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Huhtamaki India Ltd.

BSE: 509820 Sector: Industrials
NSE: HUHTAMAKI ISIN Code: INE275B01026
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OPEN 232.00
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VOLUME 4791
52-Week high 352.45
52-Week low 220.10
P/E 64.11
Mkt Cap.(Rs cr) 1,713
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 232.00
CLOSE 226.75
VOLUME 4791
52-Week high 352.45
52-Week low 220.10
P/E 64.11
Mkt Cap.(Rs cr) 1,713
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Huhtamaki India Ltd. (HUHTAMAKI) - Auditors Report

Company auditors report

To the Members of

Huhtamaki India Limited

(formerly known as "Huhtamaki PPL Limited")

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Huhtamaki India Limitedformerly known as Huhtamaki PPL Limited ("the Company") which comprise thebalance sheet as at December 31 2020 and the statement of profit and loss (includingother comprehensive income) statement of changes in equity and statement of cash flowsfor the year then ended and notes to the financial statements including a summary of thesignificant accounting policies and other explanatory information (herein after referredto as "financial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at December 31 2020 and profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's 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 statements 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 on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Key audit matter How our audit addressed the key audit matter
Timing of Revenue Recognition (Refer note 3(i) to significant accounting policies and note 33)
In view of the significance of the matter we applied the following audit procedures among others in this area to obtain sufficient appropriate audit evidence: -
Revenue from sale of goods is recognised when control is transferred to the customers.
The Company uses a variety of delivery terms and this has an impact on the timing of revenue recognition. There is a risk that revenue could be recognised at a time which is different from transfer of control especially for sales transactions occurring on and around the year end. • Assessed the appropriateness of Company's accounting policy for revenue recognition as per the relevant accounting standard.
• Evaluated the design and implementation of key internal financial controls and processes including relevant information technology systems in relation to the timing of revenue recognition for a sample of transaction's by using statistical sampling with special reference to controls over revenue cut offs at period end.
In view of above ascertainment of timing of the revenue recognition has been identified as a key audit matter.
• Tested sample revenue transaction's by using statistical sampling near to the reporting date in order to examine whether revenue has been recognised in the correct period taking into consideration the relevant underlying documentation (customer orders transporter documents etc.).
• Performed analytical procedures on current year revenue based on monthly trends and where appropriate conducting further enquiries to identify unusual transactions.
• Obtained independent balance confirmations from the Company's customers on sample basis.
Tax litigations - Provisions and contingencies Refer note 44
In view of the significance of the matter we applied the following audit procedures among others in this area to obtain sufficient appropriate audit evidence:
The Company is subject to a number of ongoing litigations relating to directtax(including transferpricing arrangements)and indirect taxes.
• Evaluated the design and implementation and operating effectiveness of key internal controls around the recognition and measurement of provisions and disclosure of contingent liabilities.
Assessment of the outcome of ongoing litigations and consequentially whether or not any provision and/or disclosures are required is inherently uncertain and involves significant judgement since it requires interpretation of the applicable tax legislations and decisions previously passed by authorities. Also as at the year ended the amounts involved are significant.
• Obtained information from the Company's internal tax and legal team regarding the status of the ongoing litigations.
• Involved our subject matter experts for evaluating the Company's assessment of the possible outcome of the matters and analysing and challenging the assumptions used in estimation of provisions based on their knowledge and experiences of the application of the relevant legislation by the relevant authorities and related correspondence with the authorities.
In view of the above we have identified ongoing litigations relating to direct tax (including transfer pricing arrangements) and indirect tax as a key audit matter.
• Assessed the adequacy of provision for ongoing litigations by verifying the appropriateness of assumptions used and estimates made by the management in light of decisions previously made by the authorities in similar circumstances and by comparing the estimates of prior year with the actual outcome.
• Assessed the adequacy of Company's disclosures in respect of ongoing litigations as per the relevant accounting standards.

Information Other than the Financial Statements and Auditors'Report thereon

The Company's management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and our auditors'report thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Management's and Board of Directors' Responsibility for theFinancial Statements

The Company's management and Board of Directors are responsible for thematters stated i n Section 134(5) of the Act with respect to the preparation of thesefinancial statements that give a true and fair view of the state of affairs profit andother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgements and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.

In preparing the financial statements the Management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the FinancialStatements

Our objectives are to obtain reasonable assurance about whether thefinancial 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 financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thefinancial 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 control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)

(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the financial statementmade by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors' use of going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained upto the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matter

The comparative financial information of the Company for the year endedDecember 31 2019 prepared in accordance with Ind AS included in these financialstatements have been audited by the predecessor auditor. The report of the predecessorauditor on the comparative financial information dated February 17 2020 expressed anunmodified opinion. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors' Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143 (11) of the Act wegive in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.

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

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The balance sheet the statement of profit and loss (including othercomprehensive income) the statement of changes in equity and the statement of cash flowsdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with theInd AS specified under Section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on December 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on December 31 2020 from being appointed as a director interms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditors'Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 as atDecember 31 2020 on its financial position in its financial statements - Refer Note 44 tothe financial statements;

ii. The Company did not have any long-term contract includingderivative contracts for which there were any material foreseeable losses;

iii. There were no delays in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

iv. The disclosures in the financial statements regarding holdings aswell as dealings in specified bank notes during the period from November 8 2016 toDecember 30 2016 have not been made in these financial statements since they do notpertain to the financial year ended December 31 2020.

(C) With respect to the matter to be included in the Auditors' Reportunder Section 197(16) of the Act:

In our opinion and according to the information and explanations givento us the remuneration paid by the company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) ofthe Act which are required to be commented upon by us.

> For B S R & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 101248W/W-100022
Amar Sunder
Partner
Mumbai Membership No. 078305
February 24 2021 UDIN: 21078305AAAAAQ7705

Annexure - A to the Independent Auditors' Report on the financialstatements of Huhtamaki India Limited for the year ended December 31 2020 (Referred to inour report of even date)

With reference to the Annexure referred to in the Independent Auditors'Report to the Members of the Company on the financial statements for the year endedDecember 31 2020 we report the following:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of the fixed assets (propertyplant and equipment).

(b) Fixed assets (property plant and equipment) have been physicallyverified by the management during the year and no material discrepancies have been noticedon such verification. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us thetitle deeds of immovable properties as disclosed in Note 4 to the financial statementsare held in the name of the Company. Certain immovable properties of the Company are inthe former name of the Company i.e. Huhtamaki PPL Limited. The management has made anapplication to the relevant authorities for transfer of immovable properties in itspresent name.

(ii) The inventory except goods-in-transit and inventory lying withthird parties has been physically verified by management at reasonable intervals duringthe year. In our opinion the frequency of such verification is reasonable. In respect ofgoods-in-transit subsequent goods receipts have been verified and in respect of inventorylying with third parties at the year-end these have been confirmed by them. Thediscrepancies noticed on such verification between physical stocks and the book recordswere not material.

(iii) In our opinion and according to information and explanationsgiven to us the Company has not granted any loans secured or unsecured to companiesfirms limited liability partnerships or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly paragraph 3(iii) of the Order is not applicableto the Company.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has not advanced loans to directors/to a company in which theDirector is interested to which provisions of Section 185 of the Companies Act 2013 apply.

The Company has complied with the provisions of Section 186 of the Actwith respect to investments. The Company has not provided any loan guarantee or securityto the parties covered under Section 186 of the Act.

(v) According to information and explanations given to us the Companyhas not accepted any deposits from the public within the meaning of the directives issuedby Reserve Bank of India provisions of Sections 73 to 76 of the Act any other relevantprovisions of the Act and the relevant rules framed thereunder.

(vi) We have broadly reviewed the records maintained by the Companypursuant to the rules prescribed by Central Government for maintenance of cost recordsunder Section 148 (1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. However we have not made a detailedexamination of the records.

(vii) (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generallyregular in depositing the undisputed statutory dues including provident fund employees'state insurance income tax goods and services tax duty of customs cess professionaltax and other material statutory dues as applicable with the appropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome tax goods and services tax duty of customs cess professional tax and othermaterial statutory dues were in arrears as at December 31 2020 for a period of more thansix months from the date they became payable.

(b) According to the information and explanations given to us thereare no dues of income tax sales tax service tax goods and services tax duty ofcustoms duty of excise or value added tax which have not been deposited with theappropriate authorities on account of any dispute other than those mentioned below.

Name of Statute Nature of Dues Period to which the amount relates Forum where dispute is pending Amount (Rs. in Million) Amount paid under protest (Rs. in Million)
Income Tax Act 1961 Income Tax 2007-2008 High Court 1.9 0.4
2001-2002 2011-2012 ITAT 19.8 -
Finance Act 1994 - Service Tax Service Tax 2009-2017 Customs Excise and Service Tax Appellate Tribunal 47.9 -
2016-2017 Commissioner (Appeals) 2.7 -
2008-2015 Assistant Commissioner/Range Superintendent 0.7 -
Central Excise Act 1944 Excise Duty 2001-2007 High Court 0.6 -
2001-2014 Customs Excise and Service Tax Appellate Tribunal 56.0 -
2020 Commissioner (Appeals) 0.4 -
2005-2017 Commissioner 132.7 -
1997-1998 Deputy Commissioner 0.2 -
2009-2010 Joint Secretary 0.0* -
Customs Act 1962 Duty of Customs 2012-2013 Customs Excise and Service Tax Appellate Tribunal 0.3 -
2004-2008 Joint Commissioner 1.4 0.7
2007-2013 Assistant/Deputy Commissioner 2.1 1.2
Goods and services tax Tax 2020 Assistant/Joint Commissioner (Appeals) 0.3 0.3

*Less than Rs. 50000

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings to banks orfinancial institutions or Government. There were no dues to debenture holders.

(ix) According to the information and explanations given to us andbased on our examination of the records of the Company term loans obtained by the Companywere applied for the purpose for which those were raised. The Company did not raise anymoney by way of initial public offer or further public offer during the year.

(x) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have not comeacross any instance of material fraud on the Company or by the Company or by its officersor employees.

(xi) According to the information and explanations give to us and basedon our examination of the records of the Company the Company has paid or provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. Accordingly para 3(xii) of the Order isnot applicable to the Company.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable. Thedetails of such related party transactions have been disclosed in the notes to thefinancial statements as required under Indian Accounting Standard (Ind AS) 24 RelatedParty Disclosures notified under the Companies (Indian Accounting Standards) (Amendment)Rules 2016.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly para 3(xiv) of the Order is not applicable to theCompany.

(xv) According to the information and explanations given to us andbased on our examination of the records the Company has not entered into non-cashtransactions with directors or persons connected with him as referred to in Section 192 ofthe Act. Accordingly para 3(xv) of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanationsgiven to us the Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly para 3(xvi) of the Order is not applicableto the Company.

For B S R & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 101248W/W-100022
Amar Sunder
Partner
Mumbai Membership No. 078305
February 24 2021 UDIN: 21078305AAAAAQ7705

Annexure - B to the Independent Auditors' Report on financialstatements of Huhtamaki India Limited for the year ended December 31 2020

Report on the internal financial controls with reference to aforesaidfinancial statements under Clause (i) of sub-section 3 of Section 143 of the CompaniesAct 2013

(Referred to in paragraph (A)(f) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference tofinancial statements of Huhtamaki India Limited as of December 31 2020 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at December 31 2020 based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal controls stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's i nterna lfi nancial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to financial statements was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal controls based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.

Meaning of Internal Financial Controls with reference to financialstatements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls with reference tofinancial statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 101248W/W-100022
Amar Sunder
Partner
Mumbai Membership No. 078305
February 24 2021 UDIN: 21078305AAAAAQ7705

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