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ADF Foods Ltd.

BSE: 519183 Sector: Agri and agri inputs
NSE: ADFFOODS ISIN Code: INE982B01019
BSE 00:00 | 26 Feb 825.15 -27.60
(-3.24%)
OPEN

836.00

HIGH

846.85

LOW

816.00

NSE 00:00 | 26 Feb 823.90 -29.95
(-3.51%)
OPEN

851.00

HIGH

851.00

LOW

815.20

OPEN 836.00
PREVIOUS CLOSE 852.75
VOLUME 2382
52-Week high 863.05
52-Week low 123.35
P/E 51.70
Mkt Cap.(Rs cr) 1,652
Buy Price 816.20
Buy Qty 1.00
Sell Price 825.15
Sell Qty 200.00
OPEN 836.00
CLOSE 852.75
VOLUME 2382
52-Week high 863.05
52-Week low 123.35
P/E 51.70
Mkt Cap.(Rs cr) 1,652
Buy Price 816.20
Buy Qty 1.00
Sell Price 825.15
Sell Qty 200.00

ADF Foods Ltd. (ADFFOODS) - Auditors Report

Company auditors report

To the Members of ADF Foods Limited

Report on the Audit of the Standalone Ind AS Financial Statements Opinion

We have audited the accompanying Standalone Ind AS Financial Statements ofADF FoodsLimited ("the Company") which comprise the Balance Sheet as at March 31 2020the Statement of Profit and Loss (including other comprehensive income) the Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and notes to theFinancial Statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS Financial Statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs (financial position) of the Company as at March 312020and profit (financial performance including Other Comprehensive Income) changes in equityand its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013 ("the Act"). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of Standalone Ind AS Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the Financial Statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS Financial Statements of the currentperiod. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

We have determined the matters described below to be the key audit matters to becommunicated in our report.

Key Audit Matter Description Our Response
1. Impairment of Indefinite-lived intangible assets
Indefinite-lived intangible assets (Brands) as at March 312020 amount to Rs. 2132.84 lakhs. We have assessed the valuation methodology and challenged management's analysis and assumptions around the key drivers of cash flow forecasts including discount rate terminal growth rate royalty rate etc. by comparing them to relevant market data and with the assistance from our inhouse specialists. We also performed sensitivity analysis in respect of the above assumptions.
The impairment assessment must be performed at least annually and involves the determination of the recoverable amount being the higher of the value-in-use and the fair value less costs to dispose.
We consider this to be a key audit matter because the recoverability assessment of such assets involves complex and subjective estimates and judgements. We assessed the appropriateness and completeness of the related disclosures in the financial statements.
These estimates and judgements are entrenched with inherent uncertainty as they include assumptions in relation to forecasting revenue growth rates direct costs foreign exchange rates discount rates and future cash flows.
2. Derivative Instruments and Hedge Accounting
The Company enters into a high volume of derivative financial instrument contracts to manage its exposure to foreign currency risk. These contracts gave rise to Derivative Liabilities of Rs.199.17 lakhs as at March 31 2020. These contracts are recorded at fair value and for the majority of them hedge accounting is applied such that gains and losses arising from fair value changes are deferred in equity and recognised in the Statement of Profit or Loss when hedges mature. The high volume of contracts necessitates a sophisticated system to record and track each contract and calculate the related valuations at each financial reporting date. The valuation of hedging instruments and consideration of hedge effectiveness can involve a significant degree of both complexity and management judgement and are subject to an inherent risk of error. Ensure that the entity's Hedging policy is documented validated by adequate level of management and those charged with governance and communicated to all stakeholders within the entity.
Assess the process and controls to validate hedging requests to ensure that all hedging requests were duly validated by adequate level of management and are in line with the entity's documented hedging policy.
Verify that all derivatives documented in hedging relationships are allocated to a specific hedged risk from their inception.
Testing management's controls over derivative financial instruments and hedge accounting.
Inspecting on a sample basis appropriateness of hedging documentation and contracts.
Obtaining confirmation in respect of derivative financial instruments from counterparties.
Re-performing the year end valuations of derivative financial instruments and calculations of hedge effectiveness; and
 

We have also evaluated whether the liabilities and potential exposures were appropriately disclosed in the Financial Statements.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report namely ManagementDiscussion and Analysis Director's report Corporate Governance Report BusinessResponsibility Report and Share Holders Information but does not include the FinancialStatements and our auditor's report thereon.

Our opinion on the Financial Statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Ind AS Financial Statements ourresponsibility is to read the other information identified above and in doing soconsider whether the other information is materially inconsistent with the StandaloneFinancial Statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report the fact. Wehave nothing to report in this regard.

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 Act with respect to the preparation of these Standalone Ind AS FinancialStatements that give a true and fair view of the financial position financial performance(including Other Comprehensive Income) changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 Standalone Ind AS FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the Standalone Ind AS Financial Statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Ind AS Financial Statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the Standalone Ind ASFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

(b) Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system with reference to Standalone FinancialStatements in place and the operating effectiveness of such controls.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

(d) Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Standalone Ind AS Financial Statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

(e) Evaluate the overall presentation structure and content of the Standalone Ind ASFinancial Statements including the disclosures and whether the Standalone Ind ASFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of theusers of the Financial Statements may be influenced. We consider quantitative materialityand qualitative factors in (i) planning the scope of our audit work and in evaluating theresults of our work; and (ii) to evaluate the effect of any identified misstatements inthe standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Ind AS FinancialStatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

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 Companies Act 2013 we give in the Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

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 purposes 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 Standalone Balance Sheet the Standalone Statement of Profit and Loss(including Other Comprehensive Income) the Standalone Statement of Changes in Equity andthe Standalone Statement of Cash Flows dealt with by this Report are in agreement with thebooks 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 relevant rulesissued thereunder.

(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors of the Companyis disqualified as on March 31 2020 from being appointed as a director in terms ofSection 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference toFinancial Statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(g) According to information and explanations given to us and based on our examinationof the records of the Company the Company has paid managerial remuneration in accordancewith the provisions of Section 197 of the Act.

(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 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 Standalonefinancial position in its Standalone Ind AS Financial Statements - Refer Note 40 to theFinancial Statements.

ii. The Company did not have any material foreseeable losses on long-term contractsincluding derivative contracts.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For KALYANIWALLA & MISTRY LLP
CHARTERED ACCOUNTANTS
Firm Registration Number 104607W/W100166
FARHAD M. BHESANIA
PARTNER
Membership Number 127355
UDIN: 20127355AAAABP7211
Place: Mumbai
Date: May 11 2020

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in in Para 1 'Report on Other Legal and Regulatory Requirements' in ourIndependent Auditors' Report to the members of the Company on the standalone Ind ASFinancial Statements for the year ended March 31 2020.

Statement on Matters specified in paragraphs 3 & 4 of the Companies (Auditor'sReport) Order 2016:

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

(b) The Company has a regular programme of physical verification of fixed assets bywhich all fixed assets are verified once in three years. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets. Pursuant to the programme certain fixed assets were physicallyverified during the year and discrepancies reported on such verification were not materialand have been properly dealt with in the books of accounts.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

2) The inventory has been physically verified by the management during the year. In ouropinion the frequency of such verification is reasonable. The discrepancies reported onsuch verification were not material and have been properly dealt with in the books ofaccounts.

3) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnership or other parties covered in the register maintained undersection 189 of the Act. Therefore the provisions of sub-clause (a) (b) and (c) ofparagraph 3(iii) the Order are not applicable.

4) In our opinion and according to information and explanations given to us theCompany has not advanced any loans to the persons covered under section 185 or givenguarantees or granted securities under section 186 of the Act. In our opinion andaccording to the information and explanations given to us the provisions of Section 186of the Act in respect of Investments made have been complied with by the Company.

5) In our opinion and according to the information and explanations given to us theCompany has not accepted any Deposits from Public and hence the directives issues by theReserve Bank of India and the provisions of Section 73 to 76 or any other relevantprovisions of the Act and the rules framed thereunder are not applicable.

6) In our opinion and according to the information and explanation given to us themaintenance of cost records under sub section (i) of section 148 of the Act is notapplicable to the Company under the Companies (Cost Record and Audit) Rules 2014.

7) (a) According to the information and explanations given to us and the recordsexamined by us the Company

is generally regular in depositing undisputed statutory dues including Provident FundEmployees' State Insurance Income Tax Sales Tax Service Tax Goods and Service taxDuty of Customs Duty of Excise Value Added Tax Cess and any other statutory dues withthe appropriate authorities wherever applicable and there are no such outstanding dues asat March 31 2020 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and on the basis of ourexamination of books of accounts and record the Company has generally been regular indepositing undisputed statutory dues including Income Tax Sales Tax Service Tax Goodsand Service Tax Duty of Customs Duty of Excise and Value added Tax except the following:

Sr. No. Name of the Statute Amount (R in Lakh) Period to which the amount relates Forum where dispute is pending
1 Finance Act 1994 463.54 F.Y.2006-2007 to FY.2010-2011 CESTAT
2 Income Tax Act 1961 164.98 FY.2009-2010 to F.Y.2013-2014 CIT (Appeal)

8) According to the information and explanations given to us and based on the documentsand records produced to us the Company has not defaulted in repayment of borrowings tobanks. The Company does not have any loans or borrowings from financial institutionsgovernment or debenture holders.

9) The Company has not raised any funds by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordingly theparagraph 3 (ix) of the Order is not applicable.

10) During the course of our examination of the books of account and records of theCompany and according to the information and explanation given to us and representationsmade by the Management no material fraud by or on the Company has been noticed orreported during the year.

11) According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with requisite approvals mandated by the provisions of section197 read with Schedule V to the Act.

12) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

13) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Standalone Ind AS Financial Statements as requiredby the applicable accounting standards.

14) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

15) According to the information and explanation given to us and based on ourexamination of the records the Company has not entered into non-cash transactions withthe directors or persons connected with him. Hence the provisions of Section 192 of theAct are not applicable.

16) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 hence the provisions of paragraph 3 (xvi) of the Order are notapplicable.

For KALYANIWALLA & MISTRY LLP
CHARTERED ACCOUNTANTS
Firm Registration Number 104607W/W100166
FARHAD M. BHESANIA
PARTNER
Membership Number 127355
UDIN: 20127355AAAABP7211
Place: Mumbai
Date: May 11 2020

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Para 2 (f) 'Report on Other Legal and Regulatory Requirements' in ourIndependent Auditors' Report to the members of the Company on the Standalone Ind ASFinancial Statements for the year ended March 31 2020.

Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the Internal Financial Controls with reference to Financial Statementsof ADF Foods Limited ("the Company") as of March 31 2020 in conjunction withour audit of the Standalone Ind AS Financial Statements of the Company for the year endedon 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's Internal FinancialControls with reference to Financial Statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing issued by ICAI anddeemed to be prescribed under section 143(10) of the Act to the extent applicable to anaudit of Internal Financial Controls both applicable to an audit of Internal FinancialControls and both issued by ICAI. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe Internal Financial Controls System with reference to financial statements and theiroperating effectiveness.

Our audit of Internal Financial Controls System with reference to financial statementsincluded obtaining an understanding of Internal Financial Controls with reference tofinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the Standalone Ind AS FinancialStatements 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 Company's internal financial controls systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A Company's Internal Financial Control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Standalone Ind AS Financial Statements for externalpurposes in accordance with generally accepted accounting principles. A Company's InternalFinancial Control with reference to financial statements includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of Standalone Ind AS Financial Statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorizations of management and directors of theCompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial effect on the Standalone Ind AS Financial Statements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

Because of the inherent limitations of Internal Financial Controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theInternal Financial Control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate Internal Financial ControlsSystem with reference to financial statements and such Internal Financial Controls withreference to financial statements were operating effectively as at March 31 2020 basedon "the Internal Control Over Financial Reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For KALYANIWALLA & MISTRY LLP
CHARTERED ACCOUNTANTS
Firm Registration Number 104607W/W100166
FARHAD M. BHESANIA
PARTNER
Membership Number 127355
UDIN: 20127355AAAABP7211
Place: Mumbai
Date: May 11 2020

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