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Bata India Ltd.

BSE: 500043 Sector: Others
NSE: BATAINDIA ISIN Code: INE176A01028
BSE 12:39 | 02 Jul 1278.95 -5.85
(-0.46%)
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1299.00

HIGH

1299.00

LOW

1273.40

NSE 12:34 | 02 Jul 1278.45 -6.55
(-0.51%)
OPEN

1291.30

HIGH

1298.70

LOW

1273.00

OPEN 1299.00
PREVIOUS CLOSE 1284.80
VOLUME 24882
52-Week high 1897.00
52-Week low 1017.20
P/E 50.27
Mkt Cap.(Rs cr) 16,437
Buy Price 1277.95
Buy Qty 4.00
Sell Price 1278.65
Sell Qty 2.00
OPEN 1299.00
CLOSE 1284.80
VOLUME 24882
52-Week high 1897.00
52-Week low 1017.20
P/E 50.27
Mkt Cap.(Rs cr) 16,437
Buy Price 1277.95
Buy Qty 4.00
Sell Price 1278.65
Sell Qty 2.00

Bata India Ltd. (BATAINDIA) - Auditors Report

Company auditors report

To the Members of Bata India Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Bata India Limited ("theCompany") which comprises the standalone balance sheet as at 31 March 2019 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant 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 financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide a separateopinion on these matters.

Description of Key Audit Matter-

Completeness existence and accuracy of Revenue Recognition
See note 18 to the standalone financial statements
Key audit matters How the matter was addressed in our audit
The Company's major part of revenue relates to retail sales which comprises of high volumes of individually small transactions recorded in the books through journals. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
Revenue from the sale of goods is recognised when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such recognition in case of sale of goods is when control over the same is transferred to the customer which is mainly upon delivery. A) Obtaining an understanding of and assessing the design implementation and operating effectiveness of management's key internal controls relating to the recognition of revenue including those related to the reconciliation of sales records to cash / credit card / online receipts preparation posting and approval of manual journal entries relating to revenue recognition.
B) Testing the accuracy of retail revenue recorded during the year by examining that the sale of goods transactions are in agreement with the cash / credit card / online receipts and deposit of cash amounts recorded in daily cash reports with bank remittances on sample basis.
The timing of revenue recognition is relevant to the reported performance of the Company. C) Testing whether the sales have been recorded in the correct period by selecting samples of reconciliation between sales transactions and cash / credit card / online and agreeing those reconciliations through supporting documentation.
The management considers revenue as a key measure for evaluation of performance. D) Performing on a test basis cash counts at selected stores and examining whether the cash balances are in agreement with the cash receipts reported in the daily collection report.
Since revenue comprises of high volumes of individually small transactions the process of summarizing and recording sales revenue is critical with regard to the completeness existance and accuracy of retail sales revenue. E) Obtaining reconciliation of retail sales as per books of account with the sales as per Indirect tax records and inquire about reasons for differences if any.
F) Performing an analysis of the manual journal entries passed during the year.

 

Existence and Valuation of Inventories
See note 8 to the standalone financial statements
Key audit matters How the matter was addressed in our audit
The Company's major part of inventory comprises finished goods which are geographically spread across multiple locations such as retail stores depots and factories. These inventories are counted by the Company on a cyclical basis and accordingly provision for obsolescence of inventories is assessed and recognized by the management in the financial statements based on management estimation as at end of reporting period. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
A) Obtaining an understanding of and assessing the design implementation and operating effectiveness of management's key internal controls relating to physical verification of inventories by the management and the internal auditors of the Company identification of obsolete and slow moving inventories inventories with low or negative gross margins monitoring of inventory ageing and assessment of provisioning and of net realizable values.
The Company manufactures and sells goods which may be subject to changing consumer demands and fashion trends. B) Assessing whether items in the inventory ageing report prepared by the management were classified within the appropriate ageing bracket;
Significant degree of judgment is thereby required to assess the net realizable value of the inventories and appropriate level of provisioning for items which may be ultimately sold below cost. Such judgment include management's expectations for future sale volumes inventory liquidation plans and future selling prices less cost to sell. C) Performing a review of the provisions for inventories by examining movements in the balance during the current year and new provisions made for inventory balances as at 31 March 2018 during the current year to assess the historical accuracy of management's inventory provisioning process;
D) Assessing on a sample basis the net realizable value of slow-moving and obsolete inventories and inventories with low or negative gross margins as calculated by management with reference to prices achieved and costs to sell after the financial year end.
Based on above existence and valuation of inventories has been identified as a key audit matter. E) Attending cyclical inventory counts at selected stores factories retail distribution centers and wholesale distribution centres twice during the reporting period and evaluating the results of the cycle counts performed by the management throughout the year to assess management's estimation of the provisioning.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditor's reportthereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. 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 designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible 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.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

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

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial 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 todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness 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 Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

(A) As required by Section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books. c) The standalone balance sheet the standalone statement ofprofit and loss (including other comprehensive income) the standalone statement ofchanges in equity and the standalone statement of cash flows dealt with by this Report arein agreement with the books of account. d) In our opinion the aforesaid standalonefinancial statements comply with the Ind AS specified under section 133 of the Act. e) Onthe basis of the written representations received from the directors as on 31 March 2019taken on record by the Board of Directors none of the directors is disqualified as on 31March 2019 from being appointed as a director in terms of Section 164(2) of the Act. f)With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". (B) With respect to the othermatters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us: i. The Company has disclosed the impact ofpending litigations as at 31 March 2019 on its financial position in its standalonefinancial statements - Refer Note 31 to the standalone financial statements; ii. TheCompany did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses; iii. There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theCompany; iv. The disclosures in the standalone financial statements regarding holdings aswell as dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these financial statements since they do not pertainto the financial year ended 31 March 2019. (C) With respect to the matter to be includedin the Auditor's Report under section 197(16): In our opinion and according to theinformation and explanations given to us the remuneration paid by the company to itsdirectors during the current year is in accordance with the provisions of Section 197 ofthe Act. The remuneration paid to any director is not in excess of the limit laid downunder Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed otherdetails under Section 197(16) which are required to be commented upon by us.

For B S R & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 101248W/W-100022
Adhir Kapoor
Place : Gurugram

Partner

Date : 24 May 2019 Membership No.: 098297

Annexure A referred in the Independent Auditor's Report to the Members of Bata IndiaLimited on the standalone Ind AS financial statements for the year ended 31 March 2019(i) (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets. (b) According to the information and explanations given to usthe Company has a regular programme of physical verification of its fixed assets by whichall fixed assets are verified by the management in a phased manner over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andnature of its fixed assets. Pursuant to the aforesaid programme a portion of the fixedassets has been physically verified by the management during the year. As informed to usno material discrepancies were observed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of the immovable propertiesincluded in the fixed assets are held in the name of the Company.

(ii) According to the information and explanations given to us the inventories(excluding stocks with third parties and goods-in-transit) have been physically verifiedby the management during the year. For goods in transit in respect of sale and purchase ofmaterial all material is substantially delivered or received until the date of issuanceof this report. In respect of inventories lying with third parties these havesubstantially been confirmed by them. In our opinion the frequency of verification isreasonable. Further as informed the discrepancies noticed on verification between thephysical inventory and the book records were not material and have been properly dealtwith in the books of account. (iii) According to the information and explanations given tous the Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Act. Accordingly paragraph 3(iii) of the Order is not applicable.

(iv) According to the information and explanations given to us the Company has notprovided any guarantee or security as specified under Section 185 and 186 of the CompaniesAct 2013. Further in respect of the loans given and investments made by the Companyrequirements of Section 185 and 186 of the Companies Act 2013 have been complied with.(v) According to the information and explanations given to us the Company has notaccepted any deposits covered under Section 73 to 76 of the Act. Accordingly paragraph3(v) of the Order is not applicable.

(vi) According to the information and explanations given to us the Central Governmenthas not specified the maintenance of cost records under Section 148(1) of the CompaniesAct 2013 for the products of the Company. (vii) (a) According to the information andexplanations given to us and on the basis of our examination of the records of theCompany amounts deducted / accrued in the books of account in respect of undisputedstatutory dues including Provident Fund Employees' State Insurance Income tax Salestax Service tax Duty of Customs Duty of Excise Goods and Service Tax (‘GST')Value Added Tax Cess and any other material statutory dues to the extent applicablehave generally been regularly deposited with the appropriate authorities during the year.As explained to us the Company did not have any dues on account of Sales tax Servicetax Duty of excise Value Added Tax and Cess.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income tax GST Salestax Service tax Duty of Customs Duty of Excise Value Added tax Cess and othermaterial statutory dues to the extent applicable were in arrears as at 31 March 2019 fora period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and on the basis of therecords of the Company examined by us there are no dues of Income-tax Sales-tax Servicetax Duty of Customs Duty of Excise Value Added Tax and GST which have not beendeposited with the appropriate authorities on account of any dispute except as mentionedbelow:-

Name of the Statue Nature of dues Amount of demand Period to which the amount relates Forum where dispute is pending
(in INR millions)
1994-1995
Various state sales tax Acts Revenue recovery against non-payment of demand in assessment. 6.7 1998-1999 STAT Kerala Commissioner of
2000-2001
Central Excise Act1944 Duty demanded for sale of footwear at domestic tariff area which final hearing before commissioner concluded and order is pending. 3.35 1997-99 Central Excise Chennai
2007
Central Excise Act1944 Disallowing abatement @ 40% on MRP for institutional sales. Sale of Industrial Boots and Mine Safety Boots. 9.0 2008 CESTAT- Kolkata
2009
2010
Central Excise Act1944 Non-compliance of the condition of the notification for marking MRP on factory seconds cleared on payment of appropriate C.E. duty. 21.5 July 2004 to Jan 2008 CESTAT-Kolkata
Finance Act 1994 Disallowance of service tax input credit on input service availed for outward transportation. 4.3 2006-2010 Commissioner of Central Excise Kolkata
Customs Act1942 Wrong availment of concessional rate of customs duty etc. against which the hearing has not been finalised as yet. 81.24 1998-2003 CESTAT- Kolkata

* Amount as per demand orders including interest and penalty wherever indicated in theorder.

(viii) According to the information and explanations given to us the Company hasneither taken any loans from financial institutions or banks or government nor issued anydebentures therefore the provision of clause (viii) of the Order is not applicable. (ix)According to the information and explanations given to us the Company has not raised anymoney by way of initial public offer or further public offer (including debt instrument)and any term loans during the year. Accordingly paragraph 3 (ix) of the Order is notapplicable.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the managerial remuneration has been paid orprovided by the Company in accordance with the provisions of Section 197 read withSchedule V to the Act. (xii) According to the information and explanations given to usthe Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to information and explanations given to us and on the basis of ourexamination of the records of the Company all transactions with the related parties arein compliance with Section 177 and 188 of the Act where applicable and the details havebeen disclosed in the Ind AS financial statements as required by the applicableaccounting standard. (xiv) According to information and explanations given to us and onthe basis of our examination of the records of the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.

(xv) According to information and explanations given to us the Company has not enteredinto any non-cash transactions with directors or persons connected with him. Accordinglyparagraph 3(xv) of the Order is not applicable.

(xvi) According to information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act1934.

For B S R & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 101248W/W-100022
Adhir Kapoor
Place : Gurugram

Partner

Date : 24 May 2019 Membership No.: 098297

Annexure B to the Independent Auditor's report on the standalone financial statementsof Bata India Limited for the year ended 31 March 2019 Report on the internal financialcontrols with reference to the aforesaid standalone financial statements under Clause (i)of Sub-section 3 of Section 143 of the Companies Act 2013 (Referred to in paragraph 1(A)(f) under ‘Report on Other Legal and Regulatory Requirements' section of our reportof even date) Opinion

We have audited the internal financial controls with reference to financial statementsof Bata India Limited ("the Company") as of 31 March 2019 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls with reference tofinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to financial statements included obtaining an understanding ofsuch internal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the standalone financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include 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 FinancialStatements

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

For B S R & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 101248W/W-100022
Adhir Kapoor
Place : Gurugram

Partner

Date : 24 May 2019 Membership No.: 098297