To the Members of
Heritage Foods Limited
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Heritage FoodsLimited (the Company') which comprise the Balance Sheet as at 31 March 2018 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
2. 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 financial statements that give a true and fair view of the state ofaffairs (financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity 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 the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating e3 ectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
4. 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.
5. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthese standalone financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial controls relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
7. We believe that the audit evidence we have obtained is su3 cient and appropriate toprovide a basis for our audit opinion on these standalone financial statements.
8. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including Ind AS specified under Section133 of the Act of the state of affairs (financial position) of the Company as at 31 March2018 and its profit (financial performance including other comprehensive income) itscash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
9. We draw attention to note 42 (i) to the standalone financial statements for the yearended 31 March 2018 in relation to the accounting treatment of the Composite Scheme ofArrangement (the "Scheme") between the Company Heritage Nutrivet Limited(formerly Heritage Foods Retail Limited) Future Retail Limited and their respectiveshareholders and creditors. As explained on the basis of internal evaluation managementhas adopted the accounting treatment as referred to under the Scheme. Our opinion is notmodified in respect of this matter.
10. The comparative financial information for the year ended 31 March 2017 and thetransition date opening balance sheet as at 1 April 2016 prepared in accordance with IndAS included in these financial statements are based on the previously issued statutoryfinancial statements for the year ended 31 March 2017 and 31 March 2016 respectivelyprepared in accordance with Accounting Standards prescribed under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014 (as amended) which were auditedby the predecessor auditor whose reports dated 25 May 2017 and 23 May 2016 respectivelyexpressed unmodified opinion on those financial statements. These comparative financialinformation for the year ended 31 March 2017 and the transition date opening balance sheetas at 1 April 2016 have been adjusted for the di3 erences in the accounting principlesadopted by the Company on transition to Ind AS which have also been audited by thepredecessor auditor. The report of the predecessor auditor dated 24 May 2018 on thecomparative financial information for the year ended 31 March 2017 and the transition dateopening balance sheet as at 1 April 2016 prepared in accordance with Ind AS included inthese standalone financial statements expressed an unmodified opinion. Our opinion is notmodified in respect of this matter.
Report on Other Legal and Regulatory Requirements
11. As required by the Companies (Auditor's Report) Order 2016 (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 paragraphs 3 and 4 of theOrder.
12. Further to our comments in Annexure B as required by Section 143(3) of the Act wereport that:
a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose 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 standalone financial statements dealt with by this report are in agreement withthe books of account;
d) in our opinion the aforesaid standalone financial statements comply with Ind ASspecified under Section 133 of the Act;
e) on the basis of the written representations received from the directors and 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) we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31 March 2018 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 24 May 2018 as per Annexure B expressed unmodified opinion;
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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. the Company as detailed in 46(b) to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; iii. there has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company; and
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.
Annexure A to the Independent Auditor's Report of even date to the members of HeritageFoods Limited on the standalone financial statements for the year ended 31 March 2018Annexure A
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management during the year byengaging the outside expert and no material discrepancies were noticed on suchverification. In our opinion the frequency of verification of the fixed assets isreasonable having regard to the size of the Company and the nature of its assets.
(c) The title deeds of all the immovable properties (which are included under the headProperty plant and equipment') are held in the name of the Company.
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit and stocks lying withthird parties. For stocks lying with third parties at the year-end written confirmationshave been obtained by the management. No material discrepancies were noticed on theaforesaid verification.
(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.
(iv) In our opinion the Company has complied with the provisions of Sections 186 inrespect of investments guarantees and security. Further in our opinion the Company hasnot entered into any transaction covered under Section 185 in respect of loans.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections373 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable have generally beenregularly deposited to the appropriate authorities though there have been significantdelays in a few cases. Further no undisputed amounts payable in respect thereof wereoutstanding at the year-end for a period of more than six months from the date they becamepayable.
(b) The dues outstanding in respect of income-tax sales-tax service-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:
Statement of disputed dues
|Nature of Statue ||Nature of dues ||Amount (Rs) ||Amount paid in protest (Rs) ||Period to which the amount relates ||Forum where dispute is pending |
|The Central Sales Tax Act1956 ||Purchase tax ||1.42 ||1.42 ||1998-99 ||The High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh |
|Andhra Pradesh General Sales Tax Act 1957 ||Purchase tax ||95.12 ||11.36 ||2001-02 ||The High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh |
|Andhra Pradesh Value Added Tax Act 2005 ||Sales Tax / VAT ||127.07 ||127.07 ||2007-08 ||Sales tax appellate tribunal AP |
|Andhra Pradesh Value Added Tax Act 2005 ||Sales Tax / VAT ||46.88 ||- ||2008-09 ||The High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh |
|The Central Sales Tax Act1956 ||Sales Tax / VAT ||15.93 ||15.93 ||2010-11 ||Joint Commissioner of commercial taxes (Appeals) Bangalore |
|The Central Sales Tax Act1956 ||Sales Tax / VAT ||21.48 ||15.82 ||2011-12 ||Joint Commissioner of commercial taxes (Appeals) Bangalore |
|The Central Sales Tax Act1956 ||Sales Tax / VAT ||7.31 ||7.31 ||2012-13 ||Joint Commissioner of commercial taxes (Appeals) Bangalore |
|The Income-tax Act 1961 ||Income- tax ||16.84 ||- ||2016-17 ||Deputy Commissioner of Income Tax Hyderabad |
(viii)The Company has not defaulted in repayment of borrowings to any bank during theyear. There are no loans or borrowings payable to financial institutions or government andno dues payable to debenture-holders.
(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.
(x) No fraud by the Company or on the Company by its offcers or employees has beennoticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable Ind AS.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.
(xvi)The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934..
Annexure B to the Independent Auditor's Report of even date to the members of HeritageFoods Limited on the standalone financial statements for the year ended 31 March 2018Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
1. In conjunction with our audit of the standalone financial statements of HeritageFoods Limited ("the Company") as of and for the year ended 31 March 2018 wehave audited the internal financial controls over financial reporting (IFCoFR) of theCompany of as of that date.
Management's Responsibility for Internal Financial Controls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on 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 Reporting("Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating e3 ectively for ensuring theorderly and e3 cient conduct of the company's business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of IFCoFR and the Guidance Note issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate IFCoFR wereestablished and maintained and if such controls operated e3 ectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating e3 ectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating e3 ectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
5. We believe that the audit evidence we have obtained is su3 cient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR 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 statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 over Financial Reporting
7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating e3 ectively as at 31 March 2018 based on the internalcontrol over financial reporting criteria established by considering the essentialcomponents of internal control stated in the Guidance Note issued by the ICAI.
| ||For Walker Chandiok & Co LLP |
| ||Chartered Accountants |
| ||(FRN: 001076N/N500013) |
| ||per Sanjay Kumar Jain |
|Place : Hyderabad ||Partner |
|Date : May 24 2018 ||M No. 207660 |