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Coffee Day Enterprises Ltd.

BSE: 539436 Sector: Services
NSE: COFFEEDAY ISIN Code: INE335K01011
BSE 00:00 | 18 Apr 264.45 -8.05
(-2.95%)
OPEN

271.25

HIGH

273.90

LOW

262.30

NSE 00:00 | 18 Apr 264.20 -8.30
(-3.05%)
OPEN

271.00

HIGH

273.45

LOW

262.20

OPEN 271.25
PREVIOUS CLOSE 272.50
VOLUME 8574
52-Week high 356.20
52-Week low 237.10
P/E
Mkt Cap.(Rs cr) 5,587
Buy Price 263.15
Buy Qty 200.00
Sell Price 264.45
Sell Qty 262.00
OPEN 271.25
CLOSE 272.50
VOLUME 8574
52-Week high 356.20
52-Week low 237.10
P/E
Mkt Cap.(Rs cr) 5,587
Buy Price 263.15
Buy Qty 200.00
Sell Price 264.45
Sell Qty 262.00

Coffee Day Enterprises Ltd. (COFFEEDAY) - Auditors Report

Company auditors report

To the Members of Coffee Day Enterprises Limited

REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

We have audited the accompanying standalone Ind AS financial statements of Coffee DayEnterprises Limited (‘the Company') which comprise the balance sheet as at 31 March2018 the statement of profit and loss the statement of changes in equity and thestatement of cash flows for the year then ended and summary of significant accountingpolicies and other explanatory information (herein after referred to as "StandaloneInd AS financial statements").

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of the stateof affairs loss (including other comprehensive income) changes in equity and cash flowsof the Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) prescribed under section 133 of theAct.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalone Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so..

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We are also responsible to conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the entity's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in the auditor's report tothe related disclosures in the financial statements or if such disclosures areinadequate to modify the opinion. Our conclusions are based on the audit evidenceobtained up to the date of the auditor's report. However future events or conditions maycause an entity to cease to continue as a going concern.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31 March 2018 its loss including other comprehensive income changes inequity and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to 37 to the Statement regarding the scheme of merger (‘Scheme')which has been approved by the National Company Law Tribunal (NCLT) vide its order dated31 August 2017. The Company has given effect to the Scheme from the appointed datespecified in the Scheme i.e. 1 August 2016. Considering that the Company has treated themerger as an asset acquisition the Company should be have accounted for the merger fromthe date of approval of the scheme as per Ind AS 103 Business Combinations. Howeverconsidering that the NCLT has approved the scheme with an appointed date of 1 August 2016the Company is mandated to account for the merger from such retrospective date.

Our opinion is not modified in respect of the above 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 inAnnexure A a statement on the matters specified in paragraph 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act we report that:

(a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit; (b) in ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books; (c) the balance sheet the statement ofprofit and loss (including other comprehensive income) statement of changes in equity andthe statement of cash flows dealt with by this report are in agreement with the books ofaccount; (d) in our opinion the aforesaid standalone Ind AS financial statements complywith the Accounting Standards specified under Section 133 of the Act. (e) on the basis ofthe written representations received from the directors as on 31 March 2018 taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2018 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'; and (g) 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: a. The Company has disclosed the impact ofpending litigations on its financial position. Refer note 28 in its the standalone Ind ASfinancial statements; b. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; c. There wereno amounts which were required to be transferred to the Investor Education and ProtectionFund by the Company. d. The disclosures in the 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 since they do not pertain to the financial year ended 31March 2018. However amounts as appearing in the audited Standalone Ind AS financialstatements for the year ended 31 March 2017 have been disclosed.

for B S R & Co. LLP
Chartered Accountants
Firm's registration number: 101248W/W-100022
Sd/-
Supreet Sachdev
Partner
Membership number: 205385
Bangalore
17 May 2018

ANNEXURE A

TO THE INDEPENDENT AUDITOR'S REPORT

As referred to in our Independent Auditor's Report to the members of Coffee DayEnterprises Limited (‘the

Company') on the Standalone Ind AS financial statements of the Company for the yearended 31 March 2018 we report that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b)The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified every year. In our opinion the periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. In accordance with the programme physical verification of fixed assets wascarried out during the year and no material discrepancies were noted.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records we have verified the lease agreement which is in the name ofthe Company for the land taken on lease (for construction of building) duly registeredwith the appropriate authority.

(ii) According to the information and explanations given to us and on the basis of ourexamination of the records the inventories of coffee beans have been physically verifiedby the Management during the year. In our opinion the frequency of verification isreasonable. The discrepancies identified on physical verification of inventories betweenphysical stocks and book records were not material. However there is no physicalinventory as at the year end.

(iii) According to the information and explanations given to us and on the basis of ourexamination of the records the Company has granted unsecured loans to two wholly ownedsubsidiary Companies covered in the register maintained under Section 189 of the Act and;(a) In our opinion the rate of interest and other terms and conditions on which loans hadbeen granted to the wholly owned subsidiaries listed in the register maintained underSection 189 of the Act were not prima facie prejudicial to the interest of the Company.

(b) In case of loans granted to the wholly owned subsidiaries listed in the registermaintained under Section 189 of the Act the loans and interest are repayable on demand.According to the information and explanation given to us the borrowers have been regularin the repayment of the principal amount. (c) There are no overdue amounts in respect ofthe loan granted to the wholly owned subsidiaries listed in the register maintained undersection 189 of the Act.

(iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respect toloans advanced and investments made and securities and guarantees given.

(v) The Company has not accepted any deposits from the public.

(vi) According to the information and explanation given to us the Central Governmentof India has not prescribed the maintenance of cost records under Section 148(1) of theAct for any of the services rendered and goods sold 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 Service taxSales-tax Value added tax Income tax dues Goods and Service tax and other materialstatutory dues have been regularly deposited during the year by the Company with theappropriate authorities. As explained to us the Company did not have any dues on accountof Employees' State Insurance Duty of Customs Duty of Excise and Cess during the year.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Sales-tax Value added tax Goods and Service taxIncome tax Service tax and other material statutory dues were in arrears as at 31 March2018 for a period of more than six months from the date they became payable.

(b)According to the information and explanations given to us there are no dues ofSales-tax Value added tax Income tax Service tax Goods and Service tax and othermaterial statutory dues which have not been deposited with the appropriate authorities onaccount of any dispute. As explained to us the Company did not have any dues on accountof Employees' State Insurance Duty of Customs Duty of Excise and Cess during the year.The Company however disputes the following income-tax which are as follows:

Name of the Statute Nature of the dues Amount (Rs in million) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Tax and interest 46.37 AY 2011 – 12 Commissioner of Income Taxes (Appeals) Bangalore

(viii) According to the information and explanations given to us and on the basis ofour examination of the records the Company did not raise any money by way of initialpublic offer or further public offer (including debt instruments) during the year. In ouropinion and according to the information and explanations given to us the term loanstaken by the Company were applied for the purposes for which they were raised.

(ix) According to the information and explanations given to us no material fraud bythe Company or on the Company by its officers or employees has been noticed or reportedduring the year.

(x) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the Company has not paid any ManagerialRemuneration during the year. Accordingly paragraph 3(xi) of this Order is notapplicable.

(xi) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xii) In our opinion and according to the information and explanations given to us andbased on an examination of the records of the Company all transactions with the relatedparties are in compliance with sections 177 and 188 of Companies Act 2013 whereapplicable and the details have been disclosed in the financial statements as required bythe applicable accounting standards.

(xiii) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or convertible debenturesduring the year. Accordingly paragraph 3(xiv) of the Order is not applicable.

(xiv) According to the information and explanations given to us the Company has notentered into any non-cash transaction with directors or person connected with him asreferred to in Section 192 of Companies Act 2013. Accordingly paragraph 3(xv) of theOrder is not applicable.

(xv) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.

for B S R & Co. LLP
Chartered Accountants
Firm registration number: 101248W / W-100022
Sd/-
Supreet Sachdev
Partner
Membership number: 205385
Bangalore
17 May 2018

Annexure – B to the Independent Auditor's Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference to financial statementsof Coffee Day Enterprises Limited ("the Company") as of 31 March 2018 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India ("ICAI").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.

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 on Audit of Internal Financial Controls OverFinancial Reporting ("the Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A company's internal financial control 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 control withreference to financial statements includes those policies and procedures that: (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial

Controls with reference to financial statements

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 control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31 March 2018 based on the internal controls with reference to financial statementscriteria established by the Company considering the essential components of internalcontrols stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the ICAI.

for B S R & Co. LLP
Chartered Accountants
Firm's registration number: 101248W / W-100022
Sd/-
Supreet Sachdev
Partner
Membership number: 205385
Bangalore
Date: 17 May 2018