1. We have audited the accompanying standalone financial statements of Shalimar Paints Limited (‘the Company’), which comprisethe Standalone Balance Sheet as at 31 March 2025, the Standalone Statement of Profit and Loss (including Other ComprehensiveIncome), the Standalone Statement of Cash Flow and the Standalone Statement of Changes in Equity for the year then ended, andnotes 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 financialstatements give the information required by the Companies Act, 2013 (‘the Act’) in the manner so required and give a true and fairview 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 theCompany as at 31 March 2025, and its loss (including other comprehensive income), its cash flows and the changes in equity forthe 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 responsibilitiesunder those standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute ofChartered Accountants of India (‘ICAI’) together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilitiesin accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand 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 standalonefinancial statements of the current period. These matters were addressed in the context of our audit of the standalone financialstatements 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.
Key audit matter
How our audit addressed the key audit matter
a.
Revenue recognition
(Refer Notes 3.3 and 29 for details of revenue recognisedduring the year)
The Company’s revenue is derived primarily frommanufacturing, selling and distribution of paints, coatings andproviding related services recognised in accordance with theaccounting policy described in the accompanying standalonefinancial statements.
In accordance with the principles of Ind AS 115, Revenue fromContracts with Customers, (‘Ind AS 115’) revenue from the saleof products is recognised by the Company when the performanceobligation is satisfied, i.e., when the ‘control’ of the goodsunderlying the particular performance obligation is transferredto the customer. The performance obligations are generallyconsidered to be satisfied by the management when the buyerexamines the goods after taking delivery in accordance with theterms and conditions included in the revenue contracts.Revenue recognition from sale of products also involvesdetermination of variable consideration on account of volumediscounts and other rebate programs run by the Company,which requires estimates to be made by the management ateach year end.
Further, the Company and its external stakeholders focus onrevenue as a key performance measure, which could be anincentive or external pressures to meet expectations resultingin revenue being overstated or recognized before control hasbeen transferred.
Our audit procedures for testing revenue recognition included,
but were not limited to the following:
a) Assessed the appropriateness of the revenue recognitionaccounting policies and its compliances with applicableaccounting standards;
b) Obtained an understanding of the management’sprocesses and controls relating to revenue recognition;
c) Evaluated the design and tested the operatingeffectiveness of Company’s key internal controls relatingto revenue recognition;
d) Performed substantive testing of revenue transactionsrecorded during the year using statistical sampling byverifying the underlying supporting documents includingcustomer contracts, purchase order, sales order, salesinvoice and proof of delivery through dispatch/shippingdocuments;
e) Performed testing of samples of revenue transactionsrecorded during specific period before and after year-endby verifying underlying documents as above, to assesswhether revenue was recognised in the correct period;
f) Performed analytical procedures which include varianceanalysis of current year revenue with previous yearrevenue and corroborating the variance considering bothqualitative and quantitative factors;
Considering the above factors and the amounts involved, itrequired considerable audit efforts in testing revenue recordedduring the year, and therefore, we have identified revenuerecognition as a key audit matter in the current year audit.
g) Tested on a sample basis rebates and discount schemesas approved by the management to assess its accounting.For the samples selected compared that the actual rebatesand discounts recognized in respect of particular schemesdo not exceed their approved amounts;
h) Circularised balance confirmations for invoicesoutstanding at the year-end on a sample basis andreviewed the reconciling items, if any; and
i) Assessed that the adequacy of disclosures made by themanagement are in accordance with the applicableaccounting standards.
b.
Provision for Obsolescence of inventory
(Refer Notes 3.5 and 12 for details of inventory as at 31 March2025).
The Company held inventories aggregating Rs. 133.87 croreas at 31 March 2025 comprising of raw materials, work-inprogress, stock-in-trade, finished goods, packaging materialsand stores, spares and consumables, on which the Companyhas recorded an obsolescence provision amounting toRs. 6.61 crore as at 31 March 2025.
At each reporting period end, the management assesseswhether there is any objective evidence indicating that thenet realisable value of any item of inventory is below itscarrying value. If so, such inventories are written down to theirnet realisable value in accordance with the requirements ofInd AS 2, Inventories (‘Ind AS 2’).
The factors that the Company considers in determining theprovision for slow moving, obsolete and other non-saleableinventory include estimated remaining shelf life, productdiscontinuances and ageing of inventory, to the extent eachof these factors impact the Company’s business and markets.The Company considers all these factors and adjusts theinventory provision to reflect its actual experience on a periodicbasis. The aforesaid determination involves significantmanagement judgement and high estimation uncertainty onaccount of usage of slow moving, obsolete and other non¬saleable inventory.
Considering the above, provision for obsolescence of inventoryhas been considered as key audit matter for the current yearaudit.
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 toidentify slow-moving, obsolete, and other non-saleableinventory, and process of consequent measurement ofrequired provision for obsolescence;
b) Evaluated the appropriateness of related accountingpolicies adopted by the Company in accordance with therequirements of Ind AS 2 (‘Ind AS 2’);
c) Evaluated the design, implementation and tested theoperating effectiveness of key controls that the Companyhas in relation to aforesaid process;
d) Evaluated the nature, source and reliability of all theinformation used by the management for arriving at theestimates for determination of provision for obsolescenceof inventory and observed physical count at few locations;
e) For the provision made in respect of non-processableinventory and reprocessing cost to be incurred on re-processable inventory, discussed with the seniormanagement the basis of identification of such inventoryalong with the judgement and estimates used. We haveevaluated the aforesaid in view of our understanding ofthe business and industry conditions. Further, reperformedcomputations to validate the accuracy and completenessof such provision; and
f) Evaluated appropriateness of disclosures made in thestandalone financial statements.
c.
impairment assessment of freehold land at Kolkata
In year 2014 the operations in Company’s Kolkata plant weresuspended after a fire incident as a result of which the land atKolkata plant is not used to its full capacity.
The aforesaid matter is impairment indicator and triggered aneed for impairment assessment. Management, during theyear ended 31 March 2025, has carried out valuation of landwhereby the carrying amount of the land was compared withthe recoverable value as determined under the principles ofInd AS 36.
The aforesaid recoverable value has been determined by themanagement with the help of an external valuation expert usingmarket approach and the key assumptions underpinning suchvaluation are guideline rate published by state government.
Our audit procedures for impairment assessment of Howrahfreehold land at Kolkata included, but were not limited to thefollowing:
a) Discussed with the management, future plans of theCompany with respect to alternate use of the plant andfuture revival of operations of the plant;
b) Assessed the appropriateness of the impairmentaccounting policies and its compliances with applicableaccounting standards;
c) Obtained an understanding of the management’sprocesses and tested the design and operatingeffectiveness of internal controls over identification andimpairment test procedures;
Considering the materiality of the amounts involved andsignificant degree of judgement and subjectivity involved inthe estimates and key assumptions used in the impairmentevaluation, impairment assessment of the land at Kolkata plantwas determined as a key audit matter.
d) Reviewed the valuation report with respect to Howrah landat Kolkata plant and fair value obtained by themanagement from an independent valuer and assessedthe professional competence, skills and objectivity of thevaluer for performing the required valuation;
e) Assessed the appropriateness of the significantassumptions as well as the Company’s valuationmethodology and assumptions with the support of auditor’svaluation specialists; and
f) Evaluated the adequacy and appropriateness ofdisclosures made by the Company in the standalonefinancial statements, as required by the applicableprovisions of the Act and the requirement of Ind AS 36.
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 informationincluded in the Director’s Report but does not include the standalone financial statements and our auditor’s report thereon. TheDirector’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 ofassurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identifiedabove when it becomes available and, in doing so, consider whether the other information is materially inconsistent with thestandalone 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 communicatethe 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’sBoard of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentationof these standalone financial statements that give a true and fair view of the financial position, financial performance includingother comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified undersection 133 of the Act and other accounting principles generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internalfinancial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevantto 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 tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realisticalternative 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 frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditingwill always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered materialif, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis 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 professionaljudgment 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 oneresulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override ofinternal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Companyhas adequate internal financial controls with reference to financial statements in place and the operating effectiveness of suchcontrols;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by management;
• Conclude on the appropriateness of Board of Directors’ use of the going concern basis of accounting and, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to drawattention in our auditor’s report to the related disclosures in the standalone financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. 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, andwhether the standalone financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the auditand 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 regardingindependence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe thesematters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rarecircumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doingso 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 directorsduring 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 ofsection 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 theextent 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 extentapplicable, that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessaryfor 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 faras 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 ofthe 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 paragraph17(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 theCompanies (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 31March 2025 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we haveexpressed 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 andAuditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations givento us:
i. The Company, as detailed in Note 40A(b) to the standalone financial statements, has disclosed the impact of pendinglitigations 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 materialforeseeable 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 theCompany 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 orsecurities 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, thatthe intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any mannerwhatsoever by or on behalf of the Company (‘the Ultimate Beneficiaries’) or provide any guarantee, security or thelike 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 thestandalone 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 anymanner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries’) or provide any guarantee, securityor the like on behalf of the Ultimate Beneficiaries; and
c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothinghas 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 usedaccounting software’s for maintaining its books of account which have a feature of recording audit trail (edit log) facilityand 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 thanthe consequential impact of the exception given below. Furthermore, the audit trail at application level has been preservedby the Company as per the statutory requirements for record retention from the date the audit trail was enabled for theaccounting software:
(i) The audit trail feature was not enabled at the database level for accounting software used for the period from 1 April2024 to 31 August 2024 to log any direct data changes, used for maintenance of all accounting records by theCompany; and
(ii) The accounting software used for maintaining its books of account, implemented effective 3 September 2024, isoperated by a third-party software service provider. In the absence of any information on existence of audit trail (editlogs) for any direct changes made at the database level in the ‘Independent Service Auditor’s Assurance Report onthe Description of Controls, their Design and Operating Effectiveness’ (‘Type 2 report’ issued in accordance withISAE 3402, Assurance Reports on Controls at a Service Organization), we are unable to comment on whether audittrail feature with respect to the database of the said software was enabled and operated throughout the period.
For Walker Ohandiok & Co LLP
Chartered AccountantsFirm’s Registration No.: 001076N/N500013
Rakesh R. Agarwal
Partner
Place: Mumbai Membership No.: 109632
Date: 26 May 2025 UDIN: 25109632BMLCTO6004