To the Members of United Breweries Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of UnitedBreweries Limited ("the Company") which comprise the Balance Sheet as at March31 2017 the Statement of Profit and Loss including the Statement of Other ComprehensiveIncome the Cash Flow Statement the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone 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 standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with accounting principles generallyaccepted in India including the Accounting Standards specified under section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014 and the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial control that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit in accordance with the Standards on Auditing issued by the Institute ofChartered Accountants of India as specified under section 143(10) of the Act. ThoseStandards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether the standalone Ind AS financial statementsare free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone Ind AS financial statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of the standalone Ind AS 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 accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the standalone Ind AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the standalone Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2017 its profit including other comprehensive income its cash flows andthe changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to Note 42 to the accompanying standalone Ind AS financialstatements which more fully describes the decision made by the Bihar State Government fornot renewing brewery license from the financial year 2017-18
Independent Auditor's Report contd.
and the uncertainty relating to the outcome of special leave petition filed by theBihar State Government before the Honourable Supreme Court of India. Our opinion is notqualified 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 ofthe Act we give in "Annexure 1" a statement on the matters specified inparagraphs 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 Cash Flow Statement and the 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 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 standalone Ind AS financial statements Refer Note 16 and 35 to thestandalone Ind AS financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company;
iv. The Company has not provided certain requisite disclosure in the standalone Ind ASfinancial statements as to
holdings as well as dealings in Specified Bank Notes during the period from November 82016 to December 30 2016. Consequently we are unable to obtain sufficient andappropriate audit evidence to report whether such disclosure is in accordance with booksof account maintained by the Company and as produced to us by the management ReferNote 10 to the standalone Ind AS financial statements.
For S.R. Batliboi & Associates LLP
ICAI Firm Registration Number: 101049W/E300004
per Mahendra Jain
Membership Number: 205839
Place of signature: Bengaluru
Date: May 17 2017
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE IND ASFINANCIAL STATEMENTS OF UNITED BREWERIES LIMITED
Statement on the matters specified in paragraphs 3 and 4 of the Companies (Auditor'sreport) Order 2016 ("the Order")
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the year and nomaterial discrepancies were identified on such verification.
(c) According to the information and explanations given by the management andconfirmation from banks relating to title deeds of immovable properties mortgaged with thebanks (refer Note 14 to the accompanying standalone Ind AS financial statements fordetails) for securing the borrowings raised by the Company the title deeds of immovableproperties included in property plant and equipment are held in the name of the Companyexcept for 1 immovable property of 9.04 acres (forming part of land parcel of 23.87 acreswith gross book value of Rs. 211 Lakhs) where registration of title deed is pending 2immovable properties aggregating to 1.8 acres (forming part of land parcel of 142.96 acreswith gross book value of Rs. 4309 Lakhs) for which title deeds are under dispute andpending resolution at the Civil Courts as at March 31 2017 4 immovable propertiesaggregating to 181.63 acres (with gross book value of Rs. 1754 Lakhs) for which titledeeds are held in the name of erstwhile merged entities and 1 immovable propertyaggregating to 14.39 acres (with gross book value of Rs. 1590 Lakhs) for which title deedis held in the name of transferor and is pending to be registered in the name of theCompany.
(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 ("the Act"). Accordingly the provisions of clause3(iii)(a)(b) and (c) of the Order are not applicable to the Company and hence notcommented upon.
(iv) In our opinion and according to the information and explanations given to usprovisions of section 186 of the Act in respect of investments made by the Company havebeen complied with. The Company has not advanced loans to directors / to a company inwhich the director is interested to which provisions of section 185 of the Act apply andhas not given loans /guarantees/ provided security to which the provisions of section 186of the Act apply and hence not commented 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 section 148(1) of the Act for theproducts/services of the Company.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax cess and other statutory dues have generally been regularly deposited with theappropriate authorities though there have been serious delays in a large number of casesin deposit of service tax dues on government services.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax sales-taxservice tax duty of custom duty of excise value added tax cess and other statutorydues were outstanding at the year end for a period of more than six months from the datethey became payable.
(c) According to the records of the Company the dues outstanding of income taxsales-tax service tax duty of custom duty of excise value added tax and cess onaccount of any dispute are as follows:
|Name of the statute ||Nature of the dues ||Amount (including interest and penalty) ||Payment under protest (Rs. in Lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
| || ||(Rs. in Lakhs) || || || |
|The Income Tax Act 1961 ||Income tax/ tax deducted at source ||14613 ||1633 ||FY 2002-03 and 2011-12 ||Commissioner of Income Tax (Appeals) |
| || ||4850 || ||FY 2012-13 ||Dispute Resolution Panel |
| || ||2678 ||713 ||FY 2002-03 to 2009-10 ||Income Tax Appellate Tribunal |
| || ||2445 ||458 ||FY 2001-02 to 2009-10 ||High Court of Madras |
| || ||2159 ||219 ||FY 2003-04 to 2008-09 ||High Court of Karnataka |
| || ||69 ||46 ||FY 2009-10 ||High Court of Andhra Pradesh and Telengana |
| || ||15 || ||FY 2007-08 to 2016-17 ||Commissioner of Income Tax (TDS) |
|The Finance Act 1994 ||Service tax ||7220 || ||2004-05 to 2010-11 ||Customs Excise and Service Tax Appellate Tribunal |
| || ||2273 || ||2010-11 ||Commissioner of Service Tax Bangalore |
| || ||2192 ||96 ||2009-10 to 2011-12 ||Commissioner of Customs and Central Excise Aurangabad |
| || ||1 || ||2012-13 to 2015-16 ||Deputy Commissioner (Audit) Central Excise Customs & Service Tax |
|The Central Excise Act 1944 ||Excise duty/ disallowance of cenvat credit ||96 || ||2009-10 to 2015-16 ||The Commissioner (Appeals) |
| || ||67 ||9 ||2005-06 to 2007-08 and 2013-14 to 2014-15 ||Customs Excise and Service Tax Appellate Tribunal |
| || ||16 || ||2010-11 to 2014-15 ||Commissioner of Central Excise Customs & Service Tax Aurangabad |
| || ||12 || ||2014-15 and 2015-16 ||Commissioner of Customs Central Excise & Service Tax (Appeals) |
| || ||11 || ||2014-15 ||The Commissioner (Appeals) Central Excise Jaipur |
| || ||1 || ||2007-08 ||Commissioner (Appeals) Central Excise Chandigarh |
|Name of the statute ||Nature of the dues ||Amount (including interest and penalty) (Rs. in Lakhs) ||Payment under protest (Rs. in Lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|State Excise (various statutes) ||Excise duty Storage and privilege fee etc. ||218 ||150 ||1999-00 to 2005-06 ||High Court of Karnataka |
| || ||141 || ||2000-01 to 2014-15 ||The Commissioner of Prohibition and Excise Chennai |
| || ||43 ||13 ||1988-89 ||High Court of Calcutta |
| || ||38 || ||2011-12 to 2015-16 ||High Court of Bombay at Goa |
| || ||19 ||5 ||2009-10 to 2012-13 ||High Court of Madhya Pradesh |
| || ||7 ||2 ||2013-14 ||Rajasthan Tax Board Ajmer |
| || ||3 || ||2000-01 to 2003-04 ||Excise Commissioner Karnataka |
|Sales Tax (various statutes) ||Sales tax/ Value added tax/ Entry tax ||3001 ||1245 ||2001-02 to 2013-14 ||Rajasthan Tax Board Ajmer |
| || ||579 ||24 ||2012-13 ||The Appeal Authority Commercial Taxes Alwar |
| || ||438 || ||2006-07 and 2007-08 ||The West Bengal Sales Tax Appellate and Revisional Board |
| || ||426 || ||2006-07 to 2013-14 ||Supreme Court of India |
| || ||353 || ||2010-11 ||Deputy Commissioner of Commercial Taxes Dhanbad |
| || ||188 || ||2012-13 and 2013-14 ||The Joint Commissioner of Sales Tax |
| || ||71 || ||2013-14 ||Assistant Commissioner of Commercial Taxes Patna |
| || ||69 ||6 ||2008-09 to 2010-11 ||Joint Commissioner of Sales Tax (Appeals) Maharashtra |
| || ||63 || ||2002-03 ||Jt. Excise and Taxation Commissioner (Appeals) Faridabad |
| || ||51 || ||2008-09 to 2011-12 ||Joint Commissioner of Commercial Taxes (Appeal) Patna |
| || ||26 || ||2011-12 to 2012-13 ||Commissioner of Commercial Taxes Bihar |
| || ||22 ||8 ||2003-04 and 2006-07 ||Maharashtra Sales Tax Tribunal |
| || ||10 ||4 ||2005-06 to 2007-08 ||Sales Tax Appellate Tribunal Andhra Pradesh |
| || ||5 || ||2011-12 ||Commercial Tax Tribunal Bihar |
| || ||3 || ||2008-09 ||The Commercial Taxes Tribunal Bihar |
(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowings to afinancial institution or bank or government. The Company did not have any outstanding duesin respect of debenture holders during the year.
(ix) In our opinion and according to information and explanations given by themanagement monies raised by the Company by way of term loans were applied for thepurposes for which loans were obtained. The Company has not raised any money by way ofinitial public offer or further public offer (including debt instruments) and hence notcommented upon.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the standalone Ind AS financial statements and according to the informationand explanations given by the management we report that no fraud by the Company or nomaterial fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
(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) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 of Actwhere applicable and the details have been disclosed in the notes to the standalone IndAS financial statements as required by the applicable 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 the Act.
(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 applica4le to the Company.
For S.R. Batliboi & Associates LLP
ICAI Firm Registration Number: 101049W/E300004
per Mahendra Jain
Membership Number: 205839
Place of signature: Bengaluru
Date: May 17 2017