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Nestle India Ltd.

BSE: 500790 Sector: Agri and agri inputs
NSE: NESTLEIND ISIN Code: INE239A01016
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NSE 00:00 | 21 Oct 19233.15 -44.50
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OPEN 19549.00
PREVIOUS CLOSE 19273.70
VOLUME 1369
52-Week high 20599.95
52-Week low 15435.00
P/E 82.79
Mkt Cap.(Rs cr) 185,581
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 19549.00
CLOSE 19273.70
VOLUME 1369
52-Week high 20599.95
52-Week low 15435.00
P/E 82.79
Mkt Cap.(Rs cr) 185,581
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Nestle India Ltd. (NESTLEIND) - Auditors Report

Company auditors report

TO THE MEMBERS OF

NESTL INDIA LIMITED

Report on the Audit of the Financial Statements Opinion

We have audited the financial statements of Nestl India Limited ("theCompany") which comprise the balance sheet as at 31 December 2020 and the statementof profit and loss (including other comprehensive income) statement of changes in equityand statement of cash flows for the year then ended and notes to the financialstatements including a summary of the significant accounting policies and otherexplanatory information.

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 ("Act") in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 December 2020 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements 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 professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

Revenue Recognition

See note 2 and 35 to the financial statements

The key audit matter How the matter was addressed in our audit
Revenue from the sale of goods is recognized at the moment when control has been transferred to the customer and is measured net of trade discounts rebates and pricing allowances to customers (collectively ‘trade spends'). Our audit procedures included:
• We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
There is a risk that revenue may be overstated because of fraud resulting from the pressure local management may feel to achieve performance targets. Revenue is also an important element of how the company measures its performance upon which management is incentivized. • We evaluated the design tested the implementation and operating effectiveness of key internal controls including general IT controls and key IT application controls over recognition of revenue.
The Company focuses on revenue as a key performance measure which could create an incentive for revenue to be recognized before control has been transferred. • We performed substantive testing by selecting samples of revenue transactions recorded during the year by testing the underlying documents which included invoices good dispatch notes customer acceptances and shipping documents (as applicable).
• We carried out analytical procedures on revenue recognised during the year to identify unusual variances.
• We tested on a sample basis specific revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period.
• We tested manual journal entries posted to revenue to identify unusual items.

Provision for Contingencies

See note 2 21 26 and 38 to the financial statements

The key audit matter How the matter was addressed in our audit
The management is required to make judgements and estimates in relation to the issues and exposures arising from a range of matters relating to direct tax indirect tax general legal proceedings and other eventualities arising in the regular course of business. The Company is also subject to complexities arising from uncertain tax positions on deductibility of expenses. Our audit procedures included:
• We tested the design implementation and operating effectiveness of key internal controls around the recognition and measurement of provisions.
• We inquired the status in respect of significant provisions with the Company's internal tax and legal team.
The key judgement lies in determining the likelihood and magnitude of the possible cash outflows and interpretations of the legal aspects tax legislations and judgements previously made by authorities. By nature these are complex and include many variables. • We involved our subject matter experts wherever required to assess the value of material provisions in light of the nature of the exposures applicable regulations and related correspondence with the authorities.
• We challenged the assumptions and critical judgements made by the Company which impacted their estimate of provision required considering judgements previously made by the authorities in the relevant jurisdictions or any relevant opinions given by the Company's advisors and assessing whether there was an indication of management bias.
• We verified the calculation of provision on a test check basis.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditor's reportthereon.

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 statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Management's and Board of Directors' Responsibility for the Financial Statements

The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the state of affairs profit and other comprehensiveincome changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)specified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring accuracy and completeness of the accounting records relevant to the preparationand presentation of the financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the financial statements the Management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so. The Board ofDirectors is also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements. As part of an audit in accordance with SAs weexercise professional judgment and maintain professional skepticism throughout the audit.We also:

• Identify and assess the risks of material misstatement of the financialstatements 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 with reference to financial statements in placeand the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the financial statements made by theManagement and Board of Directors.

• Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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 financial statements 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 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable. (A) As required by Section 143(3) of the Act we reportthat: a) We have sought and obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit. b) In ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books. c) The balance sheet the statement ofprofit and loss (including other comprehensive income) the statement of changes in equityand the statement of cash flows dealt with by this Report are in agreement with the booksof account. d) In our opinion the aforesaid financial statements comply with the Ind ASspecified under section 133 of the Act. e) On the basis of the written representationsreceived from the directors as on 31 December 2020 taken on record by the Board ofDirectors none of the directors is disqualified as on 31 December 2020 from beingappointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) 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. TheCompany has disclosed the impact of pending litigations as at 31 December 2020 on itsfinancial position in its financial statements - Refer Note 38 and 44 to the financialstatements. ii. The Company did not have any long-term contracts including derivativecontracts for which there were any material foreseeable losses. iii. There has been nodelay in transferring amounts required to be transferred to the Investor Education andProtection Fund by the Company. iv. The disclosures in the financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these financial statements since they donot pertain to the financial year ended 31 December 2020. (C) With respect to the matterto be included in the Auditor's Report under section 197(16): In our opinion andaccording to the information and explanations given to us the remuneration paid by thecompany to its directors during the current year is in accordance with the provisions ofSection 197 of the Act. The remuneration paid to any director is not in excess of thelimit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has notprescribed other details under Section 197(16) which are required to be commented upon byus.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No. 101248W/W-100022
Place: New Delhi Vikram Advani
Date: 16 February 2021 Partner
Membership No. 091765
UDIN: 21091765AAAAAJ1554

Annexure - A to the Independent Auditor's Report of even date on the financialstatements of Nestle India Limited

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of two years. In ouropinion the periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets. As informed to us no material discrepancieswere noticed on such verification. (c) According to the information and explanations givento us and the records examined by us and based on the examination of the registered saledeed / transfer deed / conveyance deed provided to us we report that the title deedscomprising all the immovable properties of land and buildings which are freehold are heldin the name of the Company as at the balance sheet date. In respect of leasehold land thathave been taken on lease and disclosed as fixed asset in the financial statements thelease agreements are in the name of the Company where the Company is the lessee in theagreement.

(ii) The inventory except goods in transit and stock lying with third parties hasbeen physically verified by the management during the year. In our opinion the frequencyof such verification is reasonable. Confirmations have been obtained for stock lying withthird parties at the year end. According to the information and explanations given to usthe discrepancies noticed on physical verification of inventory as compared to bookrecords were not material and have been properly dealt with in the books of account.

(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013. Accordingly clause 3(iii) of the order is notapplicable. iv) According to the information and explanations given to us and on the basisof our examination of the records of the Company the Company has not entered into anytransactions in respect of loans investments guarantees and security which are coveredunder section 185 of the Companies Act 2013. The Company has complied with the provisionsof Section 186 of the Companies Act 2013 in respect of grant of loans making investmentsand providing guarantees and securities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposits covered under section 73 to 76 or any other relevant provisions ofthe Companies Act 2013 and the rules framed there under. Accordingly clause 3(v) of theOrder is not applicable.

(vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by Central Government for maintenance of cost records under sub section(1) of Section 148 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 givento us and on the basis of our examination of the records of the Company amounts deducted/accrued in the books of account in respect of undisputed statutory dues includingProvident Fund Employees' State Insurance Income-tax Duty of Customs Goods andServices Tax Cess and other material statutory dues have been regularly deposited duringthe year by the Company with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income-tax Duty ofcustoms Goods and Services Tax Cess and other material statutory dues were in arrears asat 31 December 2020 for a period of more than six months from the date they becamepayable.

(b) According to the information and explanations given to us except as stated inAppendix 1 there are no dues of Income-tax Goods and Services tax Sales tax Servicetax Duty of customs Duty of excise or Value added tax which have not been deposited onaccount of any dispute.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to its bankers. The Company did nothave any dues payable to any financial institutions government or debentures holdersduring the year. (ix) The Company has not raised any money by way of initial public offerfurther public offer (including debt instruments) and term loans during the year.Accordingly the provisions of clause 3(ix) of the Order are not applicable to theCompany.

(x) According to the information and explanations given to us no material fraud by theCompany or no material fraud on the Company by its officers or employees has been noticedor reported during the year.

(xi) Acc ording to the information and explanations to us and based on our examinationof the records the Company has paid or provided for managerial remuneration in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly clause 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on ourexaminations of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the financial statements as required byapplicable accounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferential givenallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly clause 3(xiv) of the Order is not applicable.

(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 non-cashtransactions with directors or persons connected with him. Accordingly clause 3(xv) ofthe Order is not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For B S R & Co. LLP
Chartered Accountants
Firm's registration no.: 101248W/W-100022
Place: New Delhi Vikram Advani
Date: 16 February 2021 Partner
Membership No.: 091765
UDIN: 21091765AAAAAJ1554

Appendix 1 to the statement on the matters specified in paragraph vii(b) of theCompanies Auditors Report Order

Rs
Name of the Statute Nature of Dues Amount* Amount Paid under protest Period to which amount relates Forum where case is pending
Central excise Act 1944 Duty of Excise 49.4 43.8 September 1996 - December 2000 July 2001 to August 2001 Supreme Court
Central excise Act 1944 Duty of Excise 0.9 - 1994 High Court
Customs Act 1962 Custom Duty 105.8 6.7 2008-2013 Commissioner
Customs Act 1962 Custom Duty 17.4 12.1 Feb-12 to Apr-13 Tribunal
Goods and Services Tax Act Goods and Services Tax 731.5 - Nov-17 to Jun-18 National Anti-Profiteering Authority
The Finance Act 1994 Service Tax 417.1 4.6 2005-2007 2008 2010-2011 High Court
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 114.1 2.5 1997-1998 2000-2006 2007- High Court
2009 2014-2015
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 48.3 42.6 2003-2005 2006-2007 2010- Tribunal
2013 2014-15
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 178.8 - 2005-2010 Appellate & Revisional Board
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 7.5 1.9 2005- 2007 2008-2009 2011- 2012 2014-2015 Commissioner (Appeals)
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 82.1 1.5 2004- 2005 2010-2012 2013- 20142015-2016 Commissioner
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 201.5 1.0 2010-112014-16 Joint Commissioner (Appeals)
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 88.3 5.2 2008-10 2013-16 Joint Commissioner
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 9.5 2.4 2008-2009 2010-2011 2012- 2014 2015-16 Additional Commissioner
Central Sales Tax/ Value Added Tax Sales Tax/ VAT 1.1 0.2 2007-2008 Assessing Officer
Income Tax Act 1961 Income Tax 1253.2 - 1996-2001 2004-2008 Supreme Court
Income Tax Act 1961 Income Tax 3139.8 - 2000-2004 2008-2014 High Court
Income Tax Act 1961 Income Tax 12.3 6.3 2014-2015 2016-2017 Commissioner of Income Tax
Income Tax Act 1961 Income Tax 690.0 - 2014-2015 Income Tax Appellate Tribunal

* As per Demand orders

Annexure B to the Independent Auditor's report on the financial statements of NestleIndia Limited for the year ended 31 December 2020 Report on the internal financialcontrols with reference to the aforesaid financial statements under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act") (Referred toin paragraph 1(A)(f) under ‘Report on Other Legal and Regulatory Requirements'section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statementsof Nestl India Limited ("the Company") as of 31 December 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 adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 December 2020 based on the internal financial controlswith reference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. 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.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements 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 withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial controls with Reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No. 101248W/W-100022
Place: New Delhi Vikram Advani
Date: 16 February 2021 Partner
Membership No. 091765
UDIN: 21091765AAAAAJ1554

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