To the Members of
V2 Retail Limited
Report on the Audit of the Financial Statements
1. We have audited the accompanying financial statements of V2 Retail Limited(the Company') which comprise the Balance Sheet as at 31 March 2019 the Statementof Profit and Loss (including Other Comprehensive Income) the Cash Flow Statement and theStatement of Changes in Equity for the year then ended and a summary of the significantaccounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter(s) described in the Basis forQualified Opinion section of our report the aforesaid financial statements give theinformation required by the Companies Act 2013 (Act') in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India including Indian Accounting Standards (Ind AS') specified under section 133of the Act of the state of Affairs (financial position) of the Company as at 31 March2019 and its profit (financial performance including other comprehensive income) itscash flows and the changes in equity for the year ended on that date.
Basis for Qualified Opinion
3. As stated in Note 16 (a) to the accompanying financial statements the Company'sother equity as at 31 March 2019 includes an amount of H365.36 lakhs in the nature ofcapital reserve arising out of business restructuring carried out in earlier years forwhich the Company's management has not been able to provide necessary reconciliation andinformation. In the absence of sufficient appropriate audit evidence we are unable tocomment upon the appropriateness and classification of the aforesaid balance and theconsequential impact if any on the financial statements. Our auditor's report on thefinancial statements for the previous year ended 31 March 2018 was also qualified inrespect of this matter.
4. As stated in 37 (iv) to the accompanying financial statements the Company'scontingent liabilities as at 31 March 2019 include an amount of Rs 2512.37 lakhs relatingto litigations pending with various authorities for which the Company's management hasnot been able to provide necessary details and information. In the absence of sufficientappropriate audit evidence we are unable to comment upon the appropriateness andclassification of the aforesaid amounts including management's evaluation of likelyoutcome of such litigations in accordance with Ind AS 37 "Provisions ContingentLiabilities and Contingent Assets" and the consequential impact if any on the totalliabilities and profit as at and for the year then ended. Our auditor's report on thefinancial statements for the previous year ended 31 March 2018 was also qualified inrespect of this matter.
5. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards 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 (ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our qualified opinion.
Key Audit Matter
6. 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.
7. We have determined the matter described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Allowance for Inventories ||Our audit included but was not limited to the following audit procedures over inventory allowances: |
|Refer note 1 (iv) (k) for significant accounting policy and note 9 for the financial statement disclosure. || |
|At the end of each reporting period management of the Company assesses whether there is adequate provision for inventory losses on account of physical count net realizable value and obsolete inventory. || Understood the management process for cyclical physical counts identification of slow moving non-moving or obsolete inventories and determining net realisable value and evaluated whether such processes are consistently followed. |
|The management applies judgement in determining appropriate provisions for inventory losses which include: || Evaluated design and tested the operating effectiveness of controls implemented around above mentioned processes throughout the year. |
| ||Cyclical physical counts: |
|a) Applying specific identification process to ascertain slow moving and obsolete inventory. || Inspected the management's inventory count records and observed physical inventory verification for locations selected based on materiality and risk considerations. |
|b) Assessing the net realizable value of such slow moving and obsolete inventory. || Performed independent test counts to corroborate the management count for the locations selected as above. |
|In addition to the above the management adopts a cyclical count for physical verification of inventory which is a complex exercise owing to the nature of the inventory and the multiple locations covered by such cyclical counts. || Tested the roll-forward of the cyclical counts performed by the management for locations where such counts were performed before the year end. |
|Considering the complexities involved in cyclical physical verification of inventory and specific management judgements and estimates required with respect to slow moving and obsolete inventory allowance for inventory was determined to be a key audit matter for the current year audit. || Tested the adjustment made to books of accounts basis the results of the cyclical physical counts performed by the management. |
| ||Slow-moving/obsolete inventory provisions: |
| || Tested inventory ageing obtained through system reports where applicable. |
| || Obtained from the management the list of slow and non- moving inventories identified as on 31 March 2019 and their corresponding expected sales in future periods. |
| || Tested the computation for allowance for slow-moving non-moving and obsolete inventories by performing an independent age-wise analysis of the inventory line items along with specific inquiries with the management with respect to planned sales corroborating the same with our prior experience and understanding of the business. |
| || Tested the net realizable value of traded goods inventory on a sample basis to recent selling prices. |
| || Compared and assessed the actual utilization/sales to the previous estimates done by the management in prior periods to determine the efficacy of the process of estimation by the management. |
| || Obtained written representations from management and those charged with governance on the completeness and adequacy of inventory allowance as at the year end. |
Information other than the Financial Statements and Auditor's Report thereon
8. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon. The Annual Report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
9. 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 financial statements that givea true and fair view of the state of Affairs (financial position) profit or loss(financial performance including other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the 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 judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
10. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. 11. Those Board of Directors are also responsible for overseeingthe Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
12. 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 withStandards on Auditing 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 these financial statements.
13. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional scepticism 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 explaining 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 management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa 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.
14. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. 15. Wealso provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
16. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
17. As required by section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under section 197 read with Schedule V to the Act.
18. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.19. Further to our comments in Annexure I as required by section 143(3) of the Act wereport that:
a) we have sought and except for the possible effects of the matters described in theBasis for Qualified Opinion paragraph obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purpose of our audit;
b) except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph 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 financial statements dealt with by this report are in agreement with the booksof account;
d) except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid financial statements comply with Ind ASspecified under section 133 of the Act;
e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2019 from being appointed as a director in terms of section 164(2) of the Act;
f) the qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph;
g) we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31 March 2019 in conjunction with our audit of the financialstatements of the Company for the year ended on that date and our report dated 10 May 2019as per Annexure II expressed modified opinion;
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 as detailed in note 37 to the financial statements read with paragraph4 of Basis of Qualification paragraph has disclosed the impact of pending litigations onits financial position as at 31 March 2019;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2019;
iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended 31 March 2019;
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these financial statements. Hence reporting under this clause is notapplicable.
| ||For Walker Chandiok & Co LLP |
| ||Chartered Accountants |
| ||Firm's Registration No.: 001076N/N500013 |
| ||Rohit Arora |
|Place: New Delhi ||Partner |
|Date: 10 May 2019 ||Membership No.: 504774 |
Annexure I to the Independent Auditor's Report of even date to the members of V2 RetailLimited on the financial statements for the year ended 31 March 2019
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
(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 fixed assetsunder which fixed assets are verified in a phased manner over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. In accordance with this program certain fixed assets wereverified during the previous year ended 31 March 2018 and no material discrepancies werenoticed on such verification.
(c) The title deeds of all the immovable properties [which are included under the headAssets classified as held for sale' of financial statements (refer note 14 to theaccompanying financial statements)] are held in the name of the Company. (ii) In ouropinion the management has conducted physical verification of inventory at reasonableintervals during the year except for goods-in-transit. Material discrepancies noticed onsuch verification have been properly dealt with in the books of account. (iii) The Companyhas not granted any loan secured or unsecured to companies firms Limited LiabilityPartnerships (LLPs) or other parties covered in the register maintained under Section 189of the Act.
Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Orderare not applicable.
(iv) In our opinion the Company has not entered into any transaction covered underSections 185 and 186 of the Act. Accordingly the provisions of clause 3(iv) of the Orderare not applicable.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) The Central Government has not specified maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products. Accordinglythe provisions of clause 3(vi) of the Order are not applicable.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable have generally beenregularly deposited to the appropriate authorities though there has been a slight delayin a few cases. Further no undisputed amounts payable in respect thereof were outstandingat the year-end for a period of more than six months from the date they became payable.
(b) The dues outstanding in respect of income-tax sales-tax service-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:Statement of Disputed Dues:
|Name of the statute ||Nature of dues ||Amount (Rs) ||Amount paid under Protest (Rs) ||Period to which the amount relates ||Forum where dispute is pending |
|Finance Act 1994 ||Service tax ||30208391 ||7500000 ||2006-07 to 2010-11 ||Commissioner of Service Tax |
|Rajasthan Value Added Tax Act 2003 ||Sales tax ||5155233 ||Nil ||2006-07 ||Assistant Commissioner of Service Tax |
|102 V2 Retail Limited || || || || || |
|Name of the statute ||Nature of dues ||Amount (B) ||Amount paid under Protest (Rs) ||Period to which the amount relates ||Forum where dispute is pending |
|Rajasthan Value Added Tax Act 2003 ||Sales tax ||10000000 ||Nil ||2007-08 ||Appellate Authority of Service Tax |
|Rajasthan Value Added Tax Act 2003 ||Sales tax ||17353962 ||Nil ||2007-08 ||Joint Commissioner (Appeals) of Service Tax |
|Rajasthan Value Added Tax Act 2003 ||Sales tax ||1525511 ||Nil ||2007-08 ||Assistant Commissioner of Service Tax |
|Rajasthan Value Added Tax Act 2003 ||Sales tax ||6810980 ||Nil ||2007-08 ||Deputy Commissioner of Service Tax |
|Rajasthan Value Added Tax Act 2003 ||Sales tax ||8387111 ||Nil ||2007-08 ||Deputy Commissioner of Service Tax |
|Rajasthan Value Added Tax Act 2003 ||Sales tax ||50000 ||Nil ||2009-10 ||Assistant Commissioner of Service Tax |
|The Uttar Pradesh Value Added Tax Act 2008 ||Sales tax ||203000 ||Nil ||2009-10 ||Assistant Commissioner of Service Tax |
|West Bengal Value Added Tax Act 2003 ||Sales tax ||225000000 ||Nil ||2009-10 ||Deputy Commissioner of Service Tax |
|The Assam Value Added Tax Act 2003 ||Sales tax ||720420 ||Nil ||2009-10 ||Deputy Commissioner (Appeals) |
(viii) The Company has not defaulted in repayment of loans or borrowings to anyfinancial institution during the year. The Company has no loans or borrowings payable to abank or government and no dues payable to debenture-holders during the year. (ix) TheCompany did not raise moneys by way of initial public offer or further public offer(including debt instruments) and did not have any term loans outstanding during the year.Accordingly the provisions of clause 3(ix) of the Order are not applicable.
(x) No fraud by the Company or on the Company by its Officers or employees has beennoticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid/provided by the Company in accordance withthe requisite approvals mandated by the provisions of Section 197 of the Act read withSchedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable Ind AS.
(xiv) During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
| ||For Walker Chandiok & Co LLP |
| ||Chartered Accountants |
| ||Firm's Registration No.: 001076N/N500013 |
| ||Rohit Arora |
|Place: New Delhi ||Partner |
|Date: 10 May 2019 ||Membership No.: 504774 |