To the Members of Himalaya Food International Limited
Report on the Audit of Standalone Financial Statements
We have audited the accompanying standalone Financial Statements of Himalaya FoodInternational Limited ("the Company) which comprise the Balance sheet as at 31 March2020 the Statement of Profit and Loss the Cash flow statement and the Statement ofchanges in Equity for the year then ended and Notes to the financial statements includinga summary of significant accounting policies and other explanatory information.
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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 312020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
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 there under 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 are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr. No. ||Key Audit Matter ||Auditor's Response |
|1 ||COVID-19 Impact on Inventory ||Principal Audit Procedures |
| ||Measurement Ind AS 2Impairment of Non Financial Assets Ind AS 36Impairment of Financial Instruments Ind AS 109 ||We assessed the Company's process to identify and implement the impact of COVID- 19 |
| || || |
| ||Due to COVID-19 all businesses are affected. ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||Net realisable value of the inventories was to be checked. || Evaluated the design of internal controls relating to implementation of guidance note and accounting standards. |
| ||. Net realisable value refers to the net amount that an entry expects to realise from the sale of inventory in the ordinary course of business. Due to COVID-19 there might be temporary ceasing of operations or an immediate decline in demand or prices resulting in lowering of revenues and profitability and reduced economic activity. || |
| || || Selected a sample of inventory and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of COVID-19 impact. We carried out a combination of procedures involving enquiry and observation reperformance and inspection of evidence in respect of operation of these aspects. |
| ||Financial Instruments within the scope of Ind AS 109 such as Loans Trade Receivables Other Receivables Investment in Debt instruments Financial Guarantees and Loan Commitments not measured at fair value through profit or loss Contract Assets and Lease Receivables are subject to impairment loss recognition and measurement based on an approach called Expected Credit Loss (ECL). || Tested the relevant information technology systems' access and change management controls relating to COVID-19 and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard. |
| || || Selected a sample of continuing and new Non Financial Assets and Impairment of financial instruments and performed the following procedures: |
| || || Read analysed and identified the distinct performance obligations in these assets. |
| || || Compared these performance obligations with that identified and recorded by the Company. |
| || || Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
| || || Samples in respect of revenue recorded for time and material contracts were tested using a combination of approved time sheets including customer acceptances subsequent invoicing and historical trend of collections and disputes. |
| || || In respect of samples relating to fixed price contracts progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and budgeting systems. We also tested the access and change management controls relating to these systems. |
| || || Sample of revenues disaggregated by type and service offerings was tested with the performance obligations specified in the underlying contracts. |
| || || Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings. |
| || || We reviewed the collation of information and the logic of the report generated from the budgeting system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. |
|2 ||Accuracy of revenues and onerous obligations in respect of fixed price contracts involves critical estimates ||Principal Audit Procedures Our audit approach was a combination of test of internal controls and substantive procedures which included the following: |
| ||Estimated effort is a critical estimate to determine revenues and liability for onerous obligations. This estimate has a high inherent uncertainty as it requires consideration of progress of the contract efforts incurred till date and efforts required to complete the remaining contract performance obligations. || Evaluated the design of internal controls relating to recording of efforts incurred and estimation of efforts required to complete the performance obligations. |
| || || Tested the access and application controls pertaining to time recording allocation and budgeting systems which prevents unauthorised changes to recording of efforts incurred. |
| || || Selected a sample of contracts and through inspection of evidence of performance of these controls tested the operating effectiveness of the internal controls relating to efforts incurred and estimated. |
| || || Selected a sample of contracts and performed a retrospective review of efforts incurred with estimated efforts to identify significant variations and verify whether those variations have been considered in estimating the remaining efforts to complete the contract. |
| || || Reviewed a sample of contracts with unbilled revenues to identify possible delays in achieving milestones which require change in estimated efforts to complete the remaining performance obligations. |
| || || Performed analytical procedures and test of details for reasonableness of incurred and estimated efforts. |
|3 ||Evaluation of uncertain tax positions ||Principal Audit Procedures |
| || || |
| ||The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||Obtained details of completed tax assessments and demands for the year ended March 31 2020 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 12018 to evaluate whether any change was required to management's position on these uncertainties. |
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 Annexure 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 is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic 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 one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
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 the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements 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 statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit 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 ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified 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 March312020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct.
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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
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 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 has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There were no amounts which required to be transferred to the Investor Educationand Protection Fund by the Company.
2. 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 in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
For Satnam Associates.
Firm Registration No.009870C
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Himalaya Foods International Limitedof even date)
i. a.) The company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
b. ) According to information and explanation given to us there is a regular programmeof physical verification of these fixed assets by the management which in our opinion isreasonable having regard to size of the company and nature of its assets. As informed tous no material discrepancies were noticed on such verification.
c. ) As informed to us and as verified by us during the course of our audit the titledeeds on immovable properties are held in name of company as at the balance sheet date.
In respect of immovable properties of land and building that have been taken on leaseand disclosed as fixed assets in the standalone financial statements the lease agreementsare in the name of the Company.
ii. As informed to us the inventories were physical verified during the year by themanagement at reasonable intervals and no material discrepancies were noticed on physicalverification.
iii. As informed to us the company has granted unsecured loans to companies covered inthe register maintained under section 189 of the Companies Act 2013. In respect of suchloans:
(Rs in Lacs)
|Name of the company ||Nature of loan ||Balance as on 31.03.2020 ||Maximum Amount Due |
|APJ Laboratories Ltd. ||Advance against purchase ||568 ||568 |
a. ) As informed to us and as verified by us the terms and condition of grant to suchloans are not prejudicial to the interest of the company.
b. ) Repayment of the principle amount and payment of interest on such loans has notbeen stipulated as it is in the nature of "Advance against purchases"
c. ) Not Applicable
iv. According to the information and explanation given to us the company has compliedwith the provision of section 185 and 186 of the Companies Act 2013 in respect of grantof loans making investments and providing guarantees and securities as applicable duringthe year.
v. The company has not accepted any deposits during the year and does not have anyunclaimed deposits as at March 31 2020 and therefore the provisions of clause 3(v) ofthe Order are not applicable to the Company.
vi. Reporting under clause 3(vi) of the order is not applicable as the company'sbusiness activities are not covered by the companies (Cost Record and Audits) Rules 2014.
vii. a) According to records of the company and information and explanation given to usthe company has generally been regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax service-tax duty ofcustoms duty of excise value added tax cess and any other statutory dues with theappropriate authorities.
b) According to information and explanation given to us there are outstanding statutorydues as referred above as at the last day of the financial year under audit for a periodof more than six months from the date they become payable as below:
|Particulars of dues ||Amount Rs.' Lacs |
|PF ||30 |
|ESI ||18 |
c) As certified by the management on which we have relied upon the dues of sale tax orservice tax or duty of custom or duty of excise or value added tax or cess which have notbeen deposited on account of dispute and the forum where the dispute is pending are givenbellow:
|Particulars of dues ||Amount Rs.' Lacs ||Financial Year to which amount relates ||Forum where dispute is pending |
|Excise Duty ||3.78 ||1999-2000 ||Tribunal |
|Income Tax ||7.29 ||2011-12 ||HC |
|Sales Tax ||.50 ||2013-14 ||AETC |
viii. Based on our audit procedure and in accordance with the information andexplanation given to us by the company the company has defaulted in repayment of dues tobanks and the complete balance of loans Rs 18062 lakhs is classified as NPA by the banks.The company does not have any loans or borrowings from financial institutions orgovernment and has not issued any debentures.
ix. The company has not raised any money during the year by way of initial public offeror further public offer (including debts instrument) or term loans and hence reportingunder clause 3(ix) of the Order is not applicable.
x. According to the information and explanation given to us there has been no fraudnoticed or reported during the year by the company or on the company by its officers oremployees.
xi. In our opinion the managerial remuneration paid/provided during the year is inaccordance with requisite approvals mandated by the provisions of section 197 read withSchedule V of Companies Act 2013.
xii. The company is not a nidhi company and hence reporting under clause 3(xii) of theOrder is not applicable.
xiii. According to the information and explanation given to us and on the basis ofexamination of the records the Company is in compliance with Section 177 and 188 of theAct where applicable for all transactions with the related parties and details ofrelated party transactions have been disclosed in the financial statements as required bythe applicable accounting standards.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.
xv. As informed to us during the year the company has not entered into any non-cashtransactions with any of its directors or persons connected with the directors.
xvi. The Company is not required to get registered under section 45-IA of Reserve Bankof India Act 1934.
For Satnam Associates.
Firm Registration No.009870C
ANNEXURE B' TO THE INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 3(f) to "Report on Other legal and regulatoryrequirement" of the independent Auditors' Report of even date to the members ofHimalaya Food International Limited on standalone Ind AS financial statement for the yearended March 312020.
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 HimalayaFood International Limited ("the Company") as of March 312020 in conjunctionwith our audit of the standalone financial statement of the Company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls.
The Company's management is responsible for establishing and maintaining internalfinancial controls base 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 on India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's Policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and Completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting base 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 on 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 respect. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. 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.We believe that the audit evidence I/we have obtained is sufficient and appropriate toprovide a basis for out 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 statements 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorization of management and directors of the company; and
3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 March 31 2020 based on theinternal control over financial reporting criteria established by the company consideringthe essential components of internal controls stated in Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For Satnam Associates.
Firm Registration No.009870C