Shalimar Paints LimitedReport on the Audit of the Standalone Financial StatementsOpinion
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 2026, 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 2026, 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 from sale of goods
(Refer note 3.3 and 29 to the accompanying standalone financial statements)
The Company’s derives its revenue primarily from sale of paints and coatings, and from providing related services to its customers. In accordance with the principles of Ind AS 115, Revenue from Contracts with Customers, revenue from sale of goods is recognised by the Company when the performance obligation is satisfied, i.e., when the ‘control’ of the underlying goods is transferred to the customer as per the agreed contractual terms.
Such revenue recognition from sale of goods requires management to make certain judgements and estimates around measurement of transaction price which involves determination of variable consideration on account of volume discounts and other rebate programs run by the Company.
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, and thus, revenue recognition is identified as a presumed significant risk of fraud in accordance with the requirements of Standards on Auditing.
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Our audit procedures relating to revenue recognition from sale
of goods included, but were not limited to, the following:
a) Assessed the appropriateness of revenue recognition accounting policies in accordance with Ind AS 115;
b) Obtained an understanding of management’s processes and controls over revenue recognition, including accrual of discounts and rebates;
c) Evaluated the design and tested the operating effectiveness of key internal financial controls, relating to revenue recognition and accrual of discounts and rebates;
d) Performed substantive testing of revenue transactions recorded during the year including specific period before and after year end, on a sample basis, by verifying the underlying supporting documents such as customer contracts, purchase orders, sales orders, sale invoices, and proof of delivery through dispatch/shipping documents to ensure that the correct amount of revenue is recorded in the correct period;
e) Evaluated the appropriateness of underlying judgements and estimates used by management for determination of variable consideration;
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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 materiality of amounts, considerable audit efforts were involved in assessing the appropriateness of revenue recorded during the year, and therefore, we have identified revenue recognition from sale of goods as a key audit matter for the current year audit.
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f) Performed substantive testing on selected samples of discounts and rebates adjustments recorded during the year as well as year-end provisions recognised by the Company, by testing underlying computations, management approvals and relevant supporting documents in respect of such schemes;
g) Performed analytical procedures, which included variance and ratio analysis of current year revenue and discounts/ rebates in comparison to earlier years to identify unusual trends, if any..
i) Circularised balance confirmations for invoices outstanding at the year-end on a sample basis and reviewed the reconciling items, if any; and
j) Evaluated the appropriateness and adequacy of disclosures made in the standalone financial statements in accordance with the applicable accounting standards.
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B.
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Net realisable value assessment of inventory
(Refer note 3.5 and 11 to the accompanying standalone
financial statements)
The Company held inventories aggregating Rs. 102.14 crores as at 31 March 2026, comprising raw materials, work-in progress, stock-in-trade, finished goods, packaging materials and stores, spares and consumables, on which the Company has created an slow-moving/obsolescence provision of Rs. 4.58 crores as at year end.
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, specifically identified basis physical condition of inventory items, and prevailing and expected market trends. If so, such inventory items are written down to their net realisable value in accordance with the requirements of Ind AS 2, Inventories.
The determination of provision for slow-moving, obsolete and non-saleable inventories involves significant judgements and estimation uncertainties, around assessment of physical condition of inventories, estimated remaining shelf life, refurbishment possibility and related expected costs, historical consumption patterns, product discontinuances and expected future demand.
Considering the judgement involved in evaluating the above factors and materiality of amounts, we have identified net realisable value assessment of inventory as key audit matter for the current year audit.
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Our audit procedures for net realisable value assessment of
inventory included, but were not limited to the following:
a) Obtained an understanding of management's process for identifying slow-moving, obsolete, and other non-saleable inventory, and for determining the related provision for slow-moving/obsolescence inventories.
b) Assessed the appropriateness of related accounting policies adopted by the Company in accordance with the requirements of Ind AS 2;
c) Evaluated the design and implementation, and tested the operating effectiveness of key internal financial controls that the Company has in relation to aforesaid process;
d) Evaluated the nature, source and reliability of data/ information used by the management for identification of slow moving/obsolete items of inventory, including key judgement and estimates applied. We evaluated such assessment basis ageing of inventory, past consumption patterns of similar inventory, and our understanding of prevailing and expected market conditions.
e) Tested, on sample basis, the estimated net realisable value and related provision computed by the management, basis recent and subsequent sale transactions of such inventory items, and evaluating management's estimates for any reprocessing cost required to be incurred basis historical cost patterns; and
f) Evaluated the appropriateness and adequacy of disclosures made in the standalone financial statements in accordance with requirement of applicable accounting standards.
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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 do 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 2026 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 2026 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 40 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2026;
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 2026;
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 2026;
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 (a) and (b) above contain any material misstatement.
v. The Company has not declared or paid any dividend during the year ended 31 March 2026.
vi. As stated in Note 56 to the standalone financial statements and based on our examination which included test checks, the Company, in respect of financial year commencing on or after 1 April 2025, has used an accounting software is operated by a third-party software service provider for maintaining its books of account which has a feature of recording audit trail facility and the same has been operated throughout the year for all relevant transactions recorded in the software at the application level. 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 of the said software was enabled and operated throughout the year at the database level. The audit trail has been preserved at the application level but not at the database level by the Company as per the statutory requirements for record retention.
For Walker Chandiok & Co LLP
Chartered Accountants Firm’s Registration No.: 001076N/N500013
Mayank Jain
Partner
Place: Mumbai Membership No.: 512495
Date: 28 May 2026 UDIN: 26512495FGHXNR7970
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