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Globus Spirits Ltd.

BSE: 533104 Sector: Consumer
NSE: GLOBUSSPR ISIN Code: INE615I01010
BSE LIVE 15:54 | 17 Nov 134.95 0.70
(0.52%)
OPEN

133.00

HIGH

141.40

LOW

133.00

NSE 15:54 | 17 Nov 134.45 0.40
(0.30%)
OPEN

135.30

HIGH

141.70

LOW

133.40

OPEN 133.00
PREVIOUS CLOSE 134.25
VOLUME 244412
52-Week high 141.40
52-Week low 62.05
P/E 55.53
Mkt Cap.(Rs cr) 389
Buy Price 0.00
Buy Qty 0.00
Sell Price 134.95
Sell Qty 586.00
OPEN 133.00
CLOSE 134.25
VOLUME 244412
52-Week high 141.40
52-Week low 62.05
P/E 55.53
Mkt Cap.(Rs cr) 389
Buy Price 0.00
Buy Qty 0.00
Sell Price 134.95
Sell Qty 586.00

Globus Spirits Ltd. (GLOBUSSPR) - Auditors Report

Company auditors report

Report on the Standalone Financial Statements

To The Members of GLOBUS SPIRITS LIMITED

We have audited the accompanying standalone financial statements of GLOBUS SPIRITSLIMITED ("the Company") which comprise the Balance Sheet as at March312017 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Standalone 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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsprescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. In conducting our audit we have taken into account the provisions ofthe Act the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected

depend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone financial statements whether due to fraud or error. Inmaking those risk assessments the auditor considers internal financial control relevantto the Company's preparation of the standalone financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

1. Attention is invited to Note 11 of the Standalone Financial Statements which statesthat as on March 312017 Fixed Assets include Intangible Assets aggregating to Rs. 721.65Lacs (March 312016 - Rs. 1443.30 Lacs) under the head "Knowhow and New BrandDevelopment" representing intangibles internally generated by the Company throughexpenditure on advertisement and promotional expenses. Such recognition is not inaccordance with Accounting Standard - 26 "Intangible Assets". Had the Companycomplied with requirements of AS-26 Fixed Assets as at March 312017 would have beenlower by Rs. 721.65 Lacs (March 31 2016 - Rs. 1443.30 Lacs) Depreciation andamortisation expense for the year would be lower by Rs. 721.65 Lacs Net profit aftertaxes and Reserves and Surplus would be lower by Rs. 471.90 Lacs.

2. Attention is invited to Note 11 of the Standalone Financial Statements in respect ofPlant & Machinery having Net book value of Rs. 2966.71 Lacs (March 312016 Rs.3278.63 Lacs (Gross Book Value - Rs. 5580.40 Lacs (March 312016 Rs. 5580.40 Lacs))that are currently unutilized for over 4 years as on the balance sheet date for which themanagement is evaluating alternative use and is of the view that no impairment isconsidered necessary at this stage. In absence of impairment assessment we are unable tocomment on recoverability of carrying value of such assets and consequent adjustment thatmay be required upon such assessment.

The matters stated above were also qualified in our report on the standalone financialstatements for the year ended March 31 2016.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in sub-paragraph (1) andpossible effects of the matter described in sub-paragraph (2) of the Basis for QualifiedOpinion paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2017 and its profit and its cash flows for theyear ended on that date.

Emphasis of Matter

We draw attention to Note 35 of the financial Statement which describes the status ofrenewal of license for manufacture and sale of Extra Neutral Alcohol (E.N.A) under theBihar Prohibition and Excise Act 2016 in respect of one of the manufacturing plantlocated in Bihar.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. 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 except for the matter described in sub-paragraph (2) in the Basisfor Qualified Opinion paragraph above obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion except for the effects of the matter described in sub-paragraph (1)and the possible effects of the matter described in sub-paragraph (2) in the Basis forQualified Opinion paragraph above proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

d) In our opinion except for the effects of the matter described in sub-paragraph (1)and the possible effects of the matter described in sub-paragraph (2) in the Basis forQualified Opinion paragraph above the aforesaid standalone financial statements complywith the Accounting Standards prescribed under section 133 of the Act.

e) On the basis of the written representations received from the directors as on March312017 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312017 from being appointed as a director in terms of Section 164 (2) of theAct.

f) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above.

g) 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 in "Annexure A". Our report expresses a qualified opinion on theoperating effectiveness of the Company's internal financial controls over financialreporting.

h) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 26.1 to the standalonefinancial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses - Refer Note 26.1 to the standalonefinancial statements.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company - Refer Note 8 to the standalone financialstatements.

iv. The Company has provided requisite disclosures in the standalone financialstatements as regards its holding and dealings in Specified Bank Notes as defined in theNotification S.O. 3407(E) dated the November 08 2016 of the Ministry of Finance duringthe period from November 08 2016 to December 30 2016. Based on audit proceduresperformed and the representations provided to us by the management we report that thedisclosures are in accordance with the books of account maintained by the Company- ReferNote 34 to the standalone financial statements.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 015125N)
Sd/-
Vijay Agarwal
Place: Gurgaon (Partner)
Date: May 192017 (Membership No. 094468)

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 (g) under 'Report on Other Legal and RegulatoryRequirements' of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of GlobusSpirits Limited ("the Company") as of March 312017 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

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 company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 qualified audit opinion on the Company's internal financialcontrols system over financial 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. Acompany'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.

Basis for Qualified opinion

According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 31 2017:

In case of fixed assets the Company's internal financial controls around recording offixed assets and timely identification monitoring and reporting of non-usable fixedassets are operating in a manner that it may lead to delayed appropriate action /charge-off in the financial statements and consequently result in misstatement of thefixed assets.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.

Qualified Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has maintained in all material respects adequate internal financialcontrols over financial reporting as of March 312017 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia and except for the possible effects of the material weakness described in the Basisfor Qualified Opinion paragraph above on the achievement of the objectives of the controlcriteria the Company's internal financial controls over financial reporting wereoperating effectively as of March 312017.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statements of the Company for the year ended March 312017 and the materialweakness has affected our opinion on the said standalone financial statements of theCompany and we have issued a qualified opinion on the standalone financial statements ofthe Company.

For Deloitte Haskins & Sells

Chartered Accountants (Firm's Registration No. 015125N)

Sd/-

Vijay Agarwal

(Partner)

(Membership No. 094468)

Place: Gurgaon Date: May 192017

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S

REPORT

(Referred to in paragraph 2 under 'Report on Other Legal and

Regulatory Requirements' section of our report of even date)

(i) I n respect of the Com pany's fixed assets:

(a) The Company has maintained records showing particulars including situation offixed assets however certain particulars are in the process of being updated.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of the fixed assets at reasonable intervals. According to theinformation and explanation given to us the Company is in process of reconciling the samewith fixed assets register accordingly discrepancies if any has not been identified onsuch verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed/ Ikrarnama/ Shapathpatraprovided to us we report that the title deeds comprising all the immovable propertiesof land are held in the name of the Company as at the balance sheet date. Immovableproperties of land whose title deeds have been pledged as security for loans are held inthe name of the Company based on the confirmations directly received by us from lenders.In respect of immovable properties of land that have been taken on perpetual lease anddisclosed as fixed asset in the financial statements the lease agreements are in the nameof the Company where the Company is the lessee in the agreement.

(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals except in case of inventories lying with thirdparties where confirmations has been obtained from third parties in respect of suchinventories and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us the Company hasgranted loans secured or unsecured to companies firms Limited Liability Partnershipsor other parties covered in the Register maintained under Section 189 of the CompaniesAct 2013. In respect of which:

(a) The terms and conditions of the grant of such loans amounting to Rs. 167.54 lacsgiven to a wholly owned subsidiary are in our opinion prima facie not prejudicial tothe Company's interest.

(b) According to the information and explanation given to us the above loans arereceivable on demand which as informed to us have been converted into equity investmentin the wholly owned subsidiary. In the absence of any stipulated schedule of repayment ofprincipal and payment of interest we are unable to comment on the regularity of therepayments or receipts of principal amounts and interest.

c) According to the information and explanation given to us the above loans arereceivable on demand which as informed to us have been converted into equity investmentin the wholly owned subsidiary. Accordingly there is no overdue amount remainingoutstanding as at the balance sheet date.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposit under Sections 73 to 76 or any other relevant provisions of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 as amended.

(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained We have however not made a detailed examination ofthe cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales Tax Service TaxCustoms Duty Excise Duty Value Added Tax cess and other material statutory duesapplicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Sales Tax Service Tax Customs Duty Excise Duty ValueAdded Tax Cess and other material statutory dues in arrears as at March 312017 for aperiod of more than six months from the date they became payable.

(c) Details of dues of Income-tax. Sales tax and Excise Duty which have not beendeposited as at March 312017 on account of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates (Financial Year) Amount Involved (Rs.) *
Excise Laws Excise Duty High Court 1995-96 2004-10 19739456
Appellate authority upto Commissioners' level 1996-97 1111279
Sales Tax Laws Sales tax High Court 2010-11 12054561
Income Tax Act 1961 Income tax Appellate authority upto Commissioners' level 2012-13 2013-14 358660

* Amount as per demand orders including interest and penalty wherever indicated in theOrder. No amount has been paid under protest.

The following matter which has been excluded from the table above has been decided infavour of the Company but the department has preferred appeals at higher levels. Thedetails are given below:

Name of the Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount Involved

(n*

Sales Tax Laws Sales tax High Court 2004 -05 to 2005-06 2007-08 to 2009-10 77100339

‘Amount as per demand orders including interest and penalty wherever indicated inthe Order.

There were no dues of Service Tax Customs Duty and Value Added Tax which have not beendeposited as at March 312017 on account of disputes.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government and dues to debenture holders.

(ix) In our opinion and according to the information and explanations given to usmoney raised by way of term loans have been applied by the Company during the year for thepurposes for which they were raised other than temporary deployment pending application ofproceeds. The Company has not raised moneys by way of initial public offer (including debtinstruments) during the year.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance

with Section 177 and 188 of the Companies Act 2013 where applicable for alltransactions with the related parties and the details of related party transactions havebeen disclosed in the financial statements etc. as required by the applicable accountingstandards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.

(xvi) The Company is not required to be registered under section 45-IAof the ReserveBankof India Act 1934.

For Deloitte Haskins & Sells

Chartered Accountants (Firm Registration No. 015125N)

Sd/-

Vijay Agarwal

Partner

(Membership No. 094468)

Place: Gurgaon

Date: May 19 2017