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Venkys (India) Ltd.

BSE: 523261 Sector: Others
NSE: VENKEYS ISIN Code: INE398A01010
BSE 00:00 | 20 Feb 1476.75 64.45
(4.56%)
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1439.00

HIGH

1533.00

LOW

1430.05

NSE 00:00 | 20 Feb 1477.15 64.25
(4.55%)
OPEN

1431.00

HIGH

1534.00

LOW

1429.85

OPEN 1439.00
PREVIOUS CLOSE 1412.30
VOLUME 30448
52-Week high 2407.00
52-Week low 1100.00
P/E 20.91
Mkt Cap.(Rs cr) 2,081
Buy Price 1476.75
Buy Qty 70.00
Sell Price 1479.00
Sell Qty 20.00
OPEN 1439.00
CLOSE 1412.30
VOLUME 30448
52-Week high 2407.00
52-Week low 1100.00
P/E 20.91
Mkt Cap.(Rs cr) 2,081
Buy Price 1476.75
Buy Qty 70.00
Sell Price 1479.00
Sell Qty 20.00

Venkys (India) Ltd. (VENKEYS) - Auditors Report

Company auditors report

To

The Members of Venky's (India) Limited

Report on the Audit of Financial Statements

Opinion

We have audited the accompanying financial statements of Venky's (India) Limited("the Company") which comprise the Balance sheet as at 31st March2019 and the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Changes in Equity and Statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "the financialstatements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2019 and profit (includingother comprehensive income) changes in equity and its cash flows for the year ended onthat date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 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 together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

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.

(i) Valuation of Biological Assets- (as described in note 1.4(j) note 3.2and note7.2 of the financial statements)

Description of Key Audit Matter:

Biological assets include Poultry for live-stock breeding (Broiler and Layer Parents)hatching eggs Specific Pathogen Free Eggs (S.P.F Eggs) Commercial Eggs and livecommercial birds (Broiler and Layer). Biological assets except breeder flocks andcommercial layer birds are measured at fair value less cost to sell.

Ind AS 41- Agriculture and Ind AS 113 – Fair Value Measurement deal withrecognition and measurement of fair value of biological assets respectively. The fairvalue measurement requires consideration of market approach cost approach and incomeapproach.

Considering the distinctiveness of lifecycle of Biological Assets the marketbenchmarks for valuation are difficult to ascertain / find. Additionally thedetermination of best fit valuation technique using fair value estimates is a complexprocess involving significant judgments and estimates regarding inputs. The value of theCompany's biological assets as at March 31 2019 amounts to INR 18561.55 Lakhs which isa significant component of the Balance Sheet. Therefore we have considered it to be a keyaudit matter.

Description of Auditor's response:

We have gained adequate understanding of the nature of biological assets lifecycle andapplied the prescriptions given in Ind AS 41 and Ind AS 113 in their context. We haveundertaken audit procedures in relation to accounting of biological assets controlsexercised and valuation methods adopted by the management over biological assets with aview to evaluate their appropriateness and compliance with the applicable accountingprinciples.

Identification and classification of biological assets is a key determinant and wasexamined and evaluated. We analysed the valuation approaches adopted by management foreach class of biological assets for their appropriateness based on the principle ofhighest and best possible use as laid down in Ind AS 41. We also audited the methodologyused by the Company and verified reasonableness of inputs / assumptions used by theCompany including production life cycle feed consumption and mortality rates. Further wehave analytically reviewed the results of valuation and compared the same with the pasttrends. Finally the appropriateness and adequacy of the presentation and disclosure ofbiological assets in the financial statements was audited.

(ii) Transactions with related parties -(as described in note 13 of the financialstatements)

Description of Key Audit Matter:

The Company operates within a conglomerate of group entities. The parent company andassociates operate in the line of business as the Company. The transactions with relatedparties are significant that have effect over both profit and loss and balance sheetdescribed in detail in Note 13 of financial statements and include sales purchases andAdvances etc.

These group companies operate in the same sector and have significant transactionsamongst themselves during the year. Such transactions with related parties arenecessitated to be at arms length they involve significant cash flow between partiesintercompany contracts and common management amongst other things they are considered tobe a key audit matter.

Description of Auditor's response:

Audit procedure included identification of related party relationships classificationexamination of transactions from the perspective of arms length criteria adopted by theBoard of Directors risks attached to items such as guarantees interest rate and recoveryof capital advance ageing and provisioning policies and practices review of confirmationand reconciliation process review of controls and analytical review of various accountbalances and transaction balances amongst other things.

Other Information

The Company's Board of Directors is responsible for the other information. The Otherinformation comprises the Management Discussion and Analysis Report Directors' Reportincluding Annexures to Directors' Report Report on Corporate Governance and BusinessResponsibility Report but does not include the financial statements and our auditor'sreport thereon.

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. 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.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

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 financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the accounting Standards specified under section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

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.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

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 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 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 of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional 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 system in place and the operating effectiveness ofsuch 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 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the 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.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A"a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss Statement of Changes in Equityand the Cash Flow Statement and dealt with by this Report are in agreement with the booksof account.

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section 164 (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 B".

(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 Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements – Refer Note 7.1 to the financial statements;

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

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For B. D. Jokhakar & Co.
Chartered Accountants
Firm Registration No: 104345W
Raman Jokhakar
San Jose Partner
May 10 2019 Membership No.103241

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of Independent Auditor's Report on financial statements of evendate) i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us fixed assets of the Company have been physically verifiedduring the year by the management in accordance with a phased program of verificationdesigned to cover all assets over a period of three years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets.

No material discrepancies were noticed on physical verification.

(c) Based on audit procedures performed by us for the purpose of reporting the true andfair view of the financial statements of the Company and based on records produced to usand according to information and explanations provided by the management the title deedsof immovable properties forming part of property plant and equipment are held in thename of the Company except for the cases mentioned below wherein it is informed to us thatregistration of said property is in process.

(Rupees in Lakhs)

Particulars Location Total number of cases Gross block as at March 31 2019 Net block as at March 31 2019
Freehold Land and Building thereon Nalagarh Larsouli 2 1673.03 1568.81

ii. As explained to us the management has conducted physical verification of itsinventories during the year. In our opinion having regards to size of the Company andnature of its business the frequency of verification is reasonable. Based on recordsproduced to us discrepancies noticed on verification between the physical stocks and thebook records were not material and were properly dealt with in the books of account.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct. Consequently sub clause (a) (b) and (c) of the paragraph 3 (iii) are not applicableto the Company.

iv. In our opinion and according to the information and explanations given to us inrespect of loans investments guarantees and securities the provisions of section 185and 186 of the Act have been complied with by the Company.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public within the meaning of the provisionsof sections 73 to 76 or any relevant provisions of the Act and the rules framed thereunder.

vi. We have broadly reviewed the cost accounting records maintained by the Companypursuant to the Companies (Cost Accounting Records) Rules 2013 prescribed by the CentralGovernment under section 148(1) of the Act.

However we have not made a detailed examination of the records with a view todetermine its accuracy. Based on our review we are of the opinion that prima facie theprescribed accounts and records have been made and maintained.

vii. In respect of statutory dues:

a) According to the records of the Company the Company is generally regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income-tax goods and services tax duty of custom cessand other statutory dues applicable to it. As per the records of the Company as at March31 2019 the Company does not have any undisputed statutory dues which are outstandingfor a period of more than six months from the date they became payable.

b) According to the information and explanations given to us the particulars of duesin respect of income tax (including TDS) sales tax service tax goods and services taxduty of customs duty of excise and value added tax that have not been deposited with theappropriate authorities on account of dispute and the forum where the disputes are pendingas on March 31 2019 are as given below:

Nature of the Statute Nature of Dues Amount Involved (Rupees in Lakhs) Amount paid / adjusted under protest (Rupees in Lakhs) Period Forum where dispute is pending
Central Sales Tax Act 1956 and sales tax acts of various states Sales Tax 84.77 63.67 1991 - 1992 High Court Mumbai
1992 - 1993
1993 - 1994
1994 - 1995
1995 - 1996
16.60 - 2001 - 2002 Assistant Commissioner Trade Tax Dehradun
0.45 0.45 2002 - 2003 Deputy Commissioner Appeal -II Trade Tax Dehradun
40.15 - 2004 - 2005 WBCT appellate and
2006 – 2007 Revisional Board West Bengal
29.21 29.21 2008 – 2009 Sales Tax Dep Telangana
Central Sales Tax Act 1956 and sales tax acts of various states Sales Tax 0.36 0.36 2012 - 2013 Kerala Value Added Tax Appellate Tribunal Palakkad
7.68 3.28 2012 - 2013 Deputy Commissioner (Appeals) Sales Tax Uttar Pradesh
2013 - 2014
2014 – 2015
15.00 15.00 2012 – 2013 Maharashtra Sales Tax Tribunal
Customs Act 1962 Duty of Custom 40.36 - 2015 – 2016 Office of Commissioner of CustomsImport-Mumbai
Central Excise Act 1944 Duty of Excise 535.62 535.62 2011 – 2012 The Commissioner Central Excise Pune
2013 - 2014
2014 – 2015
2015 – 2016
2016 – 2017
2017 – 2018
693.65 26.01 2012 – 2017 CESTAT Mumbai
1.11 0.11 2012 – 2017 The Commissioner Central Excise Nagpur
5.32 1.80 2007 – 2008 The Hon. Punjab and Haryana High Court Chandigarh

viii. According to the information and explanations given to us the Company has notdefaulted in repayment of dues to financial institutions or banks.

ix. On the basis of overall examination of the balance sheet of the Company andaccording to the information and explanations provided to us we report that monies raisedby way of term loans were applied for the purposes for which those were raised. TheCompany did not raise any money by way of initial public offer or further public offer(including debt instrument).

x. To the best of our knowledge and belief and according to the information andexplanations given to us no material fraud by the Company or on the Company by itsofficers or employees was noticed or reported during the year.

xi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

xii. In our opinion the Company is not a Nidhi Company. Accordingly paragraph 3(xii)of the Order is not applicable.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableIndian Accounting Standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company no preferential allotment or private placementof shares or fully or partly convertible debentures has been made by the Company duringthe year. Therefore paragraph 3(xiv) of the Order is not applicable.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him as specified under section 192of the Act. Therefore paragraph 3(xv) of the Order is not applicable.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 and therefore the provisions of paragraph 3(xvi) of the Order isnot applicable.

For B. D. Jokhakar & Co.
Chartered Accountants
Firm Registration No: 104345W
Raman Jokhakar
San Jose Partner
May 10 2019 Membership No.103241

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of Independent Auditor's Report on financial statements of evendate)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Venky's(India) Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the financial statements of the Company for the year ended on that 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 includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reportingand the Standards on Auditing issued by ICAI and deemed to be prescribed under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For B. D. Jokhakar & Co.
Chartered Accountants
Firm Registration No: 104345W
Raman Jokhakar
San Jose Partner
May 10 2019 Membership No.103241