement and subjectivity involved in
the estimates and key assumptions used in the impairment
evaluation, impairment assessment of the land at Kolkata plant
was determined as a key audit matter.
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d) Reviewed the valuation report with respect to Howrah land
at Kolkata plant and fair value obtained by the
management from an independent valuer and assessed
the professional competence, skills and objectivity of the
valuer for performing the required valuation;
e) Assessed the appropriateness of the significant
assumptions as well as the Company’s valuation
methodology and assumptions with the support of auditor’s
valuation specialists; and
f) Evaluated the adequacy and appropriateness of
disclosures made by the Company in the standalone
financial statements, as required by the applicable
provisions of the Act and the requirement of Ind AS 36.
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information other than the Standalone Financial Statements and Auditor’s Report thereon
6. The Company’s Board of Directors are responsible for the other information. The other information comprises the information
included in the Director’s Report but does not include the standalone financial statements and our auditor’s report thereon. The
Director’s Report is expected to be made available to us after the date of this auditor’s report.
Our opinion on the standalone financial statements does not cover the other information and we will not express any form of
assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified
above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the
standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the Director’s Report, if we conclude that there is a material misstatement therein, we are required to communicate
the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
7. The accompanying standalone financial statements have been approved by the Company’s Board of Directors. The Company’s
Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation
of these standalone financial statements that give a true and fair view of the financial position, financial performance including
other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under
section 133 of the Act and other accounting principles generally accepted in India. This responsibility also includes maintenance of
adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for
preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal
financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant
to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement,
whether due to fraud or error.
8. In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
9. The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Standalone Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these standalone financial statements.
11. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company
has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such
controls;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management;
• Conclude on the appropriateness of Board of Directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the standalone financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going concern; and
• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and
whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by section 197(16) of the Act, based on our audit, we report that the Company has paid remuneration to its directors
during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor’s Report) Order, 2020 (‘the Order’) issued by the Central Government of India in terms of
section 143(11) of the Act we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the
extent applicable.
17. Further to our comments in Annexure I, as required by section 143(3) of the Act based on our audit, we report, to the extent
applicable, that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary
for the purpose of our audit of the accompanying standalone financial statements;
b) Except for the matters stated in paragraph 17(h)(vi) below on reporting under Rule 11 (g) of the Companies (Audit and Auditors)
Rules, 2014 (as amended), in our opinion, proper books of account as required by law have been kept by the Company so far
as it appears from our examination of those books;
c) The standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of
the directors is disqualified as on 31 March 2025 from being appointed as a director in terms of section 164(2) of the Act;
f) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph
17(b) above on reporting under section 143(3)(b) of the Act and paragraph 17(h)(vi) below on reporting under Rule 11 (g) of the
Companies (Audit and Auditors) Rules, 2014 (as amended)];
g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on 31
March 2025 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we have
expressed an unmodified opinion; and
h) With respect to the other matters to be included in the Auditor’s Report in accordance with rule 11 of the Companies (Audit and
Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given
to us:
i. The Company, as detailed in Note 40A(b) to the standalone financial statements, has disclosed the impact of pending
litigations on its financial position as at 31 March 2025;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material
foreseeable losses as at 31 March 2025;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the
Company during the year ended 31 March 2025;
iv. a. The management has represented that, to the best of its knowledge and belief, as disclosed in Note 54(m) to the
standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or
securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies),
including foreign entities (‘the intermediaries’), with the understanding, whether recorded in writing or otherwise, that
the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Company (‘the Ultimate Beneficiaries’) or provide any guarantee, security or the
like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in Note 54(n) to the
standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies),
including foreign entities (‘the Funding Parties’), with the understanding, whether recorded in writing or otherwise,
that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries’) or provide any guarantee, security
or the like on behalf of the Ultimate Beneficiaries; and
c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing
has come to our notice that has caused us to believe that the management representations under sub-clauses iv(a)
and iv(b) above contain any material misstatement.
v. The Company has not declared or paid any dividend during the year ended 31 March 2025.
vi. As stated in Note 56 to the standalone financial statements and based on our examination which included test checks,
except for instances mentioned below, the Company, in respect of financial year commencing on 1 April 2024, has used
accounting software’s for maintaining its books of account which have a feature of recording audit trail (edit log) facility
and the same have been operated throughout the year for all relevant transactions recorded in the software. Further,
during the course of our audit we did not come across any instance of audit trail feature being tampered with other than
the consequential impact of the exception given below. Furthermore, the audit trail at application level has been preserved
by the Company as per the statutory requirements for record retention from the date the audit trail was enabled for the
accounting software:
(i) The audit trail feature was not enabled at the database level for accounting software used for the period from 1 April
2024 to 31 August 2024 to log any direct data changes, used for maintenance of all accounting records by the
Company; and
(ii) The accounting software used for maintaining its books of account, implemented effective 3 September 2024, is
operated by a third-party software service provider. In the absence of any information on existence of audit trail (edit
logs) for any direct changes made at the database level in the ‘Independent Service Auditor’s Assurance Report on
the Description of Controls, their Design and Operating Effectiveness’ (‘Type 2 report’ issued in accordance with
ISAE 3402, Assurance Reports on Controls at a Service Organization), we are unable to comment on whether audit
trail feature with respect to the database of the said software was enabled and operated throughout the period.
For Walker Ohandiok & Co LLP
Chartered Accountants
Firm’s Registration No.: 001076N/N500013
Rakesh R. Agarwal
Partner
Place: Mumbai Membership No.: 109632
Date: 26 May 2025 UDIN: 25109632BMLCTO6004
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