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Vadilal Dairy International Ltd.

BSE: 519451 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE159T01016
BSE 05:30 | 01 Jan Vadilal Dairy International Ltd
NSE 05:30 | 01 Jan Vadilal Dairy International Ltd

Vadilal Dairy International Ltd. (VADILALDAIRY) - Auditors Report

Company auditors report

Report on the Ind AS financial statements

Opinion:

We have audited the accompanying Ind AS financial statements of VADILAL DAIRYINTERNATIONAL LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (Including Other Comprehensive Income) the Statement of Changes in Equity and the Cash Flow Statement for the year then endedand a summary of the significant accounting policies and other explanatoryinformation('the Ind AS financial statements)

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid IND AS financial statements give the information required bythe Companies Act2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding the Ind AS of the State of Affairs of the Company as at 31st March 2019 andits Profit Total Comprehensive Income changes in equity and cash flows for the yearended on that date.

Basis for Opinion:

We conducted our audit of the IND AS financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the IND AS Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the IND AS financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit 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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report

KEY AUDIT MATTER KEY AUDIT MATTER
2 IND AS 115- REVENUE FROM CONTRACTS WITH
CUSTOMERS
The application of the new revenue accounting standard involves certain key judgements rebating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. Additionally new revenue accounting standard contains disdosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard.
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
1. Evaluated the design of internal controls relating to implementation of the new revenue accounting standard.
2. Tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price.
3. Tested the relevant information technology system's access and change management controls relating to contracts and related information used in recording and disdosing revenue in accordance with the new revenue accounting standard.
4. On selected samples of contracts we tested that the revenue recognized is in accordance with the accounting standard by-
a) Evaluating the identification of performance obligation;
b) Testing managements' calculation of the estimation of contract cost and dangerous obligation if any.
Selected a sample of continuing and new contracts and performed the following procedures:
* Read. analysed and identified the distinct performance obligations in these contracts.
* Compared these performance obligations with that identified and recorded by the company.
* Considered the terms of the contracts to determing the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
* In respect of samples relating to fixed price contracts progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and budgeting systems. We also tested the access and change management controlls relating to these systems.
* Performed analytical procedures for reasonableness of revenues disdorsed by type and offerings.
2 Taxes including provision for current tax valuation of uncertain tax positions and recognition of deferred taxes
The company has recorded Rs. 120.05 lakhs of tax expenses for the year ended 31st March 2019.
The company is subject to periodic tax challenges by tax authorities leading to protracted litigatios. As such accounting for tax involves management judgement in developing estimates of tax exposures and contingencies in order to assess the adequacy of tax provisio. Refer note (1) (E). We have performed the following key audit procedures: Assesses the design implementation and operating effectiveness of key controls in respect of the company's process of recognition of tax expenses including uncertain tax positions and deferred taxes:
* Assessed and challenged the completeness of uncertain tax positions in conjunction with our internal tax specialists by considering changes to business and tax legislation through discussions with management and review of correspondance with authorities where relevant.
* Assessed and challenged the calculation for the current tax provision and the procedures performed to analyse movements including the rationale for any release increase or continued provision in the year; and *Assessed and challenged managements judgements with respect to outflow arising out of litigation after considering the status of assessments audits and enquiries recent judicial pronoun a judgements in similar matters developments in the tax environement of past litigations.

Information other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the IND AS financial statements and our auditor's report thereon.

Our opinion on the IND AS financial statements does not cover the other information andwe do not 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 IND AS financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially 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 Ind AS financial statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ('the Act') with respect to the preparation andpresentation of these Ind AS financial statements that give a true and fair view of thefinancial position financial performance including Other Comprehensive Income changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder Section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Group and for preventing and detecting frauds and other irregularities;selection and application of the 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 Ind AS financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error which have been used forthe purpose of preparation of the Ind AS financial statements by the Board of Directors ofthe company.

In preparing the Ind As Financial Statements management is responsible for assessingthe Company's ability to act as a going concerndisclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease the operations or has no realisticalternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibility for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the IND AS 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 IND AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the IND AS 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.

2. Obtain an understanding of internal financial controls 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 system in place and the operatingeffectiveness of such controls.

3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 IND AS financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

5. Evaluate the overall presentation structure and content of the IND AS financialstatements including the disclosures and whether the IND AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the IND AS financial statements thatindividually 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 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.

We believe that the audit evidence obtained by us and the audit evidence obtained bythe other auditors in terms of their reports referred to in the 'Other Matter' below issufficient and appropriate to provide a basis for our audit opinion on the Ind ASfinancial statements.

Our opinion on the Ind AS financial statements above and our report on Other Legal andRegulatory Requirements below is not modified in respect of the above matters withrespect to our reliance on the work done and the reports of other auditors.

Report on Other Legal and Regulatory Requirements

Our opinion on the Ind AS financial statements above and our report on Other Legal andRegulatory Requirements below is not modified in respect of the above matters withrespect to our reliance on the work done and the reports of other auditors.

1. As required by section 143(3) of the Act based on our audit and based on theconsideration of reports of other auditors on separate financial statements of thesubsidiary companies referred in the 'other Matter' Paragraph above we report to theextent applicable 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 of the Ind ASfinancial statements.

b) In our opinion proper books of account as required by law relating to preparationof the aforesaid Ind AS financial statements have been kept so far as appears from ourexamination of those books and the reports of other auditors.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Cash Flow Statement dealt with by thisreport are in agreement with the books of account maintained for the purpose ofpreparation of the Ind AS financial statements.

d) In our opinion the Ind AS financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act.

e) On the basis of written representations received from the directors as on 31stMarch2019 taken on record by the Board of Directors and the reports of the statutoryauditors of its subsidiary companies incorporated in India none of the directors isdisqualified as on 31st March2019 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourSeparate Report in "Annexure A" which is based on the auditors' reportsof the company and its subsidiary companies incorporated in India. Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting of Company and its subsidiary companiesincorporated in India.

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.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rules 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 Ind AS financial statements disclose the impact of pending litigations on it'sfinancial position of the Group.- Refer Note No. 37 to the Financial Statements

ii. The Company do not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has not been any delay in case of the company during the year under reportto transfer any sums to the Investor Education and Protection Fund.

For Vinod K Mehta & Co.
Chartered Accountants
(Firm Registration No. : 111508W)
Sd/-
Divyesh V Mehta
Partner
Membership No.:044293
Place : Mumbai
Date: 28th May 2019

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