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Britannia Industries Ltd.

BSE: 500825 Sector: Agri and agri inputs
NSE: BRITANNIA ISIN Code: INE216A01030
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PREVIOUS CLOSE 3096.10
VOLUME 1399
52-Week high 3443.90
52-Week low 2302.00
P/E 54.11
Mkt Cap.(Rs cr) 74,340
Buy Price 3090.55
Buy Qty 10.00
Sell Price 3093.85
Sell Qty 30.00
OPEN 3101.00
CLOSE 3096.10
VOLUME 1399
52-Week high 3443.90
52-Week low 2302.00
P/E 54.11
Mkt Cap.(Rs cr) 74,340
Buy Price 3090.55
Buy Qty 10.00
Sell Price 3093.85
Sell Qty 30.00

Britannia Industries Ltd. (BRITANNIA) - Auditors Report

Company auditors report

To the Members of Britannia Industries Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Britannia Industries Limited("the Company") which comprise the standalone balance sheet as at 31 March2019 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information. In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("Act") in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 its profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Revenue Recognition

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 aseparate opinion on these matters.

See note 3(h) note 26 and note 55 to the standalone financial statements

The key audit matter How the matter was addressed in our audit
The principal products of the Company comprises food products that are mainly sold through distributors modern trade and direct sale channels amongst others. 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 is recognised when the customer obtains control of the goods. 1. We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
2. We evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions.
We identified revenue recognition as a key audit matter because the Company and its external stakeholders focus on revenue as a key performance indicator. 3. We performed substantive testing by selecting samples of revenue transactions recorded during the year by testing the underlying documents using statistical sampling.
This could create an incentive for revenue to be overstated or recognised before control has been transferred. 4. We carried out analytical procedures on revenue recognised during the year to identify unusual variances.
5. We performed confirmation procedures on selected customer balances at the balance sheet date.
6. We tested on a sample basis specific revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period.
7. We tested manual journal entries posted to revenue to identify unusual items.

Related party transactions

See note 15 note 38 and note 44 to the standalone financial statements

The key audit matter How the matter was addressed in our audit
The Company has entered into several transactions with related parties during the year 2018-19. We identified related party transactions as a key audit matter because of risks with respect to completeness of disclosures made in the financial statements; non-compliance with statutory regulations governing related party relationships such as the Companies Act 2013 and SEBI Regulations and the judgement involved in assessing whether transactions with related parties are undertaken at arms' length. 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:
1. We carried out an assessment of the key controls to identify and disclose related party relationships and transactions in accordance with the relevant accounting standard.
2. We carried out an assessment of compliance with the listing regulations and the regulations under the Companies Act 2013 including checking of approvals/ scrutiny as specified in Sections 177 and 188 of the Companies Act 2013 with respect to the related party transactions. In cases where the matter was subject to interpretation we exercised judgement to rely on opinions provided by legal practitioners.
3. We considered the adequacy and appropriateness of the disclosures in the financial statements relating to the related party transactions.
4. For transactions with related parties we inspected relevant ledgers agreements and other information that may indicate the existence of related party relationships or transactions. We also tested completeness of related parties with reference to the various registers maintained by the Company statutorily.
5. We have tested on a sample basis Management's assessment of related party transactions for arm's length pricing.

Tax litigations – provisions and contingencies

See note 3(n) note 25 note 35 and note 40 to the standalone financial statements

The key audit matter How the matter was addressed in our audit
The Company is involved in several ongoing direct and indirect tax litigations in various states of India. The Company recognises a provision when it has a present obligation (legal or constructive) as a result of a past event it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources. When there is a possible or a present obligation where the likelihood of outflow of resources is remote no provision or disclosure is made. We have identified tax litigations provisions and contingencies as a key audit matter because it requires the management to make judgements and estimates in relation to the exposure arising out of litigations. The key judgement lies in the estimation of provisions where they may differ from the future obligations. The Company operates under several tax laws and some of these have a significant impact on the financial statements of the Company. 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: 1. We tested the effectiveness of key controls around the recording and assessment of tax provisions and contingent liabilities. 2. We used our own tax specialists to assess the value of the provisions and contingent liabilities in light of the nature of the exposures applicable regulations and related correspondences with the authorities. 3. We assessed the relevant historical and recent judgments passed by the court authorities. 4. Obtained Management's assessment of the open cases and compared the same to the assessment of our tax specialists to assess the reasonableness of the provision or contingency. 5. Considered the adequacy of the Company's disclosures made in relation to taxation related provisions and contingencies in the financial statements.

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 auditors' reportthereon. The information included in the annual report is expected to be made available tous after the date of the auditor's report.

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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take necessary actions as applicable under the applicable laws andregulations.

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 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.Inpreparingthestandalonefinancialstatementsmanagement 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 in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone 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 control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3) (i) ofthe 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 reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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

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

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' 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 other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations as at 31 March 2019 on itsfinancial position in its standalone financial statements - Refer Note 40 to thestandalone financial statements; ii. The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses. iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company. iv. The disclosures in thestandalone financial statements regarding holdings as well as dealings in specified banknotes during the period from

8 November 2016 to 30 December 2016 have not been made in these financial statementssince they do not pertain to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditors' Report under Section197(16): In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

 

for B S R & Co LLP

Chartered Accountants

Firm's Registration No.: 101248W/W-100022

Place: Bangalore Supreet Sachdev Date: 1 May 2019 Partner Membership No:205385

ANNEXURE – A TO THE INDEPENDENT AUDITOR'S REPORT

With reference to the Annexure A referred to in paragraph 1 in Report on Other Legaland Regulatory Requirements of the Independent Auditor's Report to the Members of theCompany on the standalone financial statements for the year ended 31 March 2019 we reportthat: (i) (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to the programme certain fixedassets were physically verified during the year. No material discrepancies were observedon such verification.

(c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties included in property plant and equipment are held in the name of the Company.

In respect of immovable properties been taken on lease and disclosed as property plantand equipment in the standalone Ind AS financial statements the lease agreements are inthe name of the Company.

(ii) The inventory except goods-in-transit and stocks lying with third parties havebeen physically verified by the Management during the year. In our opinion the frequencyof such verification is reasonable. The discrepancies noticed on verification between thephysical stock and the book records were not material and have been appropriately dealtwith in the books of accounts. For stocks lying with third parties at the year-endwritten confirmations have been obtained by the Management.

(iii) According to information and explanations given to us the Company has grantedloans to two companies and one other party covered in the register maintained undersection 189 of the Companies Act 2013 ("the Act"). (a) In our opinion the rateof interest and other terms and conditions on which the loans had been granted to thecompanies and the other party listed in the Register maintained under Section 189 of theAct were not prima facie prejudicial to the interest of the Company. (b) In the case ofthe loans granted to the companies and the other party listed in the Register maintainedunder Section 189 of the Act the borrowers have been regular in the repayment of theprincipal and payment of interest wherever stipulated. (c) There are no overdue amountsin respect of loans granted to companies and the other party listed in the Registermaintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act with respectto the loans given investments made guarantees and security given.

(v) The Company has not accepted any deposits from the public within the meaning thedirectives issued by the Reserve Bank of India provisions of Section_73 to 76 of the Actany other relevant provisions of the Act and the relevant rules framed thereunder.

(vi) The Central Government has not prescribed the maintenance of cost records underSection 148(1) of the Act for any of the products manufactured by the Company.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees StateInsurance Income-tax Duty of customs Goods and Services tax cess and any othermaterial statutory dues have generally been regularly deposited during the year by theCompany with the appropriate authorities. As explained to us the Company did not have anydues on account of Sales-tax Service-tax Duty of excise and Value added tax during theyear. Also refer note 35 to the financial statements. According to the information andexplanations given to us no undisputed amounts payable in respect of Provident fundEmployees State Insurance Income-tax Duty of customs Goods and Services tax cess andany other material statutory dues were in arrears as at 31_March_2019 for a period ofmore than six months from the date they became payable. (b) According to the informationand explanations given to us there are no dues which have not been deposited by theCompany on account of disputes except for the following:

Statute/ Nature of dues Amount* (`) Period to which the amount relates Forum where dispute is pending
Excise duty 26778056 1980-1999 High Court
(including service tax) 659115415 1994-2014 CESTAT
330014008 1986-2017 Appellate Authority up to Commissioner's level
Sales tax/ 8182867 1998-2001 Supreme Court
Value added tax 903083647 2000-2017 High Court
27908860 1996-2009 Tribunal
696841973 1999-2017 Appellate Authority up to Commissioner's level
Customs duty 7833410 2004-2014 Appellate Authority up to Commissioner's level - Customs
Income-tax 301500921 1992-2006 High court
163901107 1991-2014 ITAT
180835162 2009-2017 Appellate Authority up to Commissioner

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to the financialinstitution and bank. The Company does not have any outstanding loans or borrowings fromthe government or debenture holder during the year.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instrument) and term loans during the year.

(x) According to the information and explanations given to us no material fraud on theCompany by its officers and employees or fraud by the Company has been noticed or reportedduring the course of our audit.

(xi) According to the information and explanations given to us and based on examinationof the records of the Company the Company has paid/ provided for managerial remunerationin accordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.

(xii) According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under Section 406 of the Act. (xiii)According to the information and explanations given to us and based on our examination ofthe records of the Company transactions with the related parties are in compliance withSections 177 and 188 of the Act where applicable and details of all transactions havebeen disclosed in the standalone Ind AS financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentor private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him.

(xvi) According to the information and explanation given to us and in our opinion theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct1934.

 

for B S R & Co LLP

Chartered Accountants

Firm's Registration No.: 101248W/W-100022

Place: Bangalore Supreet Sachdev

Date: 1 May 2019

 

Partner Membership No: 205385

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE FINANCIAL STATEMENTSOF BRITANNIA INDUSTRIES LIMITED ("THE COMPANY") FOR THE YEAR ENDED 31 MARCH 2019

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013

(Referred to in paragraph 1(A)(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statementsof Britannia Industries Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

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").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing 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 obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone 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 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

Firm's Registration No.: 101248W/W-100022

Place:

Bangalore

Supreet Sachdev

Date: 1 May 2019

 

Partner Membership No: 205385