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Aditya Birla Fashion & Retail Ltd.

BSE: 535755 Sector: Industrials
NSE: ABFRL ISIN Code: INE647O01011
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OPEN 306.90
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VOLUME 187454
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OPEN 306.90
CLOSE 310.65
VOLUME 187454
52-Week high 318.55
52-Week low 148.60
P/E
Mkt Cap.(Rs cr) 29,483
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company auditors report

To the Members of Aditya Birla Fashion and Retail Limited

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

We have audited the accompanying Standalone Ind AS Financial Statements of Aditya BirlaFashion and Retail Limited ("the Company") which comprise the Balance Sheet asat March 31 2021 the Statement of Profit and Loss including the Statement of OtherComprehensive Income the

Statement of Cash Flows and the Statement of Changes in Equity for the year then endedand notes to the Standalone Ind AS Financial Statements including a summary ofsignificant accounting policies and other explanatory 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 as amended ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 its loss including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the Standalone Ind AS Financial Statements in accordance withthe

Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the ‘Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the Standalone Ind AS Financial Statements.

Emphasis of Matter

We draw attention to Note 40(j) of the Standalone Ind AS Financial Statements whichdescribes management's assessment of the impact of COVID 19 pandemic on the Company'soperations and carrying value of assets as at March 31 2021. Our opinion is not modifiedin respect of this matter.

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 for the financialyear ended March 31

2021. These matters were addressed in the context of our audit of the Standalone Ind ASFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. For each matter below our description of how ouraudit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the Standalone Ind AS Financial Statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the Standalone Ind AS Financial Statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying Standalone Ind AS FinancialStatements.

Key audit matters How our audit addressed the key audit matter
Goodwill: Impairment Evaluation (as described in Note 5 of the Standalone Ind AS Financial Statements) Our audit procedures included the following:
As disclosed in Note 5 goodwill amounts to Rs.1859.60 Crore as at March 31 2021 and represents goodwill acquired through business combinations and allocated to cash generating units of the Company. Obtained an understanding of the process followed by the management to determine the recoverable amounts of cash generating units to which the goodwill has been allocated.
A cash generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired. Evaluated the objectivity competency and independence of the specialist engaged by the Company and reviewed the valuation reports issued by such specialist.
As disclosed in Note 5 impairment of goodwill is determined by assessing the recoverable amount of each cash generating unit to which the goodwill relates. Evaluated the model used in determining the value in use of the cash generating units.
The recoverable amount of the cash generating unit as at March 31 2021 has been determined by the management based on a value in use calculation using cash flow projections from financial budgets approved by senior management. Assessed the consistency of data used in the recoverable amount calculation with the financial budgets approved by senior management of the Company.
Goodwill impairment assessment is a key audit matter considering future estimates and judgment involved in such assessment and considering the significant carrying value of goodwill. Analysed the performance of the cash generating units and assessed the assumptions used in computation of value in use as at March 31 2021 including understanding of management's estimate of business impact based on current market and economic conditions arising from the COVID 19 pandemic.
Involved valuation expert to assist in evaluating management's determination of value in use.
Tested the arithmetical accuracy of the computation of recoverable amounts of cash generating units.
Assessed the disclosures provided by the Company in relation to its annual impairment test in Note 5 to the Standalone Ind AS Financial Statements.
Impairment Evaluation of Investments in Subsidiaries (as described in Note 6(a) of the Standalone Ind AS Financial Statements) Our audit procedures included the following:
As disclosed in Note 6(a) Investment in subsidiaries and joint venture amounts to Rs.682.87 Crore as at March 31 2021 which includes investment in Finesse International Design Private Limited (‘Finesse') Jaypore E-commerce Private Limited (‘Jaypore') and T G Apparel & Decor Private Limited (‘T G Apparel') amounting to Rs.162.85 Crore (acquired during the year ended March 31 2020). Obtained an understanding of the process followed by the management to determine the recoverable amounts of investment in Finesse Jaypore and TG Apparel.
Investment in subsidiaries is tested for impairment annually or more frequently when there is an indication that the investment may be impaired. As disclosed in Note 40(a) impairment of investment in subsidiaries is determined by comparing the carrying value of the investments with their recoverable amount. Evaluated the objectivity competency and independence of the specialist engaged by the Company and reviewed the valuation reports issued by such specialist.
As at March 31 2021 the recoverable amount of the investments in these subsidiaries has been determined by the management based on a value in use calculation using cash flow projections from financial budgets approved by senior management. Evaluated the model used in determining the value in use of investment in aforesaid subsidiaries.
Impairment assessment of investment in aforesaid subsidiaries is a key audit matter considering future estimates and judgment involved in such assessment. Assessed the consistency of data used in the recoverable amount calculation with the financial budgets approved by senior management.
Analysed the performance of the subsidiaries and assessed the assumptions used in computation of value in use as at March 31 2021 including understanding of management's estimate of business impact based on current market and economic conditions arising from the COVID 19 pandemic.
Involved valuation expert to assist in evaluating management's determination of value in use.
Obtained and read the audited financial statements of the subsidiaries to determine the net worth historical cash flows and other financial indicators.
Tested the arithmetical accuracy of the computation of recoverable amounts of investment in aforesaid subsidiaries.
Provision for discount and sales returns (as described in Note 40(g) of the Standalone Ind AS Financial Statements) Our audit procedures included the following:
Revenue from contracts with customers is recognised upon transfer of control of promised goods and is measured at the fair value of the consideration received or receivable net of returns and allowances trade discounts sales promotion schemes and rebates based on contractually defined terms. Assessed the Company's accounting policy for recognition and measurement of net sales revenue including the policy for recording returns and discounts in accordance with Ind AS 115 ‘Revenue from Contracts with Customers'.
In some cases discounts estimated and accrued are offered on further sale of goods by the customers. Also in certain cases the Company has contracts with customers which entitles them to right of return. Tested design and operating effectiveness of key controls for calculating reviewing and approving returns and discounts.
At year end amount of expected returns and discounts that have not yet been settled with the customers are estimated and accrued. Tested the estimate of returns and discounts related accruals with underlying documentation such as management approved norms customer agreements sales data and customer reconciliations as applicable.
Estimating the amount of accrual at year end is considered a key audit matter due to assumptions and judgments required to be made by management. Obtained an understanding of management's estimate of business impact of COVID 19 pandemic on estimates of sales returns and sales discounts.
Tested on sample basis credit notes issued to customers for returns and discounts as per approved norms.
Performed analytical procedures on returns and discounts and held discussions with management to understand changes in provisioning norms/additional provisions made based on management's assessment of market conditions.
Assessed the Company's disclosures in Note 40(g) on significant accounting judgments estimates and assumptions.
Ind-AS 116 –Leases and Accounting for rent concession arrangements (as described in Note 4 and 40(k) of the Standalone Ind AS Financial Statements) Our audit procedures included the following:
As at March 31 2021 the Company has Rs.2066.89 Crore of Right of use (RoU) assets and Rs.2385.57 Crore of Lease liabilities recognised under Ind AS 116 pertaining to the premises leased by the Company. Assessed the Company's accounting policy with respect to recognition of leases and for assessing compliance with Ind AS 116 including accounting for rent concession arrangements.
During the year considering the impact of COVID 19 pandemic on its business the Company negotiated rent concessions with its lessors. Obtained an understanding evaluated the design and tested the operating effectiveness of controls that the Company has in relation to accounting of leases and rent concession arrangements under Ind AS 116.
The Ministry of Corporate Affairs vide notification dated July 24 2020 issued an amendment to Ind AS 116 - Leases by inserting a practical expedient w.r.t. "Covid- 19-Related Rent Concessions" effective from the period beginning on or after April 01 2020. Tested the accuracy and completeness of the underlying lease master by agreeing the underlying data pertaining to lease rentals term escalation and other relevant terms and conditions to lease agreements and performed recomputation on a sample basis.
Pursuant to the above amendment the Company applied the practical expedient with effect from April 01 2020. Accordingly the Company accounted unconditional rent concessions of Rs.340.43 Crore during the year as a reduction of rent expense in the Standalone Statement of Profit and Loss. Tested on a sample basis the rent concessions accounted by the Company to agreed rent concession arrangements / underlying documents calculations and assessed the terms of the same against the requirements of the practical expedient under Ind AS 116.
Accounting under Ind AS 116 requires significant judgement and estimate in identification of lease arrangement determining the RoU assets and lease liabilities and related rent concessions based on terms of the underlying agreements. Hence we considered this as a key audit matter. Assessed the underlying assumptions and estimates including the applicable discount rates.
Assessed the Company's disclosures made in accordance with the requirements of Ind AS 116.
Recognition of Deferred tax assets (as described in Note 10 and 38 of the Standalone Ind AS Financial Statements) Our audit procedures included the following:
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Assessed the Company's accounting policy with respect to recognition of deferred taxes in accordance with Ind AS 12 "Income Taxes". Involved tax specialists who evaluated the Company's tax positions by assessing the prevalent tax laws.
The Company's ability to recognise previously un-recognised deferred tax assets is assessed by the management at the end of each reporting period taking into account forecasts of future taxable profits and the applicable tax laws. Assessed the consistency of financial projections used by management in assessing recoverability of deferred tax assets with the financial budgets approved by senior management of the Company.
As at March 31 2021 the Company has recognised net deferred tax assets of Rs.321.23 Crore. The recognition and measurement of deferred tax assets is a key audit matter as its recoverability within the allowed time frame involves estimate of financial projections availability of sufficient taxable income in the future and judgments in the interpretation of tax regulations and tax positions adopted by the Company. Analysed the performance of the Company and assessed the assumptions used in forecast of future profits and expected utilisation of the unabsorbed business losses and unabsorbed depreciation including understanding of management's estimate of business impact based on current market and economic conditions arising from the COVID 19 pandemic.
Assessed the disclosures in Note 10 and 38 of the Standalone Ind AS financial statements in accordance with the requirements of Ind AS 12 "Income Taxes".
Provision on inventories (as described in Note 12 and 40(f) of the Standalone Ind AS Financial Statements) Our audit procedures included the following:
As at March 31 2021 the Company held inventories of Rs.1742.93 Crore. Inventories are carried at lower of cost and net realisable value in accordance with the accounting policy of the Company. Obtained an understanding evaluated the design and tested the operating effectiveness of controls that the Company has in relation to inventory provision.
The Company makes provision for inventory based on policy past experience current trend and future expectations of these materials depending upon the category of goods. Compared the methodology used to calculate the inventory provision and its consistency with prior periods and obtained an understanding of management basis for changes.
Significant judgment is required in assessing the appropriate level of the provision for slow moving and/or obsolete inventory. Accordingly we have considered provision on inventories to be a key audit matter. Obtained an understanding of management's estimate of business impact of COVID 19 pandemic on provision on inventories.
Tested on a sample basis the calculation of the provision as per Company policy.
For specific assessed the basis and tested with management approvals.
Tested on a sample basis whether inventories are carried at the lower of cost and net realisable value.
Assessed the Company's disclosures in Note 40(f) on significant accounting judgments estimates and assumptions and Note 12 on Inventories.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report with respect tofollowing sections but does not include the Standalone Ind AS Financial Statements andour auditor's report thereon.

Report of the Board of Directors (includes Management Discussion and Analysis) onlywith respect to the following sections

l Business Overview

l Business Strategy

l Financial Performance and Analysis

l Risk Management

l Internal Control Systems and their Adequacy

l Share Capital

l Disclosure in terms of the provisions of the Act and the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015

l Corporate Governance Report

Our opinion on the Standalone Ind AS Financial Statements does not cover the otherinformation and we do not 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 and in doing so consider whether suchother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management 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 Financial Statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe 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 the 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.

The 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 fraud orerror and to issue an auditor's report that includes our opinion. Reasonable assurance isa 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:

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.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

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

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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

Evaluate the overall presentation structure and content of the Standalone Ind ASFinancial

Statements including the disclosures and whether the Standalone Ind AS Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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 for the financial year ended March 31 2021 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

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 the "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 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 including the Statement ofOther

Comprehensive Income the Statement of Cash Flows and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account; (d) In our opinionthe aforesaid Standalone Ind AS Financial Statements comply with the

Accounting Standards specified under Section 133 of the Act read with Companies(Indian

Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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 with reference toStandalone Ind AS Financial Statements and the operating effectiveness of such controlsrefer to our separate Report in "Annexure 2" to this report;

(g) The remuneration paid to Managing Director and Whole time Directors for the yearended

March 31 2021 being in excess of the limits prescribed under the provisions ofsection

197 read with Schedule V to the Act by Rs.0.56 Crore is subject to the approval ofthe shareholders;

(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 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsStandalone Ind AS Financial Statements Refer Note 45 to the Standalone Ind

AS Financial Statements; ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; iii. There wereno amounts which were required to be transferred to the Investor Education and ProtectionFund by the Company.

Annexure 1 to the Independent Auditor's Report of even date on the Standalone Ind ASFinancial Statements of Aditya Birla Fashion and Retail Limited

We report that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property plant and equipment.

(i) (b) All Property plant and equipment have not been physically verified by themanagement during the year but there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(i) (c) According to information and explanations given by the management the titledeeds of immovable properties included in Property plant and equipment are held in thename of the Company except for the following immovable properties other thanself-constructed buildings aggregating to Rs.6.02 Crore which are held in the name of thedemerged companies and are in the process of being transferred to the Company:

Total number of cases Asset category Amount as at March 31 2021 (Rs.in Crore) Remarks
12 Freehold Land 5.92 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) 0.10

(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 clause 3(iii)(a) (b)and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 186 of the Act in respect ofinvestments made and loans granted to which section 186 of the Act is applicable.According to the information and explanations given to us there are no guarantees orsecurities given in respect of which section

186 of the Act is applicable and there are no loans guarantees and securities givenin respect of which provisions of section 185 of the Act 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 section 148(1) of the Act for theproducts/services of the

Company.

(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax customs duty goods and service tax cess and other statutory dues applicable to it.

(vii) (b) According to the information and explanations given to us no undisputedamounts payable in respect of provident fund employees' state insurance income taxcustoms duty goods and service tax cess and other statutory dues were outstanding asapplicable at the year end for a period of more than six months from the date theybecame payable.

(vii) (c) According to the records of the Company the dues of income tax service taxsales tax custom duty excise duty value added tax and cess on account of any disputeare as follows:

Statute Nature of dues Unpaid Amount involved (Rs.Crore) * Period to which the amount relates Forum Where disputeis pending
Customs Act Custom duty 2.04 1998-99 High Court Karnataka
Customs Act Custom duty 0.50 2010 Commissioner -Appeal Chennai
Excise Act Excise duty 0.50 2011-12 & 2012-13 Commissioner of Central Tax Bengaluru
Central Sales Tax Act Central sales tax 0.01 2006-07 Deputy Commissioner of Commercial Taxes Secunderabad
Gujarat Commercial Tax Act Sales tax 2.26 2011-12 Joint Commissioner – Ahmedabad
Karnataka Sales Tax Act Sales tax 3.71 2014-15 Karnataka Appellate Tribunal
Karnataka Sales Tax Act Sales tax 0.10 2014-15 Joint Commissioner of Commercial Taxes - Appeals Bengaluru
Karnataka Sales Tax Act Sales tax 0.01 2005-07 High Court – Karnataka
Karnataka Tax on Entry tax 0.02 2002-03 to Joint Commissioner of Commercial
Entry of Goods Act 2004-05 Taxes - Appeals Bengaluru
Kerala General Sales tax 0.01 2004-05 Kerala Sales Tax Appellate Tribunal
Sales Tax Act Ernakulam
Kerala Sales tax 2.44 2008-09 to Supreme Court
Commercial Tax Act 2016-17
Kerala Goods and 0.59 2017-18 Assistant Commissioner (Appeals)
Commercial Tax Act service tax of State Goods and Services Tax Department Kozhikode.
Odisha Sales Tax Act Sales tax 0.01 2002-03 Additional Commissioner – Appeals Bhubaneswar
Odisha Sales Tax Act Sales tax 0.73 2014-15 Joint Commissioner of Commercial Taxes Bhubaneswar
Uttar Pradesh Value added 0.97 2010-11 Additional Commissioner – Appeals
Commercial Tax Act Tax Lucknow
Uttar Pradesh Value added 3.25 2012-13 Additional Commissioner – Appeals
Commercial Tax Act Tax Lucknow
Uttarakhand Value added 4.99 2012-13 to Joint Commissioner Appeals Dehradun
Commercial Tax Act Tax 2015-16
West Bengal Commercial Tax Sales tax 0.04 2013-14 Joint Commissioner Appeals Kolkata
Central Sales Tax Act Central sales Tax 0.17 2016-17 Appellate Deputy Commissioner Telangana
Madhya Pradesh Commercial Tax Sales tax 0.10 2013-14 Commercial Tax officer Indore
Delhi Commercial Tax Sales tax 5.64 2015-16 Additional Deputy Commissioner of Commercial Taxes Delhi
Textile Committee Act Textile cess 0.59 1999-2005 Textile Cess Appellate Tribunal Mumbai
Income Tax Act 1961 Withholding Tax 0.24 FY 2010-11 Commissioner of Income Tax (Appeals) Mumbai
Income Tax Act 1961 Income tax 83.04 FY 2017-18 Commissioner of Income Tax (Appeals) NFAC

* The unpaid amount mentioned above is net of Rs.37.82 Crore paid under protest.

(viii) In our opinion and according to information and explanations given by themanagement the

Company has not defaulted in repayment of loans or borrowings to a financialinstitution bank or dues to debenture holders. The Company does not have any borrowingfrom the government during the year.

(ix) In our opinion and according to the information and explanations given by themanagement monies raised by way of further public offer 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 by the Company or no material fraud onthe

Company by the officers and employees of the Company has been noticed or reportedduring the year.

(xi) According to the information and explanation given by the management we reportthat remuneration of the Managing Director and Whole-time Directors for the year endedMarch 31 2021 is in excess of the limits applicable under section 197 of the Act readwith Schedule V thereto by Rs.0.56 Crore. We are informed by the management that itproposes to obtain approval of the shareholders in a general meeting by way of a specialresolution.

(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 theAct where applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.

(xiv) According to the information and explanations given by the management and auditprocedures performed by us the Company has complied with provisions of section 42 of theAct in respect of the preferential allotment of shares during the year. According to theinformation and explanations given by the management we report that the amounts raisedhave been used for the purposes for which the funds were raised. The Company has not madeany allotment of fully or partly convertible debentures during the year.

(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 applicable to the Company.

Annexure 2 to the Independent Auditor's Report of even date on the Standalone Ind ASFinancial Statements of Aditya Birla Fashion and Retail Limited Report on the InternalFinancial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act2013 ("the Act")

We have audited the internal financial controls with reference to the Standalone Ind ASFinancial Statements of Aditya Birla Fashion and Retail Limited ("the Company")as of March 31 2021 in conjunction with our audit of the Standalone Ind AS 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 Reporting issued by the Institute ofChartered Accountants of India ("ICAI"). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating 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 Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to these Standalone Ind AS Financial Statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both issued by ICAI. 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 with reference to these Standalone Ind AS Financial Statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to these Standalone Ind AS FinancialStatements and their operating effectiveness. Our audit of internal financial controlswith reference to the Standalone Ind AS Financial Statements included obtaining anunderstanding of internal financial controls with reference to these Standalone Ind ASFinancial 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 judgement including theassessment of the risks of material misstatement of the financial statements whether dueto 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 withreference to these

Standalone Ind AS Financial Statements.

Meaning of Internal Financial Controls with reference to these Standalone Ind ASFinancial Statements

A company's internal financial controls with reference to the Standalone Ind ASFinancial Statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial controls with reference to the

Standalone Ind AS Financial Statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to these StandaloneInd AS Financial Statements

Because of the inherent limitations of internal financial controls with reference tothe Standalone

Ind AS Financial Statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to the Standalone Ind AS Financial Statements to future periodsare subject to the risk that the internal financial control with reference to theStandalone Ind AS Financial Statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to the Standalone Ind AS Financial Statements and such internalfinancial controls with reference to the Standalone Ind AS Financial Statements wereoperating effectively as at March 31 2021 based on the internal control over financialreporting criteria established by the

Company considering the essential components of internal control stated in the GuidanceNote issued by the ICAI.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Aditya Vikram Bhauwala

Partner

Membership Number: 208382

UDIN: 21208382AAAABT7915

Bengaluru

May 28 2021

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