To the Members of RADICO KHAITAN LIMITED
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Radico KhaitanLimited ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including other comprehensive income) for the year endedon that date the Statement of Changes in Equity and the Statement of Cash Flows for theyear ended on that date and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of theCompanies Act 2013 ("the Act") and other accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2021 the profitand total comprehensive income for the year ended on that date changes in equity and itscash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit in accordance with Standards on Auditing (SAs) issued by theInstitute of Chartered Accountants of India (ICAI). Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India ("ICAI") together with the ethical requirements that arerelevant to our audit of the standalone financial statements under the provisions of theAct and Rules there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
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.
|Key Audit Matter ||Audit Response |
|Trade Receivables ||Principal Audit procedures |
|Receivables (net of provisioning) of ' 69745.74 lakhs constitute 43% of the current assets of the company as at March 31 2021 and are spread across geography covering State Corporations Defence canteens and open market customers (including exports). || Evaluating and testing the controls for managing trade receivables including subsequent collection and provisioning. |
|The realization is linked with actual sales by State Corporations. || |
| || Validating the basis of ECL policy as approved by the Board of Directors in the present context based on historical data and recent developments. |
| || Validating the Aging of receivables review of trend customer wise reasons for long outstanding balances evaluation of disputes and possibility of recovery and existence of the customers. |
| || Obtaining independent customer confirmations during the current COVID |
| ||19 Pandemic was a challenge. Hence greater reliance was placed on alternate substantive audit procedures. |
| || Assessing the appropriateness and completeness of the related disclosure in the company's Financial Statements. |
| ||Conclusion |
| ||Our procedures did not identify any material exceptions. |
|Inventory ||Principal Audit Procedures |
|Inventories (net of provisions) of ' 48906.57 Lakhs constitute 30% of the current assets of the company as at March 31 2021. The Inventory is lying at various locations including at 3rd party premises. Packing material constitutes a major part of inventory and has risk of impairment. || Testing the inventory provisioning and challenging the assumptions for inventory valuation basis non-moving/slow moving items. |
| || Review the policy of the management for physical verification and the documents related to management's physical count procedure actually followed at different locations. |
| || Observed the physical verification process at locations of financial significance during year end audit along with sample testing. |
| || Relied on physical verification report by zonal internal auditors. |
| || Identifying obsolete inventory if any. |
| || Obtain confirmation from Tie up units being inventory at 3rd party locations and applying substantive procedure |
| || Assess the appropriateness and completeness of the related disclosure in the company's Financial Statements. |
| ||Conclusion |
| ||Our procedures did not identify any material exceptions. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR'S reportTHEREON
The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Management Discussion andAnalysis Board's Report including annexure to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but doesnot include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
The other information has not been made available to us as at the date of thisauditor's report. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONEFINANCIAL 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 withIndian Accounting Standards and other accounting principles generally accepted in India.The Board of Directors of the company are responsible for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the Board of Directors of the Companyis responsible 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of this standalone financial statements. As part of an auditin accordance with SAs we exercise professional judgment and maintain professionalskepticism 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 control 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 with reference to financial statements inplace and the operating effectiveness 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 concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone 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 conditionsmay cause the Company to cease to continue 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 standalone 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 aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be 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 ("theOrder") issued by the Central Government of India in terms of section 143(11) of theAct we give in "Annexure 1" a statement on the matters specified in paragraphs3 and 4 of the Order to the extent applicable.
(2) As required by section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c. The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Cash Flows and the Statement of Changes in Equity dealt with bythis report are in agreement with the relevant books of account;
d. In our opinion the aforesaid standalone financial statements read with notesthereto comply with the Indian Accounting Standards specified under section 133 of the Actread with rule 7 7 of the Companies (Accounts) Rules 2014;
e. On the basis of the written representations received from the directors as on March31 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 from being appointed as a director in terms of section164(2) of the Act;
f. With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controls wegive our separate report in "Annexure 2".
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 read with Schedule V.
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 in our opinionand to the best of our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 39b on Contingent Liabilitiesto the standalone financial statements;
(ii) The Company did not have any long-term contracts including derivative contracts.Hence the question of any material foreseeable losses does not arise;
(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members ofRadico Khaitan Limited on the standalone financial statements for the year ended March 312021]
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its property plantand equipment under which property pl ant and equipment are verified in a phased mannerover a block of three years which in our opinion is reasonable having regard to thesize of the Company and the nature of its assets. However no physical verification of itsproperty plant and equipment was conducted during the year.
(c) The title deeds of immovable properties recorded in the books of account are heldin the name of the Company except 5 land parcels (145282sq mts) valuing '. 3706.55Lakhs grouped under freehold land where title is determined based on long termpossession and revenue records.
(ii) The inventory except goods in transit has been physically verified by themanagement during the year. In our opinion the frequency of verification is reasonable.No material discrepancies were noticed on physical verification carried out during theyear.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theAct. Accordingly paragraph 3 (iii)(a) 3 (iii)(b) and 3 (iii)(c) of the Order are notapplicable to the Company.
(iv) The company has not given any loan or provided any guarantee or security toparties covered under section 185 of the Companies Act 2013. Further according to theinformation and explanation given to us in respect of loans investments guarantees andsecurities the Company has complied with the provisions of Section 186 of the Act.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the provisions of Sections 73to 76 of the Act and the rules framed there under. Further as informed no Order has beenpassed by the Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any Court or any other Tribunal on the Company in respect of the aforesaid deposits.
(vi) We have broadly reviewed the books of account maintained by the Company in respectof products where the maintenance of cost records has been specified by the CentralGovernment under sub-section (1) of Section 148 of the Act and the rules framed thereunder and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of the recordswith a view to determine whether they are accurate or complete.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees' state insurance income taxsales tax goods and services tax service tax value added tax customs duty exciseduty cess and any other material statutory dues applicable to it.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax salestax goods and services tax service tax value added tax customs duty excise duty cessand any other material statutory dues applicable to it were outstanding at the year endfor a period of more than six months from the date they became payable.
(b) According to the information and explanation given to us the dues outstanding withrespect to income tax sales tax goods and services tax service tax value added taxcustoms duty excise duty on account of any dispute are as follows:
| ||Nature of dues ||Disputed Amount (Rs. in Lakhs) ||period to which the amount relates ||Forum where dispute is pending ||Amount paid under protest (Rs. in Lakhs) |
|UP VAT ACT/ ||Sales Tax/ Entry ||6.86 ||1999-00 ||Trade Tax Tribunal ||2.74 |
|KARNATAKA VAT ACT ||Tax/VAT || || ||Moradabad || |
|/DELHI VAT ACT || ||1.81 ||1998-99 ||Allahabad High Court ||1.00 |
| || ||1.21 ||1999-00 ||Trade Tax Tribunal Moradabad ||0.75 |
| || ||33.79 ||2012-13 ||Hyderabad High Court ||16.89 |
| || ||8.45 ||2012-13 ||Hyderabad High Court ||2.11 |
| || ||84.13 ||2014-15 ||Karnataka High Court ||- |
|Finance Act 1994 ||Service Tax ||49.90 ||2016-17 & ||Assistance ||- |
| || || ||2017-18 ||Commissioner (CGST Division) || |
|United Provinces (Uttar Pradesh ) Excise Act 1910 ||Excise Duty ||102.32 ||1995 to 2005 ||Allahabad High Court Lucknow Bench ||- |
| || ||246.17 ||1995-2005 ||Allahabad High Court Lucknow Bench ||246.17 |
| || ||22.00 ||1997-98 ||Allahabad High Court Lucknow Bench ||4.63 |
| || ||181.25 ||2016-17 ||Supreme Court ||- |
|The Custom Act 1962 ||Custom Duty ||10.73 ||2015 ||Commissioner of Customs (Appeals) || |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to financialinstitutions banks governments. There are no debenture holders.
(ix) The Company has not raised the money by way of public issue offer/ further publicoffer. Money raised by way of term loans during the year were utilized for the purposesfor which they were raised.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) In our opinion and to the best of our information and according to theexplanations given to us managerial remuneration has been paid and provided 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 paragraph 3(xii) of the Order is notapplicable to the Company.
(xiii) In our opinion and according to the information and explanation given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of the relatedparty transactions have been disclosed in the Financial Statements as required by theapplicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company during the year the Company hasnot entered into any non- cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable to the Company.
(xvi) According to the information and explanation given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph (f) under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members ofRadico Khaitan Limited on the standalone financial statements for the year ended March 312021]
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of RadicoKhaitan Limited ("the Company") as of March 31 2021 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India ("ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting 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 judgement including the assessment of the risks of materialmisstatement 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 controlssystem over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting 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 authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could havea material effect on the financial statements.
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 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.
| ||For BGJC & Associates LLP |
| ||Chartered Accountants |
| ||Firm's Registration No.: 003304N/N500056 |
| ||Darshan Chhajer |
| ||Partner |
|Place: Gurugram ||Membership Number: 088308 |
|Date: May 28 2020 ||UDIN: 21088308AAAABB3547 |