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 David Limited("the Company") which comprise the Balance Sheet as at 31st March2019 the statement of profit and loss (including other comprehensive income) thestatement of changes in Equity and the cash flow statement for the year on that date anda summary of significant accounting policies and other explanatory information(hereinafter referred to as "the financial statement").
In our opinion and to the best of information and according to the explanations givento us the aforesaid financial statements give the information required by the CompaniesAct 2013 (the "Act") in the manner so required and give a true and fair view inconformity with Indian Accounting Standards prescribed under section 133 of the Act readwith the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the company as at March 31 2019 the profit comprehensive income changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act (SAs). Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the companyin accordance with the Code of Ethics issued by the Institute of the Chartered Accountantsof India (ICAI) together with independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide the basis for our audit opinion on thefinancial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing of opinion thereon and we do not provide a 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 ||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: |
| ||i) Agreed samples of sales discounts incentives and rebates to supporting documentation and approvals; and |
|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. ||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: |
|Refer corresponding note for amounts recognized as revenue from sale of products. ||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 incentives 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 appropriateness 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. || Assessed the company's 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; |
|The amounts involved are potentially significant and determining the amount if any to be recognized or disclosed in the financial statements is inherently subjective. || 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 are 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 |
|III. Fixed Deposit with Bank. ||Revaluation concept and Discounted cash flow concept. |
| ||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. Refer Note No.44(1) of the financial statements. ||Obtained details of completed tax assessments and demands for the year ended March 31 2019 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 2018 to evaluate whether any change was required to management's position on these uncertainties. |
|E. Recoverability of Indirect tax receivables || |
|As at March 31 2019 non-current assets in respect of withholding tax and others include Customs / Excise Duty / Cenvat recoverable amounting to Rs.213.02 lakhs which are pending adjudication. Refer Note 21 to the Financial Statements. || |
| ||Principal Audit procedures |
| ||We have involved our internal experts to review the nature of the amounts recoverable the sustainability and the likelihood of recoverability upon final resolution. |
Information other than the Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the financial statementsand 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 financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to preparation of these financial statements that give atrue and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the companies in accordance with the Ind ASand other accounting principles generally accepted in India. The respective Board ofDirectors of the companies are also responsible for maintenance of the adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of thecompanies and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error..
In preparing the financial statements the Board of Directors of the company isresponsible for assessing the company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the ability ofthe Group to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the financial statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the company to ceaseto continue as a going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial informationof the entities or business activities within the company to express an opinion on thefinancial statements. We are responsible for the direction supervision and performance ofthe audit of the financial statements of such entities included in the financialstatements.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit 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 of the aforesaidfinancial statements.
b) In our opinion proper books of account as required by law relating to preparationof the aforesaid financial statements have been kept so far as it appears from ourexamination of those books.
c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the relevant books of account maintained for the purpose ofpreparation of the financial statements.
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder 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 directors as on March 312019 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in "Annexure 1". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in Auditor's Report in accordancewith the requirements of Section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to explanations givento us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of Section 197 of the Act read with Schedule-V 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The financial statements disclose the impact of pending litigations on the financialposition of the company in note no.44 of financial statements.
ii. The company has not entered into long term contracts or derivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe 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) of the Act we give in"Annexure 2" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION143 OF THE COMPANIES ACT 2013 ("THE ACT") REFERRED TO IN PARA V (2) (F) OF OURREPORT OF EVEN DATE.
We have audited the internal financial controls over financial reporting of AlbertDavid Limited ("the Company") as of 31st March 2019 inconjunction 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 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 FinancialReporting" issued by the Institute of Chartered Accountants of India.
These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia.
Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk.
The procedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of IND AS financial statements whether due to fraud orerror.
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 systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of IND AS financial statements for external purposes in accordance withgenerally accepted accounting principles.
A company's internal financial control over financial reporting includes those policiesand procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019based 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'SREPORT) ORDER 2016 referred to in Para V (1) of our report of even date
I. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The fixed assets have been physically verified by the management at reasonableintervals. As informed no material discrepancies between book records and the physicalinventories have been noticed on such verification.
c. The title deeds of immovable property are held in the name of the Company.
II. The inventories have been physically verified at reasonable intervals during theyear by the management. The discrepancies noticed on physical verification between thephysical stock and book records were not material and have been properly dealt with in thebooks of accounts.
III. The Company has not granted any loans secured or unsecured to companies firmslimited liability partnership or other parties listed in the register maintained underSection 189 of the Companies Act 2013. Accordingly the provisions of paragraphs 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 the Company has compliedwith the provisions of Section 185 and 186 of the Companies Act 2013 in respect of loansinvestments guarantees and securities as applicable.
V. The Company has not accepted deposits from the public within the meaning of Sections73 to 76 of the Act and the Rules framed thereunder to the extent notified. Accordinglyparagraph 3(V) of the Order is not applicable.
VI. On the basis of records produced we are of the opinion that prima facie costrecords and accounts prescribed by the Central Government under sub section (1) of section148 of the Companies Act 2013 in respect of products of the company covered under therules under said section have been made and maintained. However we are neither required tocarry out nor have carried out any detailed examination of such accounts and records.
VII. a) According to information and explanations given to us the company is regularin depositing with appropriate authorities undisputed statutory dues including providentfund employees state insurance income tax sales tax service tax custom duty exciseduty value added tax goods and services tax cess and other statutory dues to the extentapplicable to it. According to the information and explanations given to us no undisputedamounts payable in respect of the aforesaid dues were outstanding as at 31stMarch 2019 for a period of more than six months from the date of becoming payable.
VII. b) The dues on account of Sales Tax Income Tax Excise Duty and Cess disputed bythe company and not being paid vis--vis forums where such disputes are pending arementioned below:-
|Name of the Statute ||Nature of dues ||Amount Rs. in lacs ||Period to which the amount relates ||Forum where dispute is pending |
|Sales Tax : || || || || |
|Central Sales Tax Act 1956 ||Tax on Lease Rental ||5.74 ||2002-2003 ||Calcutta High Court |
|- Do - ||- Do - ||1.52 ||2003-2004 ||- Do - |
|- Do - ||- Do - ||2.62 ||2005-2006 ||W.B. Com. Taxes Appellate & Revisional Board |
|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 expenditure ||0.20 ||1991-1992 ||Commissioner of Income Tax (Appeal) |
|- Do ||- Do - ||6.95 ||1999-2000 ||Calcutta High Court |
|- Do ||Tax on disallowance of depreciation. ||20.41 ||2013-2014 ||Com. 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 |
|Excise Duty : || || || || |
|Central Excise Act 1944 ||Additional Levy of Duty and Valuation of Sample ||0.99 ||13.06.1961 to 30.04.1962 ||Collector of 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 ||49.77 ||05.01.1994 to 31.03.2019 ||Allahabad High Court |
VIII. Based on our audit procedures and as per the information and explanations givenby the management we are of the opinion that the company has not defaulted in repaymentof dues to any bank or government. Company has no debenture holder or financialinstitutional borrowing during the year.
IX. Neither any term loan has been obtained during the year nor any money was raised byway of public offer (including debt instruments) during the year by the company.
X. No fraud has been noticed or reported on or by the company during the year.
XI. The managerial remuneration has been paid or provided in accordance with theprovisions 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 Orderis not applicable.
XIII. All the transactions with the related parties are in compliance with section 177and 188 of Companies Act 2013 and the details of related parties transactions have beendisclosed in the IND AS Financial Statements as required by the applicable IndianAccounting Standards.
XIV. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year.
XV. The Company has not entered into any non-cash transaction with directors.
XVI. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For Basu Chanchani & Deb |
| ||Chartered Accountants |
| ||Firm Registration No.304049E |
| ||(Biswanath Chattopadhyay) |
|Place : Kolkata ||Partner |
|Date : May 29 2019 ||Membership No.051800 |