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VST Industries Ltd.

BSE: 509966 Sector: Consumer
NSE: VSTIND ISIN Code: INE710A01016
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NSE 00:00 | 03 Aug 3236.35 -11.30
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OPEN 3297.15
PREVIOUS CLOSE 3246.45
VOLUME 410
52-Week high 4856.45
52-Week low 2550.00
P/E 16.45
Mkt Cap.(Rs cr) 5,000
Buy Price 3200.00
Buy Qty 14.00
Sell Price 3500.00
Sell Qty 10.00
OPEN 3297.15
CLOSE 3246.45
VOLUME 410
52-Week high 4856.45
52-Week low 2550.00
P/E 16.45
Mkt Cap.(Rs cr) 5,000
Buy Price 3200.00
Buy Qty 14.00
Sell Price 3500.00
Sell Qty 10.00

VST Industries Ltd. (VSTIND) - Auditors Report

Company auditors report

To the Members of VST Industries Limited

Report on the Audit of the Financial Statements Opinion

We have audited the financial statements of VST Industries Limited ("theCompany") which comprise the balance sheet as at 31 March 2020 and the statement ofprofit and loss (including other comprehensive income) statement of changes in equity andstatement of cash flows for the year the ended and notes to the financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as the "financial statements"). In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid financial statements give the information required by the Companies Act2013 ("Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2020 and profit and other comprehensive incomechanges in equity and its cash flows for the year ended on that 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 SAs 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 on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Key audit matters How the matter was addressed in our audit
Litigations related to taxation and other claims
Refer Note 17 and Note 26 to financial statements and "significant & material orders passed by the regulators or courts or tribunals" section in the Reports of the Board of Directors & Management Discussion and Analysis.
The Company is subjected to a large number of central and state tax litigations and other claims pending before various judicial forums which could have a significant impact on the results depending upon the outcome of the matter. Our key audit procedures included:
• We understood the Company's process around the evaluation and continuous re-assessment of tax related liabilities accounting policy thereof and other claims.
The amounts involved are significant and the application of accounting standards to determine the amount if any to be provided as a liability or disclosed as a contingent liability is inherently subjective. • Assessed the appropriateness of design and implementation of the Company's controls over assessment of litigations and appropriateness of disclosures.
• Performed substantive procedures on the underlying calculations supporting the liabilities recorded.
The Company regularly updates and assesses its legal positions with the use of internal and external legal experts. • Assessed the management's conclusion through understanding relevant judicial precedents in similar cases and the applicable rules and regulations.
We considered the tax related litigations and other claims a key audit matter given the size complexity and number of cases pending and contingency related to other claims. • Engaged subject matter specialists to gain an understanding of the current status of litigation and developments in the disputes if any through discussion with the management and by reading external advice received by the Company where relevant to validate management ‘s conclusion.
• Assessed the adequacy of the Company's disclosures made in relation to tax litigations and other claims.

Revenue Recognition

Refer to Note 1 -Significant Accounting Policies to the financial statements

Key audit matters How the matter was addressed in our audit
Regulatory restrictions and taxation changes may have an impact on the revenue growth of the Company and resultant impact on the price and volume of products sold. • Our audit procedures included considering the appropriateness of the Company's revenue recognition accounting policies including those pertaining to trade incentive schemes and assessed compliance with the policies in terms of the applicable accounting standards.
Revenue from sale of goods is recognized when effective control over goods is transferred to a customer as per the terms of the contract. This is usually evidenced by a transfer of all of the significant risks and rewards of ownership upon delivery of goods to the customer which in terms of timing is not materially different to the date of shipping. We tested the design implementation and operating
• effectiveness of the Company's key controls including IT controls over measurement and recognition of revenue in accordance with customer contracts.
Revenue is measured at fair value of the consideration received or receivable after deduction of any trade discount trade incentive and other similar discounts and any taxes or duties collected on behalf of the Government which are levied on sales such as Goods & service Tax etc. • We performed tests of details on a sample basis to assess whether the revenue recorded is as per the contract terms.
• Assessed sales transactions taking place at either side of the balance sheet date as well as credit notes issued after the year end date to determine whether revenue was recognized in the correct period.
Revenue is one of the key performance indicators of the Company and there could be a risk of Management override of controls to meet targets or expectations. This may result in revenue to be recognized before the control have been transferred to the customer. •Assessed the overall trade discounts/ trade incentive issued in the current year in comparison with previous year. Assessed the adequacy of accrual made as at year end toward trade incentive schemes.
Further recognition and measurement of accruals related to trade incentive schemes involves management judgement. • Other audit procedures specifically designed to address risk of Management override of controls including journal entry testing.
• Assessed the adequacy of the Company's disclosures in the financial statements.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Management's and Board of Directors' Responsibility for the Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows 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. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safe guarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.

In preparing the financial statements the management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors is 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the financial statements made by themanagement and Board of Directors.

• Conclude on the appropriateness of the management and Board of Director's use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the 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 the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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 ourauditors' 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 (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder 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 (including other comprehensiveincome) the statement of changes in equity and the statement of cash flows dealt with bythis Report are in agreement with the books of account;

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder section 133 of the Act read with Rule 3 of the Companies (Accounts) Rules 2014;

e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act;

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B"; and

g) With respect to the other matters to be included in the Auditors' 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 as at 31 March 2020 onits financial position in its financial statements - Refer Note 17 and 26 to the financialstatements;

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

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

3. With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act.

The Ministry of Corporate Affairs has not prescribed other details under Section197(16) which are required to be commented upon by us.

for B S R & Associates LLP
Chartered Accountants
Firm's Registration Number: 116231W/W-100024
Sriram Mahalingam
Partner
Membership number: 049642
UDIN: 20049642AAAABI5740
Place: Hyderabad
Date: 21st May 2020

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

Annexure A to the Independent Auditors' report on the financial statements of VSTIndustries Limited for the year ended 31 March 2020 Report on the matters specified inparagraphs 3 and 4 of Companies (Auditor's Report) Order 2016 to the aforesaid financialstatements under Sub-section 11 of Section 143 of the Companies Act 2013 (Referred to inparagraph 1 under ‘Report on Other Legal and Regulatory Requirements' section of ourreport of even date)

We report that: i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment; (b) The property plant and equipment are physically verified by the managementaccording to a phased programme designed to cover all the items over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Pursuant to the programme a portion of the property plant andequipment has been physically verified by the management during the year and no materialdiscrepancies have been noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties asdisclosed in Note 2 on property plant and equipment to the financial statements are heldin the name of the Company.

ii. The inventories except goods in transit have been physically verified by theManagement during the year at reasonable intervals. In our opinion the frequency of suchverification is reasonable. The discrepancies noticed on verification between the physicalstocks and the book records were not material.

iii. According to the information and explanation given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnership or other parties covered in the Register maintained under Section 189 of theCompanies Act 2013 ("the Act"). Accordingly paragraph 3(iii) of the Order isnot applicable to the Company.

iv. According to the information and explanation given to us the Company has notgranted any loans or made any investments or provided any guarantees or security to theparties covered under Sections 185 and 186. Accordingly paragraph 3(iv) of the Order isnot applicable to the Company.

v. According to the information and explanation given to us the Company has notaccepted any deposits from the public in accordance with provisions of Sections 73 to 76of the Act and the Rules framed thereunder. Accordingly paragraph 3(v) of the Order isnot applicable to the Company.

vi. To the best of our knowledge and as explained the Central Government of India hasnot specified the maintenance of cost records under sub-section (1) of Section 148 of theAct for any of the products of the Company. Accordingly paragraph 3(vi) of the Order isnot applicable to the Company.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees' stateinsurance Income-tax Goods and Service tax Duty of customs Duty of excise Cess andother material statutory dues have been regularly deposited during the year by the Companywith the appropriate authorities.

According to the information and explanations given to us and on the basis of ourexamination of the records of the Company no undisputed amounts payable in respect ofProvident fund Employees' state insurance Income-tax Goods and Service tax Duty ofcustoms Duty of excise Cess and other material statutory dues were in arrears as at 31March 2020 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no dues of Income tax Duty ofcustoms Duty of excise Sales tax and Value added tax which have not been deposited withappropriate authorities on account any dispute.

According to the information and explanations given to us the following dues ofService tax and Goods and Service tax have not been deposited by the Company on account ofdisputes.

Name of statute Nature of dues Amount in lakhs (`) Period to which the amount relates Forum where the dispute is pending
The Central Excise Act 1944 Service tax credit ineligibility under Cenvat Credit Rules 2002 248.82 May 2008 to Sep 2011; Oct 2012 to Sep 2013; Aug 2015 to Mar 2016; Apr 2016 to Mar 2017 Customs Excise & Service Tax Appellate Tribunal
Goods and Service Tax Act Goods & Service Tax 96.67 Financial year 2019-20 Commissioner Appeals (Ghaziabad)

viii. According to the information and explanations given to us the Company does nothave any loans or borrowings from any financial institution or bank or Government nor hasit issued any debentures during the year. Accordingly paragraph 3(viii) of the Order isnot applicable to the Company.

ix. According to the information and explanations given to us the Company has notraised any money by way of initial public offer or further public offer (including debtinstruments) and term loans during the year. Accordingly paragraph 3(ix) of the Order isnot applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. According to the information and explanations given to us and based on ourexamination of the records on 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 of the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company.

Accordingly paragraph 3(xii) of the Order is not applicable to the Company. x

iii. 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 suchrelated party transactions have been disclosed in the Note 28 to the financial Statementsas required by the applicable Indian Accounting Standards. xiv. According to theinformation and explanations given to us the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

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-cashtransaction with the directors or persons connected with him. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

xvi. In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the Company is not required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934.

Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

for B S R & Associates LLP
Chartered Accountants
Firm's Registration Number: 116231W/W-100024
Sriram Mahalingam
Partner
Membership number: 049642
UDIN: 20049642AAAABI5740
Place: Hyderabad
Date: 21st May 2020

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

Annexure B to the Independent Auditors'report on the financial statements of VSTIndustries Limited for the year ended 31 March 2020.

Report on the internal financial controls with reference to the aforesaidfinancialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013(Referred to in clause (f) of paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date) Opinion

We have audited the internal financial controls with reference to financial statementsofVST Industries Limited("the Company") as of 31 March 2020 in conjunction withour audit of the financial statements of the Company for the year ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2020 based on the internal financial controls withreference to 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 issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 judgement 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 withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A company's internal financial controls with reference to financial statementsis 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 andfairly reflect 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

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.

for B S R & Associates LLP
Chartered Accountants
Firm's Registration Number: 116231W/W-100024
Sriram Mahalingam
Partner
Membership number: 049642
UDIN: 20049642AAAABI5740
Place: Hyderabad
Date: 21st May 2020