THE MEMBERS OF ALBERT DAVID LIMITED
Report on the Audit of the Financial Statements of Albert David Limited
We have audited the accompanying financial statements of Albert DavidLimited ("the Company") which comprise the Balance Sheet as at 31st March 2020the statement of profit and loss (including other comprehensive income) the statement ofchanges in Equity and the cash flow statement for the year on that date and a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the financial statement").
In our opinion and to the best of information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give a trueand fair view in conformity with Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the company as at March 31 2020 the profit comprehensive incomechanges in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the company in accordance with the Code of Ethics issued by the Instituteof the Chartered Accountants of India (ICAI) together with independence requirements thatare relevant to our audit of the financial statements under the provisions of the Act andthe Rules made there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide the basis for ouraudit opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming of opinion thereon and we do not provide a separateopinion on these matters.
We have determined the matters described below to be the key auditmatters to be communicated in our report.
|Key audit matter ||How our audit addressed the key audit matters |
|A. Revenue Recognition ||Our key procedures included the following: |
|Revenue for the company consists primarily of sale of products. ||a) Assessed the appropriateness of the company's revenue recognition accounting policies including those relating to discounts incentives and rebates by comparing with the applicable accounting standards; |
|Revenue from the sale of products is recognized at the moment when performance obligation of the underlying products have been completed and is measured net of discounts incentives and rebates given to the customers. ||b) Tested the operating effectiveness of the general IT control environment and key IT application controls over recognition of revenue calculation of discounts incentives and rebates; |
|The estimation of discounts incentives and rebates recognized related to sales made during the year is material and considered to be complex and judgmental. Therefore there is a risk of revenue being misstated as a result of inaccurate estimates of discounts incentives and rebates. ||c) Performed test of details: |
|Further the company focuses on revenue as a key performance measure. Therefore revenue was our area of focus included whether the accruals were misstated and appropriately valued whether rebates and discounts was recorded in the correct period and whether the significant transactions had been accurately recorded in the Statement of Profit and Loss. ||i) Agreed samples of sales discounts incentives and rebates to supporting documentation and approvals; and |
|Refer corresponding note for amounts recognized as revenue from sale of products ||ii) Obtained supporting documents for sales transactions recorded either side of year end as well as credit notes issued after the year ended to determine whether revenue was recognized in the correct period. |
| ||d) Performed focused analytical procedures: |
| ||i) Compared the revenue for the current year with the prior year for variance/ trend analysis and where relevant completed further inquiries and testing to corroborate the variances by considering both internal and external benchmarks overlaying our understanding of industry; and |
| ||ii) Compared the discounts incentives and rebates of the current year with the prior year for variance/ trend analysis and where relevant completed further inquiries and testing to corroborate the variances by considering both internal and external benchmarks overlaying our understanding of industry |
| ||e) Considered the appropriateness of the company's description of the accounting policy disclosures related to revenue discounts incentive and rebates and whether these are adequately presented in the financial statement. |
|B. Litigations and claims - provisions and contingent liabilities ||Our key procedures included the following: |
|As disclosed in Notes detailing contingent liability and provision for contingencies the company is involved in direct indirect tax and other litigations ('litigations') that are pending with different statutory authorities. || Assessed the appropriates of the company's accounting policies including those relating to provision and contingent liability by comparing with the applicable accounting standards; |
|Whether a liability is recognized or disclosed as a contingent liability in the financial statements is inherently judgmental and dependent on a number of significant assumptions and assessments. The amounts involved are potentially significant and determining the amount if any to be recognized or disclosed in the financial statements is inherently subjective. || Assessed the company process for identification of the pending litigations and completeness for financial reporting and also for monitoring of significant developments in relation to such pending litigations; |
| || Engaged subject matter specialists to gain an understanding of the current status of litigations and monitored changes in the disputes if any through discussions with the management and by reading external advice received by the company where relevant to establish that the provisions had been appropriately recognized or disclosed as required; |
| || Assessed the company's assumptions and estimates in respect of litigations including the liabilities or provisions recognized or contingent liabilities disclosed in the financial statements. This involved assessing the probability of an unfavorable outcome of a given proceeding and the reliability of estimates of related amounts; |
| || Performed substantive procedures on the underlying calculations supporting the provisions recorded; |
| || Assessed the management's conclusions through understanding precedents set in similar cases; and |
| ||Considering the appropriateness of the company's description of the disclosures related to litigations and whether these adequately presented in the financial statements. |
|C. Valuation of investments and impairment thereof ||Our key procedures included the following: |
|I. Non-Current Investments in Unquoted equity instruments. ||Verified with reference to latest registered valuers report; |
|II. Current Investments in unquoted mutual funds. ||Valuation report based on simple average of valuation of investee on EBIDTA concept Revaluation concept and Discounted cash flow concept. |
|III. Fixed Deposit with Bank. ||Verified with reference to duly declared NAV of the investee. |
| ||Verified with reference to banks' confirmation and computation of interest accrued thereon. |
|D. Evaluation of uncertain tax provisions ||Principal Audit procedures |
|The Company has material uncertain tax provisions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||Obtained details of completed tax assessments and demands for the year ended March 31 2020 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2019 to evaluate whether any change was required to management's position on these uncertainties. |
|Refer Note No.44.1 of the financial statements. || |
|E. Recoverability of Indirect tax receivables ||Principal Audit procedures |
|As at March 31 2020 non-current assets in respect of withholding tax and others include Customs/Excise Duty/Cenvat recoverable amounting to Rs. 231.39 lakhs which are pending adjudication. ||We have involved our internal experts to review the nature of the amounts recoverable the sustainability and the likelihood of recoverability upon final resolution. |
|Refer Note 19 to the Financial Statements || |
Information Other than the Financial Statements and Auditor'sReport thereon
The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Corporate Governance and Shareholder's Informationbut does not include the financial statements and our auditor's report thereon.
Our opinion on the 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 financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to preparation of these financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the companiesin accordance with the Ind AS and other accounting principles generally accepted in India.The respective Board of Directors of the companies are also responsible for maintenance ofthe adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the companies and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors of thecompany is responsible for assessing the company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the company orto cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing thecompany's financial reporting process.
Auditor's Responsibilities for the Audit of the FinancialStatements
Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial 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 financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company which has companies incorporated in India has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the ability of the Group to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Obtain sufficient appropriate audit evidence regarding thefinancial information of the entities or business activities within the company to expressan opinion on the financial statements. We are responsible for the direction supervisionand performance of the audit of the financial statements of such entities included in thefinancial statements.
Materiality is the magnitude of misstatements in the financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the 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 publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit wereport that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of our auditof the aforesaid financial statements.
b) In our opinion proper books of account as required by law relatingto preparation of the aforesaid financial statements have been kept so far as it appearsfrom our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss (including OtherComprehensive Income) Statement of Changes in Equity and the Statement of Cash Flowsdealt with by this Report are in agreement with the relevant books of account maintainedfor the purpose of preparation of the financial statements.
d) In our opinion the aforesaid financial statements comply with theInd AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e) On the basis of written representations received from the directorsas on March 31 2020 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2020 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls overfinancial reporting of the company and the operating effectiveness of such controls referto our separate report in "Annexure 1". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the company's internalfinancial controls over financial reporting.
g) With respect to the other matters to be included in Auditor'sReport in accordance with the requirements of Section 197(16) of the Act as amended:
In our opinion and to the best of our information and according toexplanations given to us the remuneration paid by the company to its directors during theyear is in accordance with the provisions of Section 197 of the Act.
h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:
i. The financial statements disclose impact of pending litigations onthe financial position of the company in note no 44.1 of financial statement.
ii. The company has not entered into long term contracts or derivativecontracts.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the company.
2. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure 2" a statement on the matters specified inparagraphs 3 and 4 of the Order.
Annexure - 1
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE I OF SUB SECTION3 OF SECTION 143 OF THE COMPANIES ACT 2013 "THE ACT" REFERRED TO IN PARA V 2 fOF OUR REPORT OF EVEN DATE.
We have audited the internal financial controls over financialreporting of Albert David Limited ("the Company") as of 31st March 2020in conjunction with our audit of IND AS financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the "Guidance Note on Audit of Internal Financial Controlsover Financial Reporting" issued by the Institute of Chartered Accountants of India.
These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companysinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India.
Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness.
Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk.
The procedures selected depend on the auditor's judgementincluding the assessment of the risks of material misstatement of IND AS financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of IND AS financial statements for external purposes inaccordance with generally accepted accounting principles.
A company's internal financial control over financial reportingincludes those policies and procedures 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 asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the companys assetsthat could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2020based on 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.
Report on the matters specified in Paragraphs 3 and 4 of THE COMPANIES(AUDITOR'S REPORT) ORDER 2016 referred to in Para V (1) of our report of even date
I. a. The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
b. The fixed assets have been physically verified by the management atreasonable intervals. As informed no material discrepancies between book records and thephysical inventories have been noticed on such verification.
c. The title deeds of immovable property are held in the name of theCompany.
II. The inventories have been physically verified at reasonableintervals during the year by the management. The discrepancies noticed on physicalverification between the physical stock and book records were not material and have beenproperly dealt with in the books of accounts.
III. The Company has not granted any loans secured or unsecured tocompanies firms limited liability partnership or other parties listed in the registermaintained under Section 189 of the Companies Act 2013. Accordingly the provisions ofparagraphs 3(ii) 3(iii)(a) to 3(iii)(c) of the said order are not applicable.
IV. In our opinion and according to explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of loans investments guarantees and securities as applicable.
V. The Company has not accepted deposits from the public within themeaning of Sections 73 to 76 of the Act and the Rules framed thereunder to the extentnotified. Accordingly paragraph 3(V) of the Order is not applicable.
VI. On the basis of records produced we are of the opinion that primafacie cost records and accounts prescribed by the Central Government under sub section (1)of section 148 of the Companies Act 2013 in respect of products of the company coveredunder the rules under said section have been made and maintained. However we are neitherrequired to carry out nor have carried out any detailed examination of such accounts andrecords.
VII. a) According to information and explanations given to us thecompany is regular in depositing with appropriate authorities undisputed statutory duesincluding provident fund employees state insurance income tax sales tax service taxcustom duty excise duty value added tax goods and services tax cess and otherstatutory dues to the extent applicable to it. According to the information andexplanations given to us no undisputed amounts payable in respect of the aforesaid dueswere outstanding as at 31st March 2020 for a period of more than six months from the dateof becoming payable.
VII. b) The dues on account of Sales Tax Income Tax Excise Duty andCess disputed by the company and not being paid vis--vis forums where such disputes arepending are mentioned below:-
|Name of the Statute ||Nature of dues ||Amount ||Period to which the amount relates ||Forum where dispute is pending |
| || ||Rs. in lacs || || |
|Sales Tax : || || || || |
|Central Sales Tax Act 1956 ||Tax on Lease Rental ||5.74 ||2002-2003 ||Calcutta High Court |
|Jharkhand VAT Act2005 ||Dispute of sale ||0.81 ||2011-2012 ||Dy. Commissioner Commercial Tax Jharkhand |
|Income Tax : || || || || |
|Income Tax Act 1961 ||Tax on disallowance of depreciation. ||20.41 ||2013-2014 ||Commissioner of Income Tax (Appeal) |
|- Do ||Tax on disallowance of R&D Expenditure ||100.20 ||2014-2015 ||- Do - |
|- Do ||Tax on disallowance of depreciation ||25.39 ||2015-2016 ||- Do |
|- Do ||Tax on disallowance of depreciation ||17.75 ||2016-2017 ||- Do |
|Excise Duty : || || || || |
|Central Excise Act 1994 ||Classification of Products ||227.57 ||01.06.2003 to 28.02.2008 ||Commissioner (Appeal) Central Excise |
|- Do - ||Valuation of Exports ||2.84 ||08.01.2005 to 31.08.2007 ||CESTAT |
|Cess : || || || || |
|Water (Prevention & Control of Pollution) Cess Act 1977 ||Additional levy of Water Cess ||40.46 ||05.01.1994 to 31.03.2020 ||Lucknow High Court |
VIII. Based on our audit procedures and as per the information andexplanations given by the management we are of the opinion that the company has notdefaulted in repayment of dues to any bank or government. Company has no debenture holderor financial institutional borrowing during the year.
IX. Neither any term loan has been obtained during the year nor anymoney was raised by way of public offer (including debt instruments) during the year bythe company.
X. No fraud has been noticed or reported on or by the company duringthe year.
XI. The managerial remuneration has been paid or provided in accordancewith the provisions of section 197 read with Schedule V of the Act.
XII. The Company is not a Nidhi Company and accordingly paragraph 3(XII) of the Order is not applicable.
XIII. All the transactions with the related parties are in compliancewith section 177 and 188 of Companies Act 2013 and the details of related partytransactions have been disclosed in the IND AS Financial Statements as required by theapplicable Indian Accounting Standards.
XIV. The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.
XV. The Company has not entered into any non-cash transaction withdirectors.
XVI. The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
| ||For Basu Chanchani & Deb |
| ||Chartered Accountants |
| ||Firm Registra on No. 304049E |
| ||Biswanath Cha apadhyay |
|Place : Kolkata ||Partner |
|Date : June 29 2020 ||Membership No: 051800 |
|UDIN: 20051800AAAAAJ3701 || |