TO THE MEMBERS OF NESTL INDIA LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of NESTLE INDIA LIMITED("the Company") which comprise the Balance Sheet as at 31st December 2015 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
The Companys 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the 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. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrol system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Companys Directors aswell as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the 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 31stDecember 2015 and its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2015 ("theOrder") issued by the Central Government in terms of Section 143(11) of the Act wegive in the Annexure a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
2. As required by Section 143(3) of the Act we report to the extent applicable that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit. (b) In ouropinion 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 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 the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stDecember 2015 taken on record by the Board of Directors none of the directors isdisqualified as on 31st December 2015 from being appointed as a director in terms ofSection 164 (2) of the Act.
(f) With respect to the other matters to be included in the Auditors 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 financial statements - Refer Note 28 and 39 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company - Refer Note 9 to the financialstatements.
For A. F. FERGUSON & CO.
(Firms Registration No. 112066W)
(Membership No. 86423)
NEW DELHI February 12 2016
ANNEXURE TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements section of our report of even date) (i) In respect of its fixed assets:(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.
(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 all the fixed assets at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification. (ii) In respect of its inventory: (a) As explained to us the inventorieswere physically verified during the year by the Management at reasonable intervals.
(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.
(iii) The Company has not granted loans secured or unsecured to companies firms orother parties covered in the Register maintained under Section 189 of the Companies Act2013. (iv) In our opinion and according to the information and explanations given to usthere is an adequate internal control system commensurate with the size of the Company andthe nature of its business for the purchase of inventory and fixed assets and for the saleof goods. There is no material sale of services. During the course of our audit we havenot observed any major weakness in such internal control system.
(v) According to the information and explanations given to us the Company does nothave any outstanding deposit during the year and has not accepted any deposit during theyear. (vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by theCentral Government under subsection (1) of Section 148 of the Companies Act 2013 and areof the opinion that prima facie the prescribed cost records have been made and maintained.We have however not made a detailed examination of the cost records with a view todetermine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect of statutorydues: (a) The Company has been regular in depositing undisputed statutory dues includingProvident Fund Employees State Insurance Income-tax Sales Tax Wealth TaxService Tax Customs Duty Excise Duty Value added tax Cess and other material statutorydues applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident FundEmployees State Insurance Income-tax Sales Tax Wealth Tax Service Tax CustomsDuty Excise Duty Value added tax Cess and other material statutory dues in arrears asat 31st December 2015 for a period of more than six months from the date they becamepayable. (c) There are no dues of Wealth Tax which has not been deposited as on 31stDecember 2015 on account of disputes. Details of dues of Income-tax Sales Tax ServiceTax Customs Duty Excise Duty Value Added Tax and Cess which have not been deposited ason 31st December 2015 on account of disputes are given below:
|Name of the Statute ||Nature of the Dues ||Amount * (Rs in million) ||Period to which the amount relates (various years covering the period) ||Forum where dispute is pending |
|Central Excise Laws ||Excise Duty ||45.7 ||1996-2004 ||Supreme Court |
| || ||22.1 ||2001-2006 2007-2014 ||Customs Excise and Service Tax Appellate Tribunal |
| || ||0.5 ||2000 ||Appellate authority upto Commissioners level |
| ||Service Tax ||412.9 ||2005-2007 2008 2010 2011 ||Customs Excise and Service Tax Appellate Tribunal |
|Customs Laws ||Customs Duty ||99.1 ||2008-2013 ||Appellate authority upto Commissioners level |
|Sales Tax Laws ||Sales Tax / ||17.3 ||2000-2006 2007-2009 ||High Court |
| ||VAT ||75.6 ||2000-2005 2011-2012 ||Appellate Tribunal |
| || ||251.6 ||1996-1997 2004-2014 ||Appellate authority upto Commissioners level |
|Local State Act ||Cess ||11.2 ||2001-2015 ||Appellate authority upto Commissioners level |
|Income Tax Act 1961 ||Income tax ||118.6 ||1992-1994 ||High Court |
| || ||334.3 ||2010-11 2006-08 ||Appellate authority upto Commissioners level |
| || ||0.6 ||2008-2009 ||Income-tax Appellate Tribunal |
* Amount includes interest and penalty as per demand orders wherever indicated in theOrder and excludes amount of Rs 226.6 Million paid under protest.
The following matters which have been excluded from the table above have been decidedin favour of the Company but the department has preferred appeals at higher levels. Thedetails are given below:
|Name of the Statute ||Nature of the Dues ||Amount ( Rs in million) ||Period to which the amount relates (various years covering the period) ||Forum where dispute is pending |
|Central Excise Laws ||Excise Duty ||7.5 ||2004-2006 ||Supreme Court |
| || ||0.9 ||1994 ||High Court |
| || ||6.6 ||2005-2006 ||Customs Excise and Service Tax Appellate Tribunal |
| ||Service Tax ||1.4 ||2008 ||Customs Excise and Service Tax Appellate Tribunal |
|Sales Tax Laws ||Sales Tax / VAT ||17.1 ||1997-1998 2003 ||High Court |
|Income Tax Act 1961 ||Income tax ||772.2 ||1996-2001 2004-2006 ||Supreme Court |
| || ||335.8 ||2000-2004 ||High Court |
| || ||625.8 ||2008-2010 ||Income Tax Appellate Tribunal |
(d) The Company has been regular in transferring amounts to the Investor Education andProtection Fund in accordance with the relevant provisions of the Companies Act 1956 (1of 1956) and Rules made thereunder within time.
(viii) The Company does not have accumulated losses at the end of the financial yearand the Company has not incurred cash losses during the financial year and in theimmediately preceding financial year.
(ix) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks and financial institutions.The Company has not issued any debentures.
(x) According to the information and explanations given to us the Company has notgiven any guarantee during the year for loans taken by others from banks or financialinstitutions.
(xi) In our opinion and according to the information and explanations given to us theCompany did not have any unutilised term loan during the year.
(xii) 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 has been noticedor reported during the year.
For A. F. FERGUSON & CO.
(Firms Registration No. 112066W)
(Membership No. 86423)
NEW DELHI February 12 2016