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Aditya Birla Fashion & Retail Ltd.

BSE: 535755 Sector: Industrials
NSE: ABFRL ISIN Code: INE647O01011
BSE LIVE 15:55 | 17 Nov 152.30 -1.25
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NSE 15:59 | 17 Nov 151.60 -2.95
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OPEN 155.90
PREVIOUS CLOSE 153.55
VOLUME 1218339
52-Week high 188.60
52-Week low 127.00
P/E
Mkt Cap.(Rs cr) 11,752
Buy Price 0.00
Buy Qty 0.00
Sell Price 152.30
Sell Qty 5.00
OPEN 155.90
CLOSE 153.55
VOLUME 1218339
52-Week high 188.60
52-Week low 127.00
P/E
Mkt Cap.(Rs cr) 11,752
Buy Price 0.00
Buy Qty 0.00
Sell Price 152.30
Sell Qty 5.00

Aditya Birla Fashion & Retail Ltd. (ABFRL) - Auditors Report

Company auditors report

To

The Members of

Aditya Birla Fashion and Retail Limited

Report on the Ind AS financial statements

We have audited the accompanying Ind AS financial statements of Aditya Birla Fashionand Retail Limited ("the Company") (formerly Pantaloons Fashion & RetailLimited) which comprise the Balance Sheet as at March 31 2017 the Statement of Profitand Loss and Statement of cash flows for the year then ended and a summary of significantaccounting policies and other explanatory information.

Management's Responsibility for the Ind AS financial statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Ind AS financial statements that give a true and fair view of the state of affairs(financial position) profit or loss (financial performance including other comprehensiveincome) cash flows and changes in equity of the Company in accordance with accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 and theCompanies (Indian Accounting Standards) Rules 2015 as amended.

This responsibility includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrol that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements basedon our audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the Act and the Rules made thereunder. We conducted our audit inaccordance with the Standards on Auditing issued by the Institute of Chartered Accountantsof India as specified under section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the Ind AS financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by the Company's Directors as well as evaluating the overallpresentation of the Ind AS financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the Ind AS financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2017 its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note - 44 in the financial statements regarding the acquisition ofthe demerged undertakings i.e Madura Undertaking and MGL Retail Undertaking in theprevious year. For reasons more fully described therein regarding the accounting noadjustments are considered necessary as regards the manner of recording of the saidtransaction.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's report) Order 2016 ("the Order")issued by the Central

Government of India in terms of sub-section 11 of section 143 of the Act we give inthe Annexure

1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet Statement of Profit and Loss including the Statement of Othercomprehensive income the Statement of cash flows and Statement of changes in equity dealtwith by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 and the Companies (Indian Accounting Standards) Rules2015 as amended;

(e) On the basis of written representations received from the Directors as on March 312017 and taken on record by the Board of Directors none of the Directors is disqualifiedas on March 31 2017 from being appointed as a Director in terms of section 164(2) of theAct;

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report dated May 12 2017 in "Annexure 2" to this report;

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements - Refer Note - 38 to the Ind AS financialstatements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company;

iv. The Company has provided requisite disclosures in Note - 32 to these Ind ASfinancial statements as to the holding of Specified Bank Notes on November 8 2016 andDecember 30 2016 as well as dealings in Specified Bank Notes during the period fromNovember 8 2016 to December 30 2016. Based on our enquiries test check of the books ofaccount and other details maintained by the Company and relying on the managementrepresentation regarding the holding and nature of cash transactions including SpecifiedBank Notes we report that these disclosures are in accordance with the books of accountmaintained by the Company.

Other Matter

The comparative financial information for the year ended March 312016 and thetransition date opening Balance Sheet as at April 1 2015 pertaining to the Maduradivision of the Company included in these Ind AS financial statements are based on thepreviously issued statutory financial statements prepared in accordance with the Companies(Accounting Standards) Rules 2006 audited by predecessor branch auditor whose report forthe year ended March 31 2016 and March 31 2015 dated May 25 2016 and May 112015respectively expressed an unmodified opinion on those financial information of the branchas adjusted for the differences in the accounting principles adopted by the Company ontransition to Ind AS which have been audited by us.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Vijay Maniar

Partner

Membership No.: 36738

Place: Mumbai

Date: May 12 2017

Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory

Requirements" of our report of even date.

(i)(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(i)(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(i)(c) Based on our audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to information and explanationsgiven by the management the title deeds of immovable properties are held in the name ofthe Company except for the following immovable properties other than self-constructedbuildings aggregating to Rs. 605 Lakh which are held in the name of the demerged companiesand is in the process of being transferred to the Company (Refer Note - 44 to thefinancial statements):-

Total number of cases Asset category Amount as at March 312017 in Lakhs Remarks
12 Freehold Land 592 Title deeds are in names of the companies whose divisions got merged with the Company and are pending to be transferred in the name of the Company.
1 Building (Flat) 13 Title deeds are in names of the companies whose divisions got merged with the Company and are pending to be transferred in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities granted in respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.

(v) The Company has not accepted any deposits within the meaning of sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under clause 148(1) of the Companies Act 2013for the products /services of the Company.

(vii) (a) Undisputed statutory dues including provident fund investor education andprotection fund employees' state insurance excise duty income tax sales tax wealthtax service tax customs duty value added tax cess and other material statutory dueshave generally been regularly deposited with the appropriate authorities

(vii)(b) According to the information and explanations given to us no undisputedamounts payable in respect of provident fund employees' state insurance income taxwealth tax service tax sales tax value added tax excise duty customs duty cess andother material statutory dues were outstanding at the year end for a period of more thansix months from the date they became payable.

(vii)(c) According to the records of the Company the dues outstanding of income taxsales tax wealth tax service tax duty of customs excise duty value added tax and cesson account of any dispute are as follows:

Name of the statute Nature of the dues Unpaid amount (Rs. in Lakhs)* Period to which the amount relates Forum where dispute is pending
Karnataka - Value Added Tax Value Added Tax 8 2008-09 Deputy Commissioner of Commercial Taxes Bangalore
Madhya Pradesh - Value Added Tax Value Added Tax 8 2013-14 Commercial Tax Department
Rajasthan - Value Added Tax Value Added Tax 4 2014-15 Commercial Tax Department
Central Excise Act Excise duty 186 May'01 to Apr03 Customs Excise and Service Tax Appellate Tribunal Bangalore
Central Sales Tax Act Sales tax 1 2006-07 The Appellate Deputy Commissioner (CT) Secunderabad Division
Customs duty Customs duty 408 1998-99 Hon'ble High Court - Karnataka
Customs duty Customs duty 50 2010 Customs Excise and Service Tax Appellate Tribunal Chennai
Gujarat - Commercial tax Sales tax 226 2011-12 DEO - Joint Commissioner - JCCT(A)
Karnataka Sales Tax Act Sales tax 528 2011-12 Karnataka Appellate Tribunal
Karnataka Sales Tax Act Sales tax 985 2005-07 to 2014-15 JCCT - Appeals
Karnataka Tax on Entry of Goods Act Entry tax 2 2002-03 to 2004-05 Joint Commissioner of Commercial Taxes - Appeal - 1
Kerala Commercial Tax Surcharge 180 April 2008 to June 2017 Kerala High Court Ernakulum
Kerala General Sales Tax Act Kerala sales tax 1 2004-05 Kerala Sales Tax Appellate Tribunal Ernakulum
Orrisa Entry tax Entry dues 0 2002-03 Assistant Commissioner of Commercial Taxes Bhubaneshwar
Orrisa Sales Tax Act Sales tax 0 2002-03 Assistant Commissioner of Commercial Taxes Bhubaneshwar
Textile Committee Act Textile cess 122 1981-2005 Honourable High Court
Uttar Pradesh Commercial tax Value Added Tax 737 2008-2013 DCCT - Uttar Pradesh
Uttarkhand Commercial tax Value Added Tax 375 2008-2014 Additional Commissioner - Appeal
West Bengal Commercial tax Sales tax 1 2005-06 Joint Commissioner Appeal - JCCT (A)

* The unpaid amount mentioned above is net of Rs. 3809 Lakh paid under protest.

(viii) Based on our audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to information and explanationsgiven by the management

we are of the opinion that the Company has not defaulted in repayment of dues to afinancial institution bank or debenture holders. The Company has not taken any loans orborrowings from the government.

(ix) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management the Company has not raised any money by way of initial publicoffer /further public offer. The monies raised by way of term loans and debt instrumentswere applied for the purposes for which those were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud on or by the officers and employees ofthe Company has been noticed or reported during the year.

(xi) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that the managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company and hence not commented upon.

(xiii) Based on our audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to the information andexplanations given by the management transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the notes to the financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us and on an overallexamination of the Balance Sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with Directors or persons connected withhim as referred to in section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Vijay Maniar

Partner

Membership No.: 36738

Place: Mumbai

Date: May 12 2017

Annexure 2 referred to in paragraph 2 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date on the financial statements ofAditya Birla Fashion and Retail Limited.

Report on the Internal Financial Controls under clause (i) of sub-section 3 of section143 of the Companies Act 2013 ("the Act")

To

The Members of

Aditya Birla Fashion and Retail Limited

We have audited the internal financial controls over financial reporting of AdityaBirla Fashion and Retail Limited ("the Company") (formerly Pantaloons Fashion& Retail Limited) as at March 31 2017 in conjunction with our audit of the financialstatements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Vijay Maniar

Partner

Membership No.: 36738

Place: Mumbai

Date: May 12 2017.