To The Members of Galaxy Cloud Kitchens Limited
(Formerly known as Galaxy Entertainment Corporation Limited) Report on the Audit of theFinancial Statements
We have audited the accompanying financial statements of Galaxy Cloud KitchensLimited("the Company") which comprise the Balance Sheet as at March 31 2022the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes to thefinancial statement including a summary of significant accounting policies and otherexplanatory information (herein after referred to as "the financialstatements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid 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 2022 the loss and total comprehensiveloss changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We have conducted our audit in accordance with the Standards on Auditing (SAs)specified under Section 143(10) of the Act. Our responsibilities under those Standards arefurther described in the Auditors Responsibilities for the Audit of the 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 financial statement under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the financial statements of the current period.
These matters were addressed in the context of our audit of the financial statements asa whole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key Audit Matters ||Principal audit procedure performed |
|Provision for Doubtful Debts ||i. The management has made provision as per The Expected |
|The company has provided provision for Doubtful Debts amounting to ' 53.57 lakhs. ||Credit Loss (ECL') approach which involves an estimation of probability weighted loss on financial instruments over their life considering reasonable and supportable information about past events current conditions and forecasts of future economic conditions which could impact the credit quality of the company's Loans And Advances. |
| ||ii. In the process the company has estimated a probability of default which could impact the Receivables of the company and therefore a significant degree of judgment has been applied by the management for: |
| || Staging of Receivables [i.e. classification in Significant Increase In Credit Risk' (SICR') and default' categories]. |
| || Grouping of Debtors based on homogeneity by using appropriate statistical techniques. |
| || Estimation of behavioral life. |
| || Estimation of losses for Receivables with no/minimal historical defaults. |
| ||Principal audit procedures performed |
| ||? We have evaluated the reasonableness of the management estimates by understanding the process of ECL estimation and related assumptions and tested the controls around data extraction and validation. |
| ||? Assessed the criteria for staging of Receivables based on their past-due status to check compliance with requirement of IndAS 109. |
| ||? Tested the ECL model including assumptions and underlying computation. |
|Fixed Assets/ Leased Assets || |
|The new Accounting Standard Ind AS 116 suggest capitalisation of lease asset and creating lease liability. Expenses need to be charged as depreciation and finance cost instead of rental expenses. ||We have obtained the working of lease assets including amortisation schedule and ensured that the same is in line with applicable Indian Accounting Standards and accurately disclosed in the financial statements. Further the Company has applied the practical expedient available as per amendment to Ind As 116 "Leases" for rent concessions which are granted due to Covid-19 pandemic. Accordingly 201.06 Lakhs has been recognised under Other Income' for the year ended 31st March2022 |
Information Other than the Financial Statement 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 Annexure to Board's Report CorporateGovernance and Shareholder's Information but does not include the financial statementsand our auditor's report there on.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statement our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statement or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe 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 Financial Statement
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 financial statement that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified under Section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintenance of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.
In preparing the financial statement 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.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibility for the Audit of the Financial Statement
Our objectives are to obtain reasonable assurance about whether the financial statementas a whole are free from material misstatement whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statement.
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 financialstatement 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 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 companyhas adequate internal financial controls system in place and the operating effectivenessof 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 financial statement or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatement including the disclosures and whether the financial statement represents theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statement thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statement may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statement.
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 the 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 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 financial statement of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2020 ("the Order")issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure A a statement on the matters specified in the paragraphs 3 and 4 of theorder to the extent applicable.
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 our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c. The Balance Sheet the Statement of Profit and Loss including Other Comprehensiveloss Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account;
d. In our opinion the aforesaid financial statement comply with the Indian AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
e. On the basis of the written representations received from the directors as on 31stMarch 2022 taken on record by the Board of Directors none of the director isdisqualified as on 31st March 2022 from being appointed as a director in terms of Section164(2) of the Act;
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B";
g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statement;
ii. The Company did not have any long-term contracts including derivative contractshence the question of making a provision for any resulting material foreseeable lossesdoes not arise; and;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. (a) The Management has represented that to the best of its knowledge and beliefno funds (which are material either
individually or in the aggregate) have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the Company toor in any other person or entity including foreign entity ("Intermediaries")with the understanding whether recorded in writing or otherwise that the Intermediaryshall whether directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever by or on behalf of the Company ("UltimateBeneficiaries") or provide any guarantee security or the like on behalf of theUltimate Beneficiaries;
(b) The Management has represented that to the best of its knowledge and belief nofunds (which are material either individually or in the aggregate) have been received bythe Company from any person or entity including foreign entity ("FundingParties") with the understanding whether recorded in writing or otherwise that theCompany shall whether directly or indirectly lend or invest in other persons orentities identified in any manner whatsoever by or on behalf of the Funding Party("Ultimate Beneficiaries") or provide any guarantee security or the like onbehalf of the Ultimate Beneficiaries;
(c) Based on the audit procedures that have been considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (i) and (ii) contain any material misstatement.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE TO THE MEMBERS OF GALAXYCLOUD KITCHEN LIMITED ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31 2022
i. (a) (A) According to the information and explanations given to us the Company ismaintaining proper records showing full particulars including quantitative details andsituations of all Property Plant & Equipment (PPE);
(B) According to information and explanations given to us there are no intangibleassets accordingly clause 3(i) (a) (B) of the Order is not applicable to the Company.
(b) According to the information and explanations given to us Property Plant &Equipment have been physically verified by the management at reasonable intervals and nomaterial discrepancies were noticed 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 immovable properties areheld in the name of the Company.
(d) According to information and explanations given to us and on the basis of ourexamination of the records of company the company has not revalued it's PPE during theyear. Accordingly provisions of Clause 3(i)(d) of the Order are not applicable to theCompany.
(e) According to information and explanations given to us and on the basis of ourexamination of the records of company no proceedings have been initiated or are pendingagainst the company for holding any Benami property under the Benami Transactions(Prohibition) Act 1988 (45 of 1988) and rules made thereunder. Accordingly provisions ofClause 3(i) (e) of the Order are not applicable to the Company.
ii. (a) As explained to us inventory has been physically verified by the managementduring the year and no material discrepancies were noticed.
(b) According to information and explanations given to us and on the basis of ourexamination of the records of company the company has not been sanctioned working capitallimits in excess of five crore rupees in aggregate from banks or financial institutionsduring the year on the basis of security of current assets.
iii. The company has not made investment in provided any guarantee or security orgranted any loans secured or unsecured to companies firms Limited LiabilityPartnership or other parties. Therefore the provisions of the Clause 3(iii)(a) (b) (c)(d) (e) & (f) of the Order are not applicable to the Company.
iv. According to the information and explanations given to us the company has notgiven/made any loans investments guarantees and security accordingly provisions ofsection 185 and 186 of the Companies Act 2013 are not applicable.
v. According to the information and explanations given to us the Company has notaccepted any deposits from the public as per the provisions of section 73 74 75 and 76or any other relevant provisions of the Act and the Rules framed there under to the extentnotified.
vi. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the service rendered by the company.
vii. (a) According to the information and explanations given to us and based on therecords of the Company examined by us in our opinion the Company is generally regular indepositing the undisputed statutory dues including income tax sales tax custom dutyvalue added tax goods & service tax cess and any other statutory dues with theappropriate authorities and no such dues are outstanding for more than six months from thedate they become applicable.
(b) According to the information and explanations given to us and based on the recordsof the Company examined by us the particulars of dues of Income Tax Service Tax SalesTax Custom Duty and Excise Duty Value Added Tax Goods and Service Tax Cess as at March312022 which have not been deposited on account of any disputes are as follows:
|Name of the Statute ||Nature of Dues ||Amount in Thousands (Rs) ||Period to which the amount relates ||Forum where dispute is pending |
|West Bengal Sales Tax ||Sales Tax ||81.21 ||F.Y. 2011-12 ||Joint Commissioner of Sales Tax |
|Service Tax ||Service Tax ||17922.00 ||F.Y 2012-13 ||Additional Commissioner of Goods & Service Tax |
viii. According to information and explanations given to us there are no transactionswhich are not recorded in the books of account and have been disclosed or surrender beforethe tax authorities as income during the year in the tax assessments under the Income TaxAct 1961. Accordingly clause 3(viii) of the Order is not applicable to the Company.
ix. In our opinion and according to the information and explanations given to us theCompany has not borrowed any money during the year Therefore the provisions of the Clause3(ix)(a) (b) (c) (d) (e) & (f) of the Order are not applicable to the Company.
x. (a) According to the information and explanations given to us the Company has notraised any fund by way of public offer further public offer (including debt instruments)and term loans. Accordingly the Clause 3(x)(a) of the order are not applicable to thecompany.
(b) The company has not made any Preferential Allotment or Private placement of shareor Convertible Debentures during the year. The Clause 3(x) (b) of the order are notapplicable to the company.
xi. (a) According to the information and explanations given to us no material fraudhas been noticed or reported during the year.
(b) According to the information and explanations given to us no report undersub-section (12) of section 143 of the Companies Act has been filed by the auditors inForm ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules 2014 withthe Central Government.
(c) During the year no whistle-blower complaints has been received by the company.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly reporting as per paragraph 3(xii) of theOrder is not required.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statement as required by the applicableIndian Accounting Standards.
xiv. The company has proper Internal Audit system in accordance with it's size andbusiness activities and the reports of the internal auditors for the period under audithave been considered by us.
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 any non-cashtransactions with its directors or persons connected with them. Accordingly reporting asper paragraph 3(xv) of the Order is not required.
xvi. a) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
(b) The company has not conducted any Non-Banking Financial or Housing Financeactivities without a valid Certificate of Registration (COR) from the Reserve Bank ofIndia as per the Reserve Bank of India Act 1934.
(c) The company is not a Core Investment Company (CIC) as defined in the regulationsmade by the Reserve Bank of India. Accordingly the provisions of Clause 3(xvi)(c) of theOrder are not applicable to the Company.
(d) The Group does not have CIC as part of the Group Accordingly clause 3(xvi)(d) ofthe Order is not applicable to the Company
xvii. According to the information and explanations given to us and based on ourexamination of the records of the Company the company has incurred cash losses in thefinancial year and the immediately preceding financial year. The amount of cash losses_'29.53 Lacs for the period and ' 199.48 Lacs preceding financial year.
xviii. There has not been any resignation of Statutory Auditor during the financialyear. Accordingly the provisions of Clause 3(xviii) of the Order are not applicable tothe Company.
xix. On the basis of the financial ratios ageing and expected dates of realization offinancial assets and payment of financial liabilities other information accompanying thefinancial statements and our knowledge of the Board of Directors and Management plans andbased on our examination of the evidence supporting the assumptions nothing has come toour attention which causes us to believe that any material uncertainty exists as on thedate of the audit report indicating that Company is not capable of meeting its liabilitiesexisting at the date of balance sheet as and when they fall due within a period of oneyear from the balance sheet date. We however state that this is not an assurance as tothe future viability of the Company as our reporting is based on the facts up to the dateof the audit report.
xx. According to the information and explanations given to us and based on ourexamination of the records of the Company the company is not required to transfer anyunspent amount to Funds specified in Schedule VII under Corporate Social Responsibilitytherefore the provisions of Clause 3(xx) of the Order are not applicable to the Company.
xxi. The company is not required to prepare consolidated financial statement thereforethe provisions of Clause 3(xxi) of the Order are not applicable to the Company
Annexure B to Independent Auditor's Report
The Annexure referred to in paragraph 1(A)(f) under "Report on Other Legal andRegulatory Requirements" section of our report of even date
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 GalaxyCloud Kitchens Limited (Formerly known as Galaxy Entertainment Corporation Limited')("the Company") as of 31st March 2022 in conjunction with our audit of thefinancial statement of the Company for 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 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.
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 Reportingissued by ICAI (the "Guidance Note") and the Standards on Auditing prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 testing and evaluating the design andoperating 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 financial statement 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 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 financial statement for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) Pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) Provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statement inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) Provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statement.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2022 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 S A R A & Associates
Firm Registration No: 120927W Purvesh Mayur Shah
Membership No: 173448
Date: May 12 2022