To the Members of Varun Beverages Limited
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Varun BeveragesLimited (the Company') which comprise the Balance Sheet as at 31 December 2020 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.
2. 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 (Act') in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India includingIndian Accounting Standards (Ind AS') specified under section 133 of the Act of thestate of affairs of the Company as at 31 December 2020 and its profit (including othercomprehensive income) its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
3. 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 Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India (ICAI')together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Key Audit Matters
4. 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.
5. We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Impairment assessment of non-current investments in and loans recoverable from certain subsidiaries ||Our audit procedures included but were not limited to the following: |
|As described in Note 6 and 8 to the standalone financial statements the Company has investments of INR 12559.74 million and has outstanding loans recoverable amounting to INR 1225.24 million from certain subsidiaries as at 31 December 2020 which have been incurring losses in the current and previous years and have had negative cash flows from operations during the current year in one of the subsidiary that are impairment indicators and triggered a need for impairment assessment. ||Obtained understanding of the management process for identification of possible impairment indicators for the relevant subsidiaries and conducted detailed discussions with the management through the year to understand the impairment assessment process assumptionsusedandestimatesmadebymanagement to assess the reasonableness of the recoverable amounts and tested the operating effectiveness of controls implemented by management; |
|In view of the above management during the year ended 31 December 2020 has carried out impairment assessment of such investments and loans granted whereby the carrying amount of the investments was compared with the value in use of the business of respective subsidiary. Determination of value in use for impairment assessment using the discounted cash flow model involved significant judgments and estimates including the expected growth rate discount rates and other market related factors. ||Obtained from the management of the Company the detailed financial projections of the relevant subsidiaries as approved by their respective board of directors and held detailed discussions with the management to understand the assumptions used and estimates made by them for determining the cash flow projections; |
|Considering the materiality of the amounts involved and significant degree of judgement and subjectivity involved in the estimates and key assumptions used in determining the cash flows used in the impairment evaluation impairment assessment of such investments / loans was determined to be a key audit matter. ||Reviewed the valuation report obtained by management from an independent valuer and assessed the professional competence skills and objectivity for performing the required valuations; |
| ||Assessed the appropriateness of the significant assumptions as well as the Company's valuation model with the support of auditor's valuation specialists who assess the reasonableness of assumptions used and valuation methodology applied relating to discount rate risk premium industry growth rate etc. This included a discussion of the expected development of the business and results as well as of the underlying assumptions used with those responsible for the planning process; |
| ||Assessed the robustness of financial projections prepared by management by comparing projections for previous financial years with actual results realised and discussed significant deviations if any with the management; |
| ||Evaluated the historical accuracy of the plans and forecasts for subsidiary where valuation was performed by management internally by comparing the forecasts used in the prior year models to the actual performance of the business in the current year and discussed the results with the management; Read the auditors' reports of the relevant subsidiaries noting no adverse remarks pertaining to impairment of any assets; |
| ||Tested mathematical accuracy of the projections and performed sensitivity analysis for reasonably possible changes in the long-term growth rates and discount rates used to ensure that there is no significant impact on the valuation; and Evaluated the adequacy and appropriateness of disclosures made by the Company in the standalone financial statements as required by the applicable provisions of the Act and the Ind AS. |
|Impairment assessment of intangible assets including goodwill ||Our audit procedures included but were not limited to the following: |
|(Refer note 3.5 for accounting policies on intangibles assets and note 5 to the standalone financial statements) ||Obtained an understanding of the management's process for identification of cash generating unit and impairment indicators for intangible assets if any and processes performed by the management for their impairment testing; |
|The Company carries goodwill and franchisee rights as intangible assets having indefinite life amounting to INR 19.40 million and INR 5385.99 million respectively that are required to be tested for impairment by the management on an annual basis in accordance with Ind AS 36 Impairment of Assets. ||Assessed the process by which management prepared its cash flow forecasts and held discussions with management to understand the assumptions used and estimates made by them for determining such projections; |
|The aforesaid assessment of the impairment testing involves significant judgement around the determination of the recoverable amount being the higher of value in use and fair value less costs of disposal. Recoverable amounts are based on management's view of the future cash flows and prospects of the business the appropriate discount rates and other industry specific risk factors. ||Tested the design and operating effectiveness of internal controls over such identification and impairment measurement through fair valuation of identified assets; |
|The key judgements in determining the recoverable amount of these intangibles relates to the forecast of future cash flows based on strategy using macroeconomic assumptions such as industry growth inflation and expected growth in market share capital expenditure and working capital requirements among others. ||Assessed the appropriateness of the Company's accounting policies including those relating to recognition measurement and impairment of intangibles by comparing with the applicable Ind AS; |
|Changes in the management forecasts or assumptions can impact the assessment of the discounted cash flows and consequently the valuation of such intangible assets. ||Reviewed the valuation report obtained by management from an independent valuer and assessed the professional competence skills and objectivity for performing the required valuations; |
|Considering the materiality of the amount involved and significant degree of judgement and subjectivity involved in the estimates and key assumptions used in determining the forecasted cash flows used in the impairment evaluation which are dependent on current and future economic factors and trading conditions varying for different economic and geographical territories impairment assessment of such intangibles assets was determined as a key audit matter. ||Assessed the appropriateness of the significant assumptions as well as the Company's valuation model with the support of auditor's valuation specialists who assess the reasonableness of assumptions used and valuation methodology applied relating to discount rate risk premium industry growth rate etc. This included a discussion of the expected development of the business and results as well as of the underlying assumptions used with those responsible for the planning process. |
| ||Assessed the robustness of financial projections prepared by management by comparing projections for previous financial years with actual results realised and discussed significant deviations if any with the management; |
| ||Tested mathematical accuracy of the projections and performed a sensitivity analysis for reasonably possible changes in the sales growth discount rate applied and the long-term growth rate; and Evaluated the adequacy and appropriateness of disclosures made by the Company in the standalone financial statements as required by the applicable provisions of the Act and the Ind AS. |
|Litigation and claims provisions and contingent liabilities ||Our audit procedures included but were not limited to the following: |
|(Refer note 41 to the standalone financial statements for the amounts of contingent liabilities) ||Assessed the appropriateness of the Company's accounting policies relating to provisions and contingent liabilities by comparing with the applicable accounting standards; |
|The Company is involved in various direct indirect tax and other litigations (litigations') that are pending with different statutory authorities. The management exercises significant judgement for determining the need for and the amount of provisions for any liabilities arising from these litigations. ||Assessed the Company's process and the underlying controls for identification of the pending litigations and completeness for financial reporting and also for monitoring of significant developments in relation to such pending litigations; |
|This judgement is dependent on a number of significant assumptions and evaluations which involves interpreting the various applicable rules regulations practices and considering precedents in the various jurisdictions including the opinions received from various legal counsels. ||Assessed the management's assumptions and estimates in respect of litigations including the liabilities or provisions recognised or contingent liabilities disclosed in the standalone financial statements. This involved assessing the probability of an unfavorable outcome of a given proceeding and the reliability of estimates of related amounts based on the various legal counsels opinions received by the Company; |
|This matter is considered as a key audit matter in view of the uncertainty regarding the outcome of these litigations the significance of the amounts involved and the subjectivity involved in management's judgement as to whether the amount should be recognised as a provision or only disclosed as contingent liability in the standalone financial statements. ||Recomputed the arithmetical accuracy of the underlying calculations supporting the provisions recorded from the supporting evidences including the correspondence with various authorities; |
| ||Assessed the management's conclusions through understanding relevant judicial precedents in similar cases and the applicable rules and regulations; Obtained legal opinions and confirmation on completeness from the Company's external legal counsels where appropriate; |
| ||Engaged auditor's experts to gain an understanding of the current status of litigations and changes in the disputes if any through discussions with the management and by reading external advice received by the Company where relevant to validate management's conclusions; and Assessed the appropriateness of the Company's description of the accounting policy disclosures related to litigations and whether these are adequately presented in the standalone financial statements. |
Information other than the Standalone Financial Statements and Auditor's Report thereon
6. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisReport on Corporate Governance and Director's Report but does not include the standalonefinancial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
7. The accompanying standalone financial statements have been approved by the Company'sBoard of Directors. The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including the IndAS specified under section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
8. In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
9. Those Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
10. 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 Standards 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 standalone financial statements.
11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone 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 to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness of such controls;
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management;
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 standalone 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; and
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
12. 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.
13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
15. As required by section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act.
16. 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.
17. Further to our comments in Annexure I as required by section 143(3) of the Actbased on our audit we report to the extent 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 purpose of our audit of theaccompanying standalone financial statements;
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 standalone financial statements dealt with by this report are in agreement withthe books of account;
d) in our opinion the aforesaid standalone 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 December2020 from being appointed as a director in terms of section 164(2) of the Act;
f) we have also audited the internal financial controls with reference to financialstatements of the Company as on 31 December 2020 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 16 February 2021 as per Annexure II expressed unmodified opinion; and g) withrespect to the other matters to be included in the Auditor's Report in accordance withrule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) in our opinion andto the best of our information and according to the explanations given to us:
i. the Company as detailed in note 41 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position as at 31 December2020;
ii. the Company as detailed in note 25 to the standalone financial statements hasmade provision as at 31 December 2020 as required under the applicable law or Ind AS formaterial foreseeable losses if any 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 during the year ended 31December 2020; and iv. the disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.
|For Walker Chandiok & Co LLP ||For APAS & Co. |
|Chartered Accountants ||Chartered Accountants |
|Firm's Registration No.: ||Firm's Registration No: |
|001076N/N500013 ||000340C |
|Anupam Kumar ||Sumit Kathuria |
|Partner ||Partner |
|Membership No.: 501531 ||Membership No.: 520078 |
|UDIN: ||UDIN: |
|21501531AAAAAN8569 ||21520078AAAABH4232 |
|Place: Gurugram ||Place: Gurugram |
|Date: 16 February 2021 ||Date: 16 February 2021 |
|L-41 Connaught Place ||606 6th Floor |
|New Delhi - 110001 ||PP City Centre Road No. 44 |
| ||Pitampura New Delhi - 110034 |
Annexure I to the Independent Auditor's Report of even date to the members of VarunBeverages Limited ("the Company") on the Standalone Financial Statements forthe year ended 31 December 2020
Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information 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 fixed assets other than refrigerators (visi coolers) and containers lying withthird parties have been physically verified by the management during the year and nomaterial discrepancies were noticed on such verification. The Company has a regularprogram of physical verification of refrigerators (visi coolers) under which such fixedassets are verified in a phased manner over a period of three years and no materialdiscrepancies were noticed on such verification. According to the information andexplanations given to us the existence of containers lying with active third parties isconsidered on the basis of the confirmations obtained from such third parties. In ouropinion the frequency of verification of the fixed assets is reasonable having regard tothe size of the Company and the nature of its assets.
(c) The title deeds of all the immovable properties (which are included under the headProperty plant and equipment') are held in the name of the Company except for thefollowing properties:
|Nature of property ||Total Number of Cases ||Whether leasehold / freehold ||Gross block as on 31 December 2020 ||Net block on 31 December 2020 ||Remarks (as per the information and explanation given to us by the management) |
|Land (at Sonarpur Kolkata) ||1 ||Leasehold ||Rs. 1.5 million ||Rs. 1.47 million ||On implementation of project |
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-intransit. No materialdiscrepancies were noticed on the aforesaid verification.
(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii) (b)and 3(iii)(c) of the Order are not applicable.
(iv) In our opinion the Company has complied with the provisions of Section 186 inrespect of investments loans and guarantees. Further in our opinion the Company has notentered into any transaction covered under Section 185 and Section 186 of the Act inrespect of security.
(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 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii)(a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax goods and service tax sales-tax service tax duty of customsduty of excise value added tax cess and other material statutory dues as applicablehave generally been regularly deposited to the appropriate authorities though there hasbeen a slight delay in a few cases. Further no undisputed amounts payable in respectthereof were outstanding at the year-end for a period of more than six months from thedate they became payable.
(b) The dues outstanding in respect of income-tax goods and service tax sales-taxservice-tax duty of customs duty of excise and value added tax on account of anydispute are as follows:
Statement of Disputed Dues:
|Name of the statute ||Nature of dues ||Amount (million) ||Amount paid under protest (million) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act 1994 ||Central excise ||11.89 ||0.89 ||April 2012 to December 2015 ||CESTAT New Delhi |
|Central Excise Act 1994 ||Central excise ||1.77 ||0.06 ||April 2012 to June 2017 ||Additional Commissioner Bhiwadi |
|Central Excise Act 1994 ||Central excise ||4.51 ||0.51 ||March 2012 to December 2016 ||Commissioner Appeal Bhiwadi |
|Central Excise Act 1994 ||Central excise ||11.39 ||- ||March 2011 to March 2013 ||High Court Jaipur |
|Central Excise Act 1994 ||Central excise ||1.27 ||0.13 ||2014-15 ||CESTAT Allahabad |
|Central Excise Act 1994 ||Central Excise ||0.20 ||0.03 ||September 14 - June 2015 ||Commissioner (Appeal) Meerut |
|Central Excise Act 1994 ||Central excise ||0.26 ||- ||April 2015 to February 2016 ||Commissioner (Appeal) Kolkata |
|Central Excise Act 1994 ||Central excise ||3.51 ||- ||July 2014 to August 2014 ||Commissioner (Appeal) Kolkata |
|Central Excise Act 1994 ||Central excise ||0.16 ||- ||March 2015 to October 2016 ||Deputy Commissioner Panipat |
|Central Excise Act 1994 ||Central excise ||0.58 ||- ||March 2015 to January 2016 ||Office of the Commissioner of Central Excise Sonipat |
|Central Excise Act 1994 ||Central excise ||13.69 ||0.68 ||April 2014 to February 2015 ||Office of the Commissioner of Central Tax Panchkula |
|Central Excise Act 1994 ||Central excise ||0.12 ||- ||February 2016 to March 2017 ||Office of the Commissioner of Central Excise Sonipat |
|Central Excise Act 1944 ||Central excise ||0.26 ||- ||April 17 to June 2018 ||Office of the Commissioner of Central Excise Sonipat |
|Central Excise Act 1944 ||Central excise ||20.39 ||0.84 ||April 16 to June 2017 ||Commissioner Appeals Jaipur |
|The Customs Act 1962 ||Custom Duty ||90.75 ||3.41 ||January 2017 to December 2018 ||Principal Commissioner/ Commissioner of Custom Maharashtra |
|The Uttar Pradesh Goods and Services Act 2017 ||GST ||1.20 ||1.20 ||June 2018- October 2020 ||Additional Commissioner Ghaziabad |
|The Odisha Goods and Services Act 2017 ||GST ||0.18 ||0.18 ||March 2020 ||Assistant Commissioner Odisha |
|The Tamil Nadu Goods and Services Act 2017 ||GST ||0.33 ||0.33 ||March 2020 ||Assistant Commissioner Tamil Nadu |
|The Gujarat Goods and Services Act 2017 ||GST ||0.36 ||0.36 ||March 2020 and July 2020 ||Assistant Commissioner Gujarat |
|The Rajasthan Goods and Services Act 2017 ||GST ||0.10 ||0.10 ||December 2020 ||Assistant Commissioner Jaipur |
|The Rajasthan Goods and Services Act 2017 ||GST ||0.30 ||0.30 ||March 2020 ||Appellate Authority-I Commercial Taxes Jaipur |
|The Delhi Goods and Services Act 2017 ||GST ||0.40 ||0.40 ||March 2020 ||Assistant Commissioner GST Noida |
|The Haryana Goods and Services Act 2017 ||GST ||0.05 ||0.05 ||March 2019 ||Assistant Commissioner Panchkula |
|The Haryana Goods and Services Act 2017 ||GST ||0.20 ||0.20 ||July 2019 ||Assistant Commissioner Faridabad |
|The Haryana Goods and Services Act 2017 ||GST ||0.64 ||0.64 ||September 2019 June 2020 ||Assistant Commissioner Panipat |
|The Kerela Goods and Services Act 2017 ||GST ||0.33 ||0.33 ||November 2019 December 2020 ||Assistant Commissioner Palakkad |
|The Telangana Goods and Services Act 2017 ||GST ||0.04 ||0.04 ||December 2019 ||Assistant Commissioner Sangareddy |
|The Uttar Pradesh Value Added Tax Act 2008 ||Value added tax ||1.52 ||0.11 ||2001-2002 ||Additional Commissioner (Appeals) Ghaziabad |
|The Uttar Pradesh Value Added Tax Act 2008 ||Value added tax ||0.31 ||0.31 ||2017-18 ||Additional Commissioner Ghaziabad |
|The Uttar Pradesh Value Added Tax Act 2008 ||Value added tax ||4.48 ||4.48 ||2011-2012 ||Joint Commissioner Ghaziabad and Add. Commissioner Ghaziabad |
|The Uttar Pradesh Value Added Tax Act 2008 ||Value added tax ||0.10 ||0.10 ||2010-2011 ||Joint Commissioner Kanpur |
|The Uttar Pradesh Value Added Tax Act 2008 ||Value added tax ||0.38 ||0.38 ||2009-10 May 2015 and June 2016 ||Deputy Commissioner (Appeal) Jaipur |
|Punjab Value Added Tax Act 2005 ||Value added tax ||0.18 ||- ||April 2015 to March 2016 ||Assessing officer Mohali |
|Punjab Value Added Tax Act 2005 ||Value added tax ||0.33 ||0.08 ||April 2015 to March 2016 ||Value added tax tribunal Punjab and Chandigarh |
|Punjab Value Added Tax Act 2005 ||Value added tax ||0.19 ||0.14 ||April 2016 to March 2017 ||The Deputy Excise and Taxation Commissioner (Appeals) / Joint Director (Investigation) Bathinda |
|Punjab Value Added Tax Act 2005 ||Value added tax ||0.13 ||0.03 ||April 2016 to March 2017 ||The Deputy Excise and Taxation Commissioner (Appeals) / Joint Director (Enforcement) Jallandhar |
|Rajasthan Value Added Tax Act 2003 ||Value added tax ||582.46 ||16.75 ||2010-2015 ||Rajasthan High Court |
|West Bengal Value Added Tax Act 2003 ||Value added tax ||1.21 ||0.51 ||July 2012 and Sept 2013 Jan 15 and September 15 ||West Bengal Tribunal |
|West Bengal Value Added Tax Act 2003 ||Value added tax ||0.96 ||0.47 ||April 2016- September 2016 ||West Bengal Tribunal |
|The Goa Value Added Tax Act 2005 ||Value added tax ||2.43 ||- ||2013 - 2014 ||Assistant Commissioner Margoa |
|The Uttarakhand Added Tax Act 2005 ||Value added tax ||0.14 ||0.14 ||April 2012 ||Uttarakhand Sales Tax Department |
|Punjab Tax on Entry of Goods into Local Areas Act 2000 ||Entry tax ||28.77 ||- ||2016-2017 ||Honorable High Court Chandigarh |
|Rajasthan Tax of Entry of Goods into Local Areas Act 1999 ||Entry tax ||3.37 ||- ||2014-2016 ||Honorable High Court Jaipur |
|Goa Non-Biodegradable Garbage (Control) Act 1996 (Act 5 of 1997) ||Cess ||61.78 ||- ||April 2014 to December 2020 ||Honorable High Court of Bombay Panaji |
|Income-tax Act 1961 ||Income tax ||39.00 ||- ||2012-2013 ||Income Tax Appellate Tribunal New Delhi |
|Income-tax Act 1961 ||Income tax ||43.32 ||- ||AY 2008-09 ||Hon'ble Supreme Court |
|Income-tax Act 1961 ||Income tax ||0.69 ||- ||AY 2009-10 ||Commissioner Income Tax (Appeals) New Delhi |
|Income-tax Act 1961 ||Income tax ||2.79 ||- ||AY 2014-15 2015-16 ||Commissioner Income Tax (Appeals) New Delhi |
|Income-tax Act 1961 ||Income Tax ||24.20 ||- ||AY 2016-17 ||Commissioner Income Tax (Appeals) New Delhi |
(viii)The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution or government during the year. The Company did not have anyoutstanding debentures during the year.
(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.
(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 and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule 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 APAS & Co.
Firm's Registration No.: 000340C
Membership No.: 520078
Date: 16 February 2021
606 6th Floor PP City Centre
Road No. 44
Pitampura New Delhi 110 034
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Membership No.: 501531
Date: 16 February 2021
L-41 Connaught Place
New Delhi 110 001
Independent Auditor's Report on the internal financial controls with reference to thestandalone financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 (the Act')
1. In conjunction with our audit of the standalone financial statements of VarunBeverages Limited (the Company') as at and for the year ended 31 December 2020 wehave audited the internal financial controls with reference to standalone financialstatements of the Company as at that date.
Responsibilities of Management and Those Charged with Governance for Internal FinancialControls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal financial controls with reference tostandalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting (the Guidance Note') issued by theInstitute of Chartered Accountants of India (ICAI'). These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of the Company'sbusiness including adherence to the Company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Standalone Financial Statements
3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Instituteof Chartered Accountants of India (ICAI') prescribed under Section 143(10) of theAct to the extent applicable to an audit of internal financial controls with reference tostandalone financial statements and the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the Guidance Note') issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements were established and maintainedand if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements includes obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to standalone financial statements.
Meaning of Internal Financial Controls with Reference to Financial Statements
6. A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements
7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to standalone financial statements and such controlswere operating effectively as at 31 December 2020 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote issued by the ICAI.