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Future Retail Ltd.

BSE: 540064 Sector: Others
NSE: FRETAIL ISIN Code: INE752P01024
BSE 09:25 | 21 Sep 99.05 -1.35
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97.50

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NSE 09:19 | 21 Sep 99.35 -0.95
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OPEN 97.50
PREVIOUS CLOSE 100.40
VOLUME 82113
52-Week high 406.60
52-Week low 61.05
P/E
Mkt Cap.(Rs cr) 5,371
Buy Price 99.05
Buy Qty 1285.00
Sell Price 99.20
Sell Qty 951.00
OPEN 97.50
CLOSE 100.40
VOLUME 82113
52-Week high 406.60
52-Week low 61.05
P/E
Mkt Cap.(Rs cr) 5,371
Buy Price 99.05
Buy Qty 1285.00
Sell Price 99.20
Sell Qty 951.00

Future Retail Ltd. (FRETAIL) - Auditors Report

Company auditors report

To the Members of

FUTURE RETAIL LIMITED

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of Future RetailLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the Standalone Financial Statements"). 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 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the Standalone Financial Statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Standalone Financial Statements.

Key Audit Matters

Key audit matters (‘KAM') are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Financial Statements of thecurrent period. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. Key Audit Matter Auditor's Response
No.
1 Revenue Recognition Accuracy of r e c o g n i t i o n m e a s u r e m e n t presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers". Principal Audit Procedures We assessed the appropriateness of the revenue recognition accounting policies including those relating to discounts by comparing with new revenue accounting standard.
Tested the relevant information technology system's access and change management controls which govern revenue recognition interfaces between different systems and key management controls over revenue recognition to assess the completeness of the revenue entries being recorded in the accounting system.
We performed substantive testing by selecting samples of discount transactions recorded during the year and comparing the parameters used in the calculation of the discounts with the relevant source documents (including schemes) to assess whether the methodology adopted in the calculation of the discounts was in accordance with the terms and conditions defined in the corresponding schemes.
Performed analytical procedures for reasonableness of revenues.
2 Valuation of Inventory We identified this matter as key in our audit due to the materiality of the value of inventories and the numerous SKUs and high volume of movement in the inventory. Principal Audit Procedures Assessment of the design implementation and operational effectiveness of the relevant controls in place in the inventory management and measurement process.
Evaluation of the inventory costing methodology and valuation policy established by management including compliance with the applicable accounting standard.
Assessment of the inventory costing methodology and valuation policy maintained and applied in the IT system. Assessing the analysis and assessment made by the management with respect to slow moving and obsolete inventory. Verification of the determination of net realizable value on a representative sample basis

Information Other than the Standalone 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 BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the Standalone Financial Statements and our auditor's report thereon.

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 during the course 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 Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the Standalone Financial Statements management 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 are 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 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 oneresultingfromerrorasfraudmayinvolvecollusionforgery 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 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 theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation. Materiality is the magnitude of misstatements in theStandalone Financial Statements that individually or in aggregate makes it probable thatthe economic decisions of a reasonably knowledgeable user of the Standalone FinancialStatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the Standalone FinancialStatements.

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 withthose charged with governance we determine those matters that were of most significancein the audit of the Standalone Financial Statements of the current year and are thereforethe key audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

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 sub-section (11) of section 143 of the Actwe give in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order.

2. 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 purpose 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 Balance Sheet the Statement of Profit and Lossincluding Other Comprehensive Income the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account; d. In ouropinion the aforesaid Standalone Financial Statements comply with Ind AS specified underSection 133 of the Act read with relevant rule issued there under. e. On the basis ofwritten representations received from the Directors as on March 31 2019 and taken onrecord by the Board of Directors none of the directors is disqualified as on March 312019 from being appointed as a director in terms of Section 164 (2) of the Act. f. Withrespect to the adequacy of Internal financial controls over financial reporting of thecompany and the operating effectiveness of such control refer to our separate report in"Annexure B" our report express an unmodified opinion on the adequacy andoperating effectiveness of the company's internal financial control over financialreporting. g. With respect to the other matters to be included in the Auditor's in theAuditor's Report in accordance with requirement of section 197(16) of the Act as amended:i.In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act. h. 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 as amended in our opinion and to the best of ourinformation and according to the explanation given to us: i. The Company has disclosed theimpact of pending litigations on its financial position in its Standalone FinancialStatements. ii. The Company did not have any long-term contracts including derivativecontracts for which there were any material foreseeable losses. iii. There were noamounts which were required to be transferred to the Investor Education and ProtectionFund by the Company.

For NGS & Co. LLP
Chartered Accountants
Firm Registration No. : 119850W
Ashok A. Trivedi
Mumbai Partner
May 25 2019 Membership Number: 042472

Annexure A to the Independent Auditor's Report

(Referred to in Paragraph 1 under the "Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Future Retail Limited of evendate) i. a. The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets. b. The Company has a programof verification to cover all the items of fixed assets in a phased manner which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the program certain fixed assets were physically verified by themanagement during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification. c. According to the informationand explanations given to us and the records examined by us and based on the examinationof the registered sale deed transfer deed conveyance deed provided to us we reportthat the title deeds comprising the immovable properties of land are held in the nameof the Company as at the Balance Sheet date. ii. The management has conducted physicalverification of inventory at regular intervals during the year. In our opinion andaccording to the information and explanations given to us the Company is maintainingproper records of inventory. The discrepancies noticed on verification between physicalstocks and the book records were not material having regard to the size of the operationsof the company. iii. According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to Companies Firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013. Therefore paragraph 3 (iii) of the order is notapplicable. iv. In our opinion and according to the information and explanations given tous and based on our examination of the records the Company has complied with theprovisions of section 185 and 186 of the Act with respect to guarantee given. v. TheCompany has not accepted deposits during the year and does not have any unclaimed depositsas at March 31 2019. Therefore paragraph 3 (v) of the order is not applicable. vi. Inour opinion and according to the information and explanations given to us maintenance ofcost records has not been specified by the Central

Government under section 148(1) of the Companies Act 2013 for the business activitiescarried out by the Company. Therefore paragraph 3(vi) of the order is not applicable.vii. a. According to the information and explanations given to us in our opinion theCompany is generally regular in depositing undisputed statutory dues including ProvidentFund Employees' State Insurance Income Tax Goods and Service Tax Cess and othermaterial statutory dues applicable to it with the appropriate authorities. b. According tothe information and explanations given to us there were no undisputed amounts payable inrespect of Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues in arrears as at March 31 2019 for aperiod of more than six months from the date they became payable. c. Details of dues ofSales Tax Value Added Tax and Stamp Duty which have not been deposited as at March 312019 on account of dispute are given below:

Name of the Stat- ute Nature of the dues Amount ( Rs. In Crore) Period to which the amount relates Forum where dispute is pending
The Indian Stamp Act 1899 Stamp Duty 9.53* FY: 2008-09; FY: 2015-16 District Collec- tor of Stamp Gautambudh- nagar U.P.; Collector of Lucknow; ADM (F & R); The Collector of Stamps Preet Vihar Delhi
Central Sales Tax Act and Local Sales Tax Act Central Sales Tax and Local Sales Tax (including Value Added Tax) 17.22* FY: 2011-12; FY: 2013-14; FY: 2014-15; FY: 2015-16; FY: 2016-17; FY: 2017-18. Dy. Commissioner of Sales Tax; Joint Commissioner of commercial Taxs Appeal-3; Comm. Tax Circle-P Jammu ; Tribunal

*Net of amount paid under protest viii. In our opinion and according to the informationand explanations given to us the Company has not defaulted in repayment of loans orborrowings from banks. The Company has not taken any loans from Government or anyFinancial Institution and debenture holders. ix. Based on our audit procedure and on thebasis information and explanation given by the management we are of the opinion thatmoney raised by company by way of term loan have been applied for the purpose for whichthey were raised. The company did not raise any money by way of Initial Public offer orfurther public offer. x. To the best of our knowledge and belief and according to theinformation and explanations given to us no fraud by the Company was noticed or reportedduring the year although there were some instances of fraud on the Company noticed by theManagement the amounts whereof were not material in the context of the size of theCompany and the nature of its business and the amounts were adequately provided for. xi.In our opinion and according to the information and explanations given to us the Companyhas paid/ provided managerial remuneration in accordance in accordance with the provisionsof section 197 of the Act. xii. In our opinion and according to the information given tous the Company is not a Nidhi Company. Therefore paragraph 3(xii) of the order is notapplicable. xiii. According to the information and explanations given to us and based onour examination of the records of the Company transactions with the related parties arein compliance with sections 177 and 188 of the Act where applicable and details have beendisclosed in the Financial Statements as required by the applicable accounting standard.xiv. According to the information and explanations given to us and based on ourexamination of the records Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year. Thereforeparagraph 3(xiv) of the order is not applicable. xv. According to the information andexplanations given to us and based on our examination of the records Company has notentered into any non-cash transactions with the directors or persons connected with him.Therefore paragraph 3(xv) of the order is not applicable. xvi. The Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For NGS & Co. LLP
Chartered Accountants
Firm Registration No. : 119850W
Ashok A. Trivedi
Mumbai Partner
May 25 2019 Membership Number: 042472

Annexure - B to the Auditors' 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 over financial reporting of FutureRetail Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the Standalone Financial Statements of the Company for the year ended on thatdate.

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 Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI'). 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.

Auditors' Responsibility

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 ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing 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 judgment 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 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 Standalone Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of StandaloneFinancial 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 StandaloneFinancial Statements.

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.

Opinion

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 March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For NGS & Co. LLP
Chartered Accountants
Firm Registration No. : 119850W
Ashok A. Trivedi
Mumbai Partner
May 25 2019 Membership Number: 042472