To the Members of Vidhi Specialty Food Ingredients Limited Report onthe Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements ofVidhi Specialty Food Ingredients Limited ("the Company") which comprises of theBalance Sheet as at March 31 2020 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the year ended on that date and a summary of the significant accounting policies andother explanatory information (hereinafter referred to as "the standalone financialstatements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements gives a true andfair view in conformity with the aforesaid Ind AS and other accounting principlesgenerally accepted in India prescribed under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended ("Ind AS") andother accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2020 the profit (other comprehensive income) changes in equityand its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing ("SA"s) specified under section143(10) of the Act. Our responsibilities underthose Standards are further described in theAuditor's Responsibilities for the Audit of the Standalone Financial Statements section ofour report. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence obtained by us is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Emphasis of Matter:
1. Note 33 to the financial statements which describe the Management'sassessment of the impact of the outbreak of Coronavirus (Covid-19) on the businessoperations of the Company. The Management believes that no adjustments are required in theFinancial Statements as it does not impact the financial year ended March 31 2020however in view of the various preventive measures taken (such as complete lock-downrestrictions by the Government of India travel restrictions etc.) and highly uncertaineconomic environment a definitive assessment of the impact on the subsequent periods ishighly dependent upon circumstances as they evolve.
2. On account of the COVID-19 related lockdown restrictions managementwas able to perform year end physical verification of inventories only at certainlocations subsequent to the year-end. Also we were not able to physically observe thestock verification where carried out by management. Consequently we have performedalternate procedures to audit the existence of inventory as per the guidance provided inSA 501 "Audit Evidence - Specific Considerations for Selected Items" and haveobtained sufficient appropriate audit evidence to issue our unmodified opinion on theseStandalone Financial statements.
Our opinion is not modified in respect of above matters.
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Key Audit Matters
|Sr. Key Audit Matter No. ||Auditor's Response |
|1 Physical verification of Inventories: ||We performed following alternate procedures to audit the existence of inventories as at the year-end since we were not able to physically observe the stock verification: |
|The Company's management conducts physical verification of inventories during the year at reasonable intervals however on account of the COVID-19 || |
|related lockdown restrictions management was able to perform year end physical verification of inventories at a date other than the date of financial statements. Management has carried out other procedures to validate the existence of its inventory as at the year || evaluated the design and implementation of the controls over physical verification of inventories and tested the operating effectiveness of the controls during the year. |
|end such as obtaining confirmations from third party warehouses and carrying out consumption analysis and stock movement analysis. || for stocks at third party warehouses obtained direct confirmations and as appropriate performed roll-back procedures to tally with stock quantities at year end on a sample basis. |
| || observed the physical verification of inventories carried out by management at certain locations subsequent to year end through virtual mediums and performed roll back procedures evidencing the movement in stocks from the date of such verification to the year end on a sample basis. |
| || verified the analytical reviews performed by the management such as consumption analysis and stock movement analysis for the year for raw material and finished goods at factories on a sample basis. |
|2 Trade Receivables: || |
|Trade receivables comprise a significant portion of the current assets of the Company and serve as security for a majority of the Company short-term debt. As indicated in Note 4.2 to the Standalone financial statements Trade receivables provision has made based on Expected Credit Loss method. The Company considered current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss the Company has also considered credit reports and other related credit information for its customers to ||We assessed the validity of material long outstanding receivables by obtaining third- party confirmations of amounts receivable. We also considered payments received subsequent to year-end insurance held for overseas trade receivables past payment history and unusual patterns to identify potentially impaired balances. The assessment of the appropriateness of the allowance for trade receivables comprised a variety of audit procedures across the Company including: |
|estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19. Accordingly the estimation of the allowance for trade receivables is a || Assessing the appropriateness and reasonableness of the assumptions applied in the managements' assessment of the receivables allowance; |
|significant judgments area and is therefore considered a key audit matter. || Consideration of the creditworthiness of significant trade receivables over 90 days; |
| || Consideration and concurrence of the agreed payment terms; |
| || Verification of receipts from trade receivables subsequent to year-end; |
| || Inspection of credit insurance policies; and |
| || Considered the completeness and accuracy of the disclosures. To address the risk of management bias we evaluated the results of audit procedures on other key balances to assess whether or not there was an indication of bias. We were satisfied that the Company's trade receivables are fairly valued and adequately provided. We further considered whether the provisions were misstated and concluded that they were appropriate in all material respects and disclosures related to trade receivable in the standalone financial statements are appropriate. |
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Information butdoes not include the standalone financial statements and our report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.
ANNUAL REPORT 2019-20
VIDHI SPECIALTY FOOD INGREDIENTS LIMITED
If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regard.
Responsibility of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Companies Act2013 ("the Act") with respect to thepreparation and presentation of these standalone Ind AS financial statements that give atrue and fair view of the financial position financial performance (including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with relevant rules issuedthereunder. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding 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 standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.
In preparing the 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.
The Board of Directors are also responsible for overseeing theCompany's financial reporting process Auditor's Responsibility for the Audit of theFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of the standalone financial statements. Aspart of an audit in accordance with SAs we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Obtain sufficient appropriate audit evidence regarding theStandalone Financial Statements of the Company to express an opinion on the StandaloneFinancial Statements.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect ofany identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits ofsuchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit wereport that:
a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b. 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 Balance Sheet the Statement of Profit and Loss (including OtherComprehensive Income) Statement of Changes in Equity and the Statement of Cash Flow dealtwith by this Report are in agreement with the relevant books of account.
d. In our opinion the aforesaid standalone financial statements complywith the Ind AS 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 thedirectors as on March 31 2020 taken on record by the Board of Directors none ofthedirectors is disqualified as on March 31 2020 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 overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols overfinancial reporting.
g. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements.
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Companies Act 2013 we give in the "Annexure B" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
For JMR & Associates LLP
Firm Registration No. 106912W / W100300
CA. Nikesh Jain
Membership No. 114003 UDIN: 20114003AAAACF7935
Mumbai; 25 June 2020
ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1(f) under Report on Other Legal andRegulatory Requirements' section ofour report to the Members of Vidhi Specialty FoodIngredients Limited of even date)
Report on the Internal Financial Controls under Clause (i) ofsub-section 3 of Section 143 of the
Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of Vidhi Specialty Food Ingredients Limited ("the Company") as ofMarch 31 2020 in conjunction with our audit of the standalone Ind AS financial statementsof the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Act to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require thatwe comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls overfinancial reportingincluded obtaining an understanding of internal financial controls overfinancialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system overfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting 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 control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 ofthecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion and to the best of our information and according to theexplanations given to us the Company have 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 2020 based on theinternal control over financial reporting criteria established by the respective companiesconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI.
For JMR & Associates LLP
Firm Registration No. 106912W / W100300
CA. Nikesh Jain
Membership No. 114003 UDIN: 20114003AAAACF7935
Mumbai; 25 June 2020
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under Report on Other Legal andRegulatory Requirements' section ofour report to the Members of Vidhi Specialty FoodIngredients Limited of even date.)
i. In respect of property plant and equipment's:
a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of property plant and equipment's.
b) As informed to us the property plant and equipment's have beenphysically verified by the management during the period according to a phased programme.In our opinion such programme is reasonable having regard to the size of the Company andthe nature of its assets. As informed no material discrepancies were noticed on suchverification by the management.
c) According to the information and explanations given to us therecords examined by us and based on the examination of the conveyance deeds / registeredsale deed provided to us we report that the title deeds comprising all the immovableproperties of land and buildings which are freehold are held in the name of the Companyas at the balance sheet date. In respect of immovable properties of land and building thathave been taken on lease and disclosed as property plant and equipment's in thestandalone financial statements the lease agreements are in the name ofthe Company
ii. In respect of its inventories:
As informed to us the physical verification of the inventories wasdone by the management at reasonable intervals at the end of each month and for year-endthey have conducted physical verification at a date other than the date of financialstatements due to a government lockdown and we have received confirmation with respect toinventories lying with third parties. In our opinion the frequency of verification isreasonable. Further on the basis of our examination of the records the Company isgenerally maintaining proper records of its inventories. No material discrepancy wasnoticed on physical verification of stocks by the management as compared to book records.
iii. The Company has not granted loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Act and accordingly the provisions of Clause (iii)(a) to (c) of Para 3 of the Order are not applicable to the Company.
iv. The Company has not granted any loan under section 185 of the Act.The Company has complied with the provisions of section 186 of the Act with respect tothe investment and guarantees. The Company has neither given any security nor given anyloans during the year.
v. According to the information and explanations given to us theCompany has not accepted any deposits from the public as per the provisions of section 73to 76 of the Act and rules framed thereunder and accordingly the provisions of Clause(v) of Para 3 of the Order are not applicable to the Company.
vi. According to the information and explanation given to us CentralGovernment has not prescribed the maintenance of cost records under section (1) of Section148 of the Act for any of the services rendered by the company.
vii. In respect of statutory dues:
a) According to the information and explanations given to us andaccording to the records of the Company examined by us in our opinion the Company isgenerally regular in depositing with the appropriate authorities undisputed statutory duesincluding provident fund Employees' State Insurance Income- tax Goods and Service taxcess or/and any other material statutory dues wherever applicable.
According to the information and explanations given to us there were nooutstanding statutory dues as on 31 March 2020 for a period of more than six months fromthe date they became payable.
b) According to the information and explanation given to us there areno dues outstanding in respect of Income-tax VAT Excise duty Service tax Custom dutyGoods and Service tax Cess or/and any other material statutory dues wherever applicablewhich have not been deposited on account of any dispute except the following;
|Name of the Statute ||Nature of the Dues ||Amount ||Period to which the amount relates ||Forum where dispute is pending |
|Central Sales Tax Act1956 ||Central Sales Tax ||868350 ||2005-06 ||Central Sales Tax Appellate Authority |
|Value Added Tax Act2002 ||Value Added Tax ||288377 ||2012-13 ||Value Added Tax Appellate Authority |
|Value Added Tax Act2002 ||Value Added Tax ||36839 ||2013-14 ||Value Added Tax Appellate Authority |
|Central Sales Tax Act1956 ||Central Sales Tax ||358975 ||2013-14 ||Central Sales Tax Appellate Authority |
viii. In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of dues to banks and financialinstitutions. The Company did not have any borrowings from the government or dues todebenture holders.
ix. Based on our audit procedures and on the basis of information andexplanations given to us the Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments) during the year. According tothe information and explanations given to us the term loans raised have been applied bythe Company during the year for the purposes for which they were raised.
x. Based upon the audit procedures performed and the information andexplanations given by the management no fraud by the Company and no fraud on the Companyby its officers or employees has been noticed or reported during the year.
xi. Based upon the audit procedures performed and the information andexplanations given by the management the managerial remuneration has been paid / providedin accordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.
xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. Accordingly the provisions of Clause(xii) of Para 3 of the Order are not applicable to the Company.
xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.
xiv. According to the information and explanations give to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with the directors requiringcompliance with Section 192 ofthe Companies Act.
xvi. The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934. Accordingly clause 3 (xvi) of the Order is notapplicable to the Company.
For JMR & Associates LLP
Firm Registration No. 106912W / W100300
Membership No. 114003 UDIN: 20114003AAAACF7935
Mumbai; 25 June 2020