To The Members of Tata Consumer Products Limited (Formerly Tata Global BeveragesLimited)
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Tata ConsumerProducts Limited (the "Company") which comprise the Balance Sheet as at March31 2020 and the Statement of Profit statements under the and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowfor the year then ended and a summary of significant 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 understatements of the section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting statementsas a whole principles generally accepted in India of the state of affairs of the Companyas at March 31 2020 and its profit total comprehensive income changes in equity andits cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibility for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thestandalone financial of the Act and the Rules made there under and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that accounting policies and the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the standalonefinancial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalonefinancial period. These matters were addressedin the context of our audit of the standalonefinancial and in forming our opinion thereonand we do not provide a separate opinion on these matters. We have determined the matterdescribed below to be the key audit matter to be communicated in our report.
|Sr. No. Key Audit Matter ||Auditor's Response |
|1. Acquisition accounting for the Scheme of merger of Consumer Products Business of Tata Chemicals Limited ||Our procedures included but were not limited to: |
|During the year the Company had acquired the Consumer Product Business of Tata Chemicals Ltd. as set out in Note 40 of the financial statements. || We examined the terms and conditions of the scheme of arrangement in order to challenge the Company's assessment of whether the acquisition comprises a business. |
|Accounting for the acquisition has involved judgment in order to: || We tested the completeness of the identified assets and liabilities acquired by comparison to the scheme of arrangement through discussions with the Company. |
| determine whether the acquisition constitutes a business; || We assessed the Company's determinations of fair values for assets and liabilities acquired and the methods used to value the underlying assets by: |
| determine the fair value of consideration transferred; ||Reading the valuation report prepared by the appointed external valuation specialists. |
| identify and measure the fair value of the identifiable assets acquired and liabilities assumed; ||Evaluating the competence objectivity and integrity of the appointed external valuation specialists. |
| allocate the purchase consideration between identifiable assets and liabilities and goodwill; ||Involving our internal valuation specialists in assessing the appropriateness of the methods used to determine the fair values of the brands and judgments relate to the identification distribution rights and including assumptions such as the discount rates applied. Evaluating appropriateness of adequate disclosures in accordance with the applicable accounting standards. |
|This is a material acquisitions for the Company and given the level of estimation and judgment required we considered it to be a key audit matter. || |
|The most significant and valuation of intangible assets acquired. The identified intangible assets are the brands and distribution rights || |
|. This includes complex valuation considerations and requires the use of specialists. || |
|Refer Note 2.2 (a) and note 2.3 to the Financial Statements || |
|2 Inventory of raw tea blended tea and salt (Existence) ||We have carried out following procedures with respect to the existence of tea and salt as at the year-end: of raw tea blended tea |
|Management's physical verification and salt was not physically observed by us subsequent to the year-end due to the restrictions imposed on account of COVID-19. Refer Note 10 of the financial statements. || Evaluated the design and implementation of the controls over physical verification operating effectiveness of these controls during the interim periods. |
| || Management had carried out the physical verification inventory on February 29 2020. On account of COVID 19 related nationwide lockdown we were unable to carry out inventory verification we have performed the following alternate procedures to audit the existence of inventory: |
| || Participated in the physical verification of tea and salt conducted by the management subsequent to the year end through video calls and performed roll back procedures. |
| || In case of tea and salt for the stock held at third party locations obtained direct confirmation of the inventory held by third party locations subsequent to the year end and performed roll back procedures. |
| || |
Obtained verification chartered accountant firms which were engaged by the Company for the Management inventory verification process. Verified the instructions provided by the management to those independent firms. Evaluated the differences identified by these independent firms during their physical verification of inventories and it was noted that there were no major deviations found.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Board's Report includingAnnexures to Board's Report Management Discussion and Analysis Report and BusinessResponsibility Report but does not include the consolidated financial statementsstandalone financial statements and our auditor's report thereon.
Our opinion on the standalone 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 standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially 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 performance including other comprehensiveincome changes in equity and cash the Ind AS and other accounting principles generallyaccepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the standalone financial is responsible for assessing the Company'sability to continue as a going concern disclosing as applicable matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate the Company or to cease operations or has no realistic alternativebut to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility 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 position financial ofthe standalone financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial 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 Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the 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 as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the standalone financialinadequate 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 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 standalone financial statements may be influenced.materiality and qualitative factors in:
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant any significant deficiencies induring 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 matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication. ability to continue.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our statements or if suchdisclosures are 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 the Statement of Changes in Equity and the Statement of Cash Flow dealt with bythis Report are in agreement with the relevant books of account. We consider quantitative
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors are disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) ofaudit findings including the Act. control that we identify
f) With respect to the adequacy of the internal financial controls over financial andthe operating effectiveness of such controls refer to our separate Report in"Annexure A". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting.
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 opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 on long-term contracts including derivativecontracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and 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 B" a statement on the matters specified and 4 of the Order.
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
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 TataConsumer Products Limited (the "Company") as of March 31 2020 in conjunctionwith our audit of the statements of the Company for the year standalone financial ended onthat date.
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.
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 the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial Company 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") issued bythe Institute of Chartered Accountants of India and the Standards on Auditing prescribedunder Section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 includedobtaining an understanding of internal financial controls over financial reportingassessing 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 judgment 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 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 as required under of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on reporting of the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial periods are subject tothe risk that the internal financial over financial reporting may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls financial reportingwere operating effectively as at March 31 2020 based on the criteria for internalfinancial reporting the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of
(b) The Company has a program of verification assets to cover all the items in a phasedmanner over a period of three years which in our opinion is reasonable having regard tothe size of the Company and the nature of its assets. Pursuant to the program certainfixed assets were physically verified by the Management during the year. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the name of theCompany as at the balance sheet date. In respect of immovable properties of land andbuildings that have been taken on lease and disclosed as fixed asset in the financialstatements the lease agreements are in the name of the Company where the Company is thelessee in the agreement.
(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification.
(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.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) According to the assets. information and explanations given to us the Company hasnot accepted any deposits and hence reporting under clause (v) of the Order is not offixed applicable.
(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service TaxCustoms Duty cess and other material statutory dues applicable to it to the appropriateauthorities.
(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Goods and Service Tax Customs Duty cess and other materialstatutory dues in arrears as at March 31 2020 for a period of more than six months fromthe date they became payable.
(c) There are no disputed dues of Customs Duty. Details of dues of Income-tax SalesTax Service Tax and State Value Added Tax which have not been deposited as on March 312020 on account of disputes are given below:
|Name of Statute ||Nature of Dues ||Forum where Dispute is Pending ||Period to which the Amount Relates ||Amount (Rs. Crores) |
|Income Tax Act 1961 ||Income Tax ||Commissioner of Income Tax (Appeals) Kochi ||2004-05 2007- 08 and 2008-09 ||2.10 |
|Income Tax Act 1961 ||Income Tax ||Income Tax Appellate Tribunal New Delhi ||2007-08 and 2009-10 ||0.01 |
|West Bengal Value Added Tax Act 2003 ||West Bengal Value Added Tax ||Additional Commissioner (Appeals) Kolkata ||2017-18 ||1.14 |
|Central Sales Tax Act 1956 ||Sales Tax ||Additional Commissioner (Appeals) Kolkata ||2017-18 ||0.07 |
|Karnataka Sales Tax Act 1957 ||Sales Tax ||Commissioner of Commercial Tax Karnataka ||1997-98 ||1.28 |
|Tamil Nadu General Sales Tax Act 1959 ||Sales Tax ||Madras High Court ||1998-99 to 2006-07 ||0.57 |
|Central Sales Tax Act 1956 ||Sales Tax ||Deputy Commissioner Indore Madhya Pradesh ||2011-12 to 2013-14 ||1.94 |
|Central Sales Tax Act 1956 ||Sales Tax ||Deputy Commissioner of Commercial Tax Indore Div. 2 Indore ||2014-15 ||0.24 |
|Central Sales Tax Act 1956 ||Sales Tax ||Deputy Commissioner Appeals Coimbatore ||2012-13 ||0.05 |
|West Bengal Value Added Tax Act 2003 ||West Bengal Value Added Tax ||The West Bengal Commercial Taxes Appellate and Revisional Board Kolkata ||2007-08 and 2008-09 ||1.36 |
|Himachal Pradesh Value Added Tax Act 2005 ||Himachal Pradesh Value Added Tax ||Additional Excise & Taxation Commissioner (Appeals) South Zone Shimla ||2007-08 ||0.08 |
|Goa Value Added Tax Act 2005 ||Goa Value Added Tax ||Commissioner of Commercial Tax Goa ||2006-07 ||0.01 |
|Madhya Pradesh Entry Tax Act 1976 ||Entry Tax ||The Supreme Court of India ||2011-12 ||0.82 |
|Madhya Pradesh Entry Tax Act 1976 ||Entry Tax ||The High Court of Madhya Pradesh ||2010-11 ||2.06 |
|Finance Act 1994 ||Service Tax ||Commissioner Appeals Bangalore ||April 15 to June 17 ||0.04 |
|Finance Act 1994 ||Service Tax ||Custom Excise and Service Tax Appellate Tribunal Kolkata ||2005-06 ||1.46 |
|Finance Act 1994 ||Service Tax ||Commissioner Appeals Kolkata ||2008-09 and 2009-10 ||0.01 |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to banks. TheCompany has not taken any loans or borrowings from financial institutions and government.The Company has not issued any debentures.
(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause (ix) ofthe CARO 2016 Order is not applicable.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no fraud on the Company by its officers oremployees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Sections 188 and 177 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of theCompanies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||On behalf of the Board of Directors |
| ||Sd/- |
| ||N Chandrasekaran |
|Mumbai ||Chairman |
|May 14 2020 ||(DIN 00121863) |