Mar 31, 2022
Report on the Audit of the Standalone financial statements
Opinion
1. We have audited the accompanying standalone financial statements of Aditya Birla Fashion and Retail Limited ("the Company") which includes the financial statements of ABFRL Employee Welfare Trust, which comprise the Standalone Balance Sheet as at March 31, 2022, and the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the Standalone financial statements, including a summary of significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2022, and total comprehensive loss (comprising of loss and other comprehensive income), changes in equity and its cash flows for the year then ended.
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the "Auditor''s Responsibilities for the Audit of the Financial Statements" section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters |
How our audit addressed the key audit matters |
Impairment assessment of goodwill (Refer Note 5A to the Standalone financial statements) The Company has goodwill of '' 1,859.60 crores as at March 31,2022. The goodwill was acquired in business combinations recorded in the prior years and was allocated to cash generating units (CGU) of the Company. In accordance with Ind AS 36, Impairment of Assets, goodwill acquired in a business combination is required to be tested for impairment annually. |
Our audit procedures included the following: ⢠Understood and evaluated the design and tested operating effectiveness of Company''s controls to assess impairment of goodwill on an annual basis. ⢠Evaluated whether the CGUs were determined and the goodwill allocation was performed in accordance with requirements of Ind AS 36 and our knowledge of the Company''s operations. ⢠Evaluated the appropriateness of the approach selected by the management to determine the recoverable amount of the CGU. ⢠Evaluated the objectivity, competency and independence of the management expert engaged by the Company. |
Key Audit Matters |
How our audit addressed the key audit matters |
Management has performed impairment assessment for each of the CGUs to which goodwill has been allocated by comparing the carrying amount of the CGU, including the goodwill, with the recoverable amount of the CGU which is higher of value in use and fair value less costs of disposal. Impairment assessment of goodwill requires significant management judgement and estimates such as projected cash flows, discount rates, growth rates over the projection period and terminal growth rates. Given the judgement, subjectivity and sensitivity of key parameters to the changes in economic conditions, the impairment assessment of goodwill is considered to be a key audit matter. |
⢠Assessed the reasonableness of the cashflow projections by testing the key management assumptions and estimates used in the impairment analysis and evaluated the consistency of the cashflow projections with the budgets approved by the Board of Directors. ⢠Evaluated the sensitivity analysis performed by management on the growth rates and discount rate to determine whether reasonable changes in these key assumptions would result in the carrying amounts of individual CGUs to exceed their recoverable amounts. ⢠Involved auditor''s expert to assist in evaluating the impairment assessment including certain assumptions used. ⢠Evaluated the adequacy of the disclosures made in the Standalone Financial Statements. Based on procedures above, management''s impairment assessment of goodwill appears to be reasonable. |
Impairment evaluation of Investments |
Our audit procedures included the following: |
in subsidiaries |
⢠Understood and evaluated the design and tested |
(Refer Note 6(a) to the standalone financial |
operating effectiveness of Company''s controls to |
statements) |
assess impairment of its investments in subsidiaries. |
The Company has made equity investments in the following subsidiaries namely, Jaypore E-Commerce Private Limited, TG Apparel & Decor Private Limited, Finesse International Design Private Limited, |
⢠Evaluated the appropriateness of the approach selected by the management to determine the recoverable amount. ⢠Evaluated the objectivity, competency and |
Sabyasachi Calcutta LLP and Indivinity |
independence of the Management expert engaged |
Clothing Retail Private Limited with |
by the Company. |
carrying values of '' 229.75 crores, '' 0.25 |
⢠Evaluated the reasonableness of the cashflow |
crores, '' 77.78 crores, '' 389.84 crores and |
projections by testing the key management |
'' 63.00 crores respectively, as at March |
assumptions and estimates used in the impairment |
31, 2022. |
analysis and assessed the consistency of the |
The Company reviews the carrying values |
cashflow projections with the budgets approved by |
of these investments in accordance |
Board of Directors. |
with Ind AS 36 ''Impairment of Assets''. |
⢠Evaluated the Company''s sensitivity analysis of the |
Impairment assessment is performed and |
recoverable amounts and evaluated whether any |
recoverable amounts of the investments are determined if indicators of impairment |
reasonably foreseeable changes in key assumptions could lead to impairment loss or material change in |
are identified. |
valuation. |
Management has considered losses suffered by these subsidiaries as an |
⢠Evaluated the Company''s process regarding impairment assessment with the involvement of |
indicator for impairment assessment. Management has therefore performed impairment assessment by determining |
auditor''s valuation experts to assist in assessing the appropriateness of the impairment model including |
the recoverable amount of the investments |
independent assessment of certain assumptions |
in these subsidiaries using the value in use |
underlying the cash flow projections, discount rate, |
method and comparing the same with |
terminal value etc. |
the carrying value. Where the carrying |
⢠Obtained the audited standalone financial statements |
value exceeds the recoverable amount, |
of the subsidiaries for the year ended March 31,2022 |
an impairment loss is recognized. |
and evaluated their financial performance. |
Key Audit Matters |
How our audit addressed the key audit matters |
Determination of value in use involves use of projected cash flows based on financial budgets approved by the Board of Directors. Management has involved external experts to determine the recoverable amounts. Impairment evaluation of investment in subsidiaries is considered as a key audit matter as it requires significant management judgement and estimates in addition to consideration of economic and entity specific factors in determination of the recoverable value used in impairment assessment such as projected cash flows, discount rates, growth rates over the projection period and terminal growth rates which are subject to management judgement and subjectivity and might be affected by changes in economic conditions. |
⢠Evaluated the adequacy of the disclosures made in the Standalone Financial Statements. Based on the above work performed, Management''s assessment of impairment of subsidiaries appears to be reasonable. |
Provision for Inventory obsolescence (Refer Notes 12 and 40(f) to the standalone financial statements) The Company held inventories of '' 2,729.23 crores as at March 31, 2022. In accordance with Ind AS 2, Inventories, inventories are carried at lower of cost or net realizable value. The Company operates in a fast changing fashion market where there is a risk of inventory falling out of fashion and proving difficult to be sold above cost. Management has a policy to recognize provisions for inventory considering assessment of future trends and the Company''s past experience related to its ability to liquidate the aged inventory. The provision for inventory obsolescence has been considered as a key audit matter, as determination of provision for inventory involves significant management judgment and estimates. |
Our audit procedures included the following: ⢠Understood and evaluated the design and tested the operating effectiveness of Company''s controls to assess the adequacy of provision for inventory obsolescence. ⢠Evaluated the methodology used by the management to determine the provision for inventory obsolescence and determined whether the method is consistent with that applied in the prior year. ⢠Assessed whether the changes in the methodology (if any) are reasonable and consistent with our understanding of the changes in the business. ⢠Evaluated the ageing report including assessing its completeness and the underlying management judgements and estimates made. Further, assessed on a sample basis whether the calculation of provision for obsolescence is in accordance with Company''s policy. ⢠Verified appropriate approvals for specific obsolescence provisions and assessed their reasonableness on a sample basis. ⢠Evaluated the adequacy of the disclosures made in the Standalone Financial Statements. Based on the above procedures performed, we did not identify any material exceptions in recognition and measurement of provision for inventory obsolescence. |
Key Audit Matters |
How our audit addressed the key audit matters |
Provision for discount and sales returns |
Our audit procedures included the following: |
(Refer Note 40(g) to the standalone |
⢠Understood and evaluated the design and tested |
financial statements) |
the operating effectiveness of Company''s controls |
The Company has recognized provision for unsettled discounts and sales returns |
to assess the adequacy of provision for discounts and sales returns. |
amounting to ''231.88 crores and '' 393.39 |
⢠Evaluated the periodic account reconciliations |
crores respectively, as at March 31,2022. |
prepared by the management during the year. |
Revenue from contracts with customers |
⢠Evaluated the management estimates and |
is recognised when the entity satisfies a |
judgements in determining the provision for |
performance obligation by transferring |
discounts and sales returns and assessed whether |
control of promised goods to a customer. |
the same is consistent with the prior year. |
Recognition of revenue requires |
⢠Evaluated the contract terms for a sample of |
determination of the net selling price |
customer contracts to assess the reasonableness |
after considering variable consideration |
of the provision for discounts and returns and |
including forecast of sales returns and |
determine whether the same is in line with terms of |
discounts. |
the contract. |
The estimate of sales returns and discounts |
⢠Verified credits notes issued to customers on a |
depends on contract terms, forecasts of sales volumes and past history of quantum of returns. The expected returns and discounts that have not yet been |
sample basis and assessed the validity of claims with the underlying documents and appropriate approvals. |
settled with the customers are estimated |
⢠Evaluated the adequacy of the disclosures made in |
and accrued. |
the Standalone Financial Statements. |
Determination of provision for discounts |
Based on the above procedures performed, we did |
and sales returns is determined as a key |
not identify any material exceptions in recognition |
audit matter as it involves significant |
and measurement of provisions for discount and sales |
management judgement and estimation. |
returns. |
5. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Chairman''s Statement, Report of the Board of Directors, Sustainability and Business Responsibility Report, Corporate Governance Report and Management Discussion and Analysis Report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the standalone financial statements
6. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the
Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s responsibilities for the audit of the standalone financial statements
7. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due 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 audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
8. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
9. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
10. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
11. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
12. The standalone financial statements of the Company for the year ended March 31, 2021 were audited by another firm of chartered accountants under the Act who, vide their report dated May 28, 2021, expressed unmodified opinion on those standalone financial statements.
Our opinion is not modified in respect of above matter.
Report on other legal and regulatory requirements
13. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the ''Annexure B'', a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
14. 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 best of 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 the Company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022 from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference to Standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A".
(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and 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 financial position in its standalone financial statements - Refer Notes 24 and 45 to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year.
iv. (a) The management has represented that, to the best of its knowledge and belief, as
disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 55(vii) to the standalone financial statements);
(b) The management has represented that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 55(vii) to the standalone financial statements); and
(c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. The Company has not declared or paid any dividend during the year.
15. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
For Price Waterhouse & Co Chartered Accountants LLP
Chartered Accountants
Firm Registration Number: 304026E/E-300009
Partner
Membership Number: 203637
UDIN: 22203637AJFDAP9079
Place: Mumbai
Date: May 18, 2022
Mar 31, 2021
Report on the Audit of the Standalone Ind AS Financial Statements
Opinion
We have audited the accompanying Standalone Ind AS Financial Statements of Aditya Birla Fashion and Retail Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2021, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and notes to the Standalone Ind AS Financial Statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the 'Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements' section of our report. We are independent of the Company in accordance with the 'Code of Ethics' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS Financial Statements.
We draw attention to Note 40(j) of the Standalone Ind AS Financial Statements which describes management's assessment of the impact of COVID 19 pandemic on the Company's operations and carrying value of assets as at March 31, 2021. Our opinion is not modified in respect of this matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind AS Financial Statements for the financial year ended March 31, 2021. These matters were addressed in the context of our audit of the Standalone Ind AS Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the Standalone Ind AS Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Ind AS Financial Statements.
Key audit matters |
How our audit addressed the key audit matter |
Goodwill: Impairment Evaluation (as described in Note 5 of the Standalone Ind AS Financial Statements) |
|
As disclosed in Note 5, goodwill amounts |
Our audit procedures included the following: |
to ' 1,859.60 Crore as at March 31, 2021 |
⢠Obtained an understanding of the process |
and represents goodwill acquired through |
followed by the management to determine the |
business combinations and allocated to |
recoverable amounts of cash generating units to |
cash generating units of the Company. |
which the goodwill has been allocated. |
A cash generating unit to which goodwill |
⢠Evaluated the objectivity, competency and |
has been allocated is tested for impairment |
independence of the specialist engaged by the |
annually, or more frequently when there is |
Company and reviewed the valuation reports |
an indication that the unit may be impaired. As disclosed in Note 5, impairment of |
issued by such specialist. |
goodwill is determined by assessing |
⢠Evaluated the model used in determining the |
the recoverable amount of each cash |
value in use of the cash generating units. |
generating unit to which the goodwill |
⢠Assessed the consistency of data used in the |
relates. |
recoverable amount calculation with the financial |
The recoverable amount of the cash |
budgets approved by senior management of the |
generating unit as at March 31, 2021 has |
Company. |
been determined by the management |
⢠Analysed the performance of the cash generating |
based on a value in use calculation using |
units and assessed the assumptions used in |
cash flow projections from financial |
computation of value in use as at March 31, |
budgets approved by senior management. |
2021, including understanding of management's |
Goodwill impairment assessment is a key |
estimate of business impact based on current |
audit matter considering future estimates |
market and economic conditions arising from the |
and judgment involved in such assessment |
COVID 19 pandemic. |
and considering the significant carrying |
⢠Involved valuation expert to assist in evaluating |
value of goodwill. |
management's determination of value in use. ⢠   Tested the arithmetical accuracy of the computation of recoverable amounts of cash generating units. ⢠   Assessed the disclosures provided by the Company in relation to its annual impairment test in Note 5 to the Standalone Ind AS Financial Statements. |
Impairment Evaluation of Investments in Subsidiaries (as described in Note 6(a) of the Standalone Ind AS Financial Statements) |
|
As disclosed in Note 6(a), Investment in subsidiaries and joint venture amounts to ' 682.87 Crore as at March 31, 2021, which includes investment in Finesse International Design Private Limited ('Finesse'), Jaypore E-commerce Private Limited ('Jaypore') and T G Apparel & Decor |
Our audit procedures included the following: ⢠   Obtained an understanding of the process followed by the management to determine the recoverable amounts of investment in Finesse, Jaypore and TG Apparel. ⢠   Evaluated the objectivity, competency and independence of the specialist engaged by the |
Key audit matters |
How our audit addressed the key audit matter |
Private Limited ('T G Apparel') amounting to ' 162.85 Crore (acquired during the year ended March 31, 2020). Investment in subsidiaries is tested for impairment annually, or more frequently when there is an indication that the investment may be impaired. As disclosed in Note 40(a), impairment of investment in subsidiaries is determined by comparing the carrying value of the investments with their recoverable amount. As at March 31, 2021, the recoverable amount of the investments in these subsidiaries has been determined by the management based on a value in use calculation using cash flow projections from financial budgets approved by senior management. Impairment assessment of investment in aforesaid subsidiaries is a key audit matter considering future estimates and judgment involved in such assessment. |
Company and reviewed the valuation reports issued by such specialist. ⢠   Evaluated the model used in determining the value in use of investment in aforesaid subsidiaries. ⢠   Assessed the consistency of data used in the recoverable amount calculation with the financial budgets approved by senior management. ⢠   Analysed the performance of the subsidiaries and assessed the assumptions used in computation of value in use as at March 31, 2021, including understanding of management's estimate of business impact based on current market and economic conditions arising from the COVID 19 pandemic. ⢠   Involved valuation expert to assist in evaluating management's determination of value in use. ⢠   Obtained and read the audited financial statements of the subsidiaries to determine the net worth, historical cash flows and other financial indicators. ⢠   Tested the arithmetical accuracy of the computation of recoverable amounts of investment in aforesaid subsidiaries. |
Provision for discount and sales returns (as described in Note 40(g) of the Standalone Ind |
|
AS Financial Statements) |
 |
Revenue from contracts with customers |
Our audit procedures included the following: |
is recognised upon transfer of control of |
⢠Assessed the Company's accounting policy for |
promised goods and is measured at the |
recognition and measurement of net sales |
fair value of the consideration received or |
revenue, including the policy for recording |
receivable, net of returns and allowances, |
returns, and discounts in accordance with Ind AS |
trade discounts, sales promotion schemes |
115 'Revenue from Contracts with Customers'. |
and rebates, based on contractually defined terms. |
⢠Tested design and operating effectiveness of key controls for calculating, reviewing and approving |
In some cases, discounts estimated and |
returns and discounts. |
accrued are offered on further sale of |
⢠Tested the estimate of returns and discounts |
goods by the customers. Also, in certain |
related accruals with underlying documentation |
cases the Company has contracts with |
such as management approved norms, |
customers which entitles them to right of |
customer agreements, sales data and customer |
return. |
reconciliations, as applicable. |
At year end, amount of expected returns, |
⢠Obtained an understanding of management's |
and discounts that have not yet been |
estimate of business impact of COVID 19 |
settled with the customers are estimated |
pandemic on estimates of sales returns and |
and accrued. |
sales discounts. |
Key audit matters |
How our audit addressed the key audit matter |
Estimating the amount of accrual at year end is considered a key audit matter due to assumptions and judgments required to be made by management. |
⢠   Tested, on sample basis, credit notes issued to customers for returns and discounts as per approved norms. ⢠   Performed analytical procedures on returns and discounts and held discussions with management to understand changes in provisioning norms/additional provisions made based on management's assessment of market conditions. ⢠   Assessed the Company's disclosures in Note 40(g) on significant accounting judgments, estimates and assumptions. |
Ind-AS 116 -Leases and Accounting for rent concession arrangements (as described in Note 4 and 40(k) of the Standalone Ind AS Financial Statements) |
|
As at March 31, 2021, the Company has |
Our audit procedures included the following: |
' 2,066.89 Crore of Right of use (RoU) assets and ' 2,385.57 Crore of Lease |
⢠Assessed the Company's accounting policy with |
liabilities recognised under Ind AS 116 |
respect to recognition of leases and for assessing |
pertaining to the premises leased by the |
compliance with Ind AS 116, including accounting |
Company. |
for rent concession arrangements. |
During the year, considering the impact |
⢠Obtained an understanding, evaluated the |
of COVID 19 pandemic on its business, |
design and tested the operating effectiveness |
the Company negotiated rent concessions |
of controls that the Company has in relation |
with its lessors. |
to accounting of leases and rent concession |
The Ministry of Corporate Affairs vide |
arrangements under Ind AS 116. |
notification dated July 24, 2020, issued |
⢠Tested the accuracy and completeness of |
an amendment to Ind AS 116 - Leases, by |
the underlying lease master by agreeing the |
inserting a practical expedient w.r.t. "Covid- |
underlying data pertaining to lease rentals, |
19-Related Rent Concessions" effective |
term, escalation and other relevant terms and |
from the period beginning on or after April |
conditions to lease agreements and performed |
01, 2020. |
recomputation on a sample basis. |
Pursuant to the above amendment, the |
⢠Tested on a sample basis, the rent concessions |
Company applied the practical expedient |
accounted by the Company, to agreed rent |
with effect from April 01,2020. Accordingly, |
concession arrangements / underlying |
the Company accounted unconditional rent |
documents, calculations and assessed the |
concessions of ' 340.43 Crore during the |
terms of the same against the requirements of |
year as a reduction of rent expense in the Standalone Statement of Profit and Loss. |
the practical expedient under Ind AS 116. |
Accounting under Ind AS 116, requires significant judgement and estimate in identification of lease arrangement, determining the RoU assets and lease liabilities and related rent concessions |
⢠   Assessed the underlying assumptions and estimates including the applicable discount rates. ⢠   Assessed the Company's disclosures made in accordance with the requirements of Ind AS 116. |
based on terms of the underlying agreements. Hence, we considered this as a key audit matter. |
|
 | |
 |
Key audit matters |
How our audit addressed the key audit matter |
Recognition of Deferred tax assets (as described in Note 10 and 38 of the Standalone Ind AS Financial Statements) |
|
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The Company's ability to recognise previously un-recognised deferred tax assets is assessed by the management at the end of each reporting period, taking into account forecasts of future taxable profits and the applicable tax laws. As at March 31, 2021 the Company has recognised net deferred tax assets of ' 321.23 Crore. The recognition and measurement of deferred tax assets is a key audit matter as its recoverability within the allowed time frame involves estimate of financial projections, availability of sufficient taxable income in the future and judgments in the interpretation of tax regulations and tax positions adopted by the Company. |
Our audit procedures included the following: ⢠   Assessed the Company's accounting policy with respect to recognition of deferred taxes in accordance with Ind AS 12 "Income Taxes". ⢠   Involved tax specialists who evaluated the Company's tax positions by assessing the prevalent tax laws. ⢠   Assessed the consistency of financial projections used by management in assessing recoverability of deferred tax assets with the financial budgets approved by senior management of the Company. ⢠   Analysed the performance of the Company and assessed the assumptions used in forecast of future profits and expected utilisation of the unabsorbed business losses and unabsorbed depreciation, including understanding of management's estimate of business impact based on current market and economic conditions arising from the COVID 19 pandemic. ⢠   Assessed the disclosures in Note 10 and 38 of the Standalone Ind AS financial statements in accordance with the requirements of Ind AS 12 "Income Taxes". |
Provision on inventories (as described in Note 12 and 40(f) of the Standalone Ind AS Financial Statements) |
|
As at March 31, 2021, the Company held inventories of ' 1,742.93 Crore. Inventories are carried at lower of cost and net realisable value in accordance with the accounting policy of the Company. The Company makes provision for inventory based on policy, past experience, current trend and future expectations of these materials depending upon the category of goods. Significant judgment is required in assessing the appropriate level of the provision for slow moving and/or obsolete inventory. Accordingly, we have considered provision on inventories to be a key audit matter. |
Our audit procedures included the following: ⢠   Obtained an understanding, evaluated the design and tested the operating effectiveness of controls that the Company has in relation to inventory provision. ⢠   Compared the methodology used to calculate the inventory provision and its consistency with prior periods and obtained an understanding of management basis for changes. ⢠   Obtained an understanding of management's estimate of business impact of COVID 19 pandemic on provision on inventories. ⢠   Tested on a sample basis, the calculation of the provision as per Company policy. |
Key audit matters |
How our audit addressed the key audit matter |
 |
⢠   For specific provisions made, on a sample basis, assessed the basis and tested with management approvals. ⢠   Tested on a sample basis, whether inventories are carried at the lower of cost and net realisable value. ⢠   Assessed the Company's disclosures in Note 40(f) on significant accounting judgments, estimates and assumptions and Note 12 on Inventories. |
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report with respect to following sections, but does not include the Standalone Ind AS Financial Statements and our auditor's report thereon.
⢠Report of the Board of Directors (includes Management Discussion and Analysis) only with respect to the following sections
⢠   Business Overview
⢠   Business Strategy
⢠   Financial Performance and Analysis
⢠   Risk Management
⢠   Internal Control Systems and their Adequacy
⢠   Share Capital
⢠   Disclosure in terms of the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
⢠   Corporate Governance Report
Our opinion on the Standalone Ind AS Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS Financial Statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Ind AS Financial Statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS Financial Statements as a whole are free from material misstatement, whether due 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 audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Ind AS Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠   Identify and assess the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠   Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
⢠   Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠   Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the Standalone Ind AS Financial Statements, including the disclosures, and whether the Standalone Ind AS Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Ind AS Financial Statements for the financial year ended March 31, 2021 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be 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 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. Â Â Â 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 best of 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 the Company so far as it appears from our examination of those books;
(c)    The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d)    In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e)    On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164 (2) of the Act;
(f)    With respect to the adequacy of the internal financial controls with reference to Standalone Ind AS Financial Statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(g)    The remuneration paid to Managing Director and Whole time Directors for the year ended March 31, 2021, being in excess of the limits prescribed under the provisions of section 197 read with Schedule V to the Act, by ' 0.56 Crore, is subject to the approval of the shareholders;
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and 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 financial position in its Standalone Ind AS Financial Statements - Refer Note 45 to the Standalone Ind AS Financial Statements;
ii.    The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii.    There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Aditya Vikram Bhauwala
Partner
Membership Number: 208382
UDIN: 21208382AAAABT7915
Bengaluru
May 28, 2021
Mar 31, 2019
INDEPENDENT AUDITOR''S REPORT
To the Members of Aditya Birla Fashion and Retail Limited Report on the Audit of the Ind AS Financial Statements Opinion
We have audited the accompanying Ind AS financial statements of Aditya Birla Fashion and Retail Limited ("the Company"), which comprise the Balance sheet as at March 31, 2019, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Ind AS Financial Statements'' section of our report. We are independent of the Company in accordance with the ''Code of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Ind AS financial statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Ind AS financial statements.
Key audit matters |
How our audit addressed the key audit matter |
Goodwill: Impairment Evaluation (as described in Note 4 of the Ind AS financial statements) |
|
As disclosed in Note 4, goodwill amounts to Rs,1,859.60 Crore as at March 31, 2019 and represents goodwill acquired through various business combinations and allocated to cash generating units of the Company. A cash generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when |
Our audit procedures in respect of impairment evaluation of goodwill included the following: - Obtained an understanding of the process followed by the management to determine the recoverable amounts of cash generating units to which the goodwill has been allocated. |
Key audit matters |
How our audit addressed the key audit matter |
there is an indication that the unit may be impaired. As disclosed in Note 4, impairment of goodwill is determined by assessing the recoverable amount of each cash generating unit to which the goodwill relates. The recoverable amount of the cash generating unit as at March 31, 2019 has been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a three-year period. Management of the Company has used an external specialist in assessing the recoverable amount of the cash generating unit based on value in use computation. We focused this area because of the judgmental factors involved in impairment assessment and the significant carrying value of the goodwill. |
- Evaluated the objectivity and independence of the specialist engaged by the Company and reviewed the valuation reports issued by such specialist. - Evaluated the model used in determining the value in use of the cash generating units. - Evaluated the consistency of data used in the recoverable amount calculation with the financial budgets approved by senior management of the Company. - Tested the arithmetical accuracy of the computation of recoverable amounts of cash generating units. - Analysed the level of performance regards the business plan approved in the previous year, discussed with the management reasons for deviation as compared to such plan to and have assessed the assumptions used in the financial budgets for computation of value in use as at March 31, 2019. - Involved valuation expert to assist in evaluating the assumptions around the key drivers of the cash flow projections including discount rates, expected growth rates and terminal growth rates used. - Assessed the sensitivity analysis performed by the Company and the resultant change in the recoverable amount upon changes in assumptions. - We also assessed the disclosures provided by the Company in relation to its annual impairment test in Note 4 to the financial statements. |
Provision on inventories (as described in Note 11 and 38 of the Ind AS financial statements) |
|
As at March 31, 2019, the Company held inventories of Rs,1,921.28 Crore (net of provision of Rs,270.91 Crore). Inventories are carried at lower of cost and net realizable value in accordance with the accounting policy of the Company. The Company makes provision for inventory based on policy, past experience, current trend and future expectations of these materials depending upon the category of goods. Significant judgment is required in assessing the appropriate level of the provision for slow moving and/ or obsolete inventory. Accordingly, we have considered provision on inventories to be a key audit matter. |
Our audit procedures to test the provision on inventories, included the following: - We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that the Company has in relation to inventory provision. - We compared the methodology used to calculate the inventory provision and its consistency with prior periods and obtained an understanding of management justification for changes. - We obtained inventory provision calculation from the Company and re-performed the calculation of the inventory provision as per the policy of the Company. - For specific provisions made, on a sample basis we assessed the basis of such provision and also tested it with management approvals. - For inventory on hand at the end of the period, we assessed on a sample basis, whether such inventory was recorded at the lower of cost and net realizable value by testing the cost for such sample inventory items to the most recent retail price. |
Key audit matters |
How our audit addressed the key audit matter |
- We assessed the Company''s disclosures concerning this in Note 38 on significant accounting judgments, estimates and assumptions and Note 11 Inventories to financial statements. |
|
Provision for discount and sales returns (as described in Note 38 of the Ind AS financial statements) |
|
Revenue from contracts with customer is recognized upon transfer of control of promised goods and is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates, based on contractually defined terms. In some cases, discounts estimated will be determined on sale of goods by the customers. Also, in certain cases the Company has contracts with customers which entitles them to right of return. At year end, amount of returns, and discounts that have been incurred and not yet settled with the customer are estimated and accrued. Estimating the amount of accrual at year-end is considered a key audit matter due to the judgments required to be made by management. |
Our audit procedures to test the provision for discount and sales returns included the following: - Read and understood the Company''s accounting policy for recognition and measurement of net sales revenue, including the policy for recording returns, and discounts by assessing compliance with Ind AS 115 ''Revenue from Contracts with Customers''. - Tested the estimate of returns and discounts related accruals with underlying documentation such as management approved norms, customer agreements, sales data and customer reconciliations, as applicable. - Tested design and operating effectiveness of key controls for calculating, reviewing and approving returns and discounts. - Analysed returns and discounts and held discussions with management to understand changes in provisioning norms/additional provisions made based on management''s assessment of market conditions. - We assessed the Company''s disclosures concerning this in Note 38 on significant accounting judgments, estimates and assumptions. |
Recognition of Deferred tax assets, including Minimum Alternate Tax (MAT) credit entitlement (as described in Note 9 and 36 of the Ind AS financial statements) |
|
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized. The Company''s ability to recognize previously un-recognized deferred tax assets is assessed by the management at the end of each reporting period, taking into account forecasts of future taxable profits and the applicable tax laws. As at March 31, 2019 the Company has recognized total deferred tax assets of Rs,194.56 Crore (including Rs,21.84 Crore of Minimum Alternate Tax credit entitlement). The recognition of deferred tax asset is a key audit matter as its recoverability within the allowed time frame involves significant estimate of the financial projections, availability of sufficient taxable income in the future and significant judgmentsâ in the interpretation of tax regulations and tax positions adopted by the Company. |
Our audit procedures to test the recognition of deferred tax assets (including MAT credit entitlement) included the following: - Read and understood the Company''s accounting policies with respect to recognition of deferred taxes and for assessing compliance with Ind AS 12 "Income Taxes". - Involved tax specialists who evaluated the Company''s tax positions by assessing the prevalent tax laws and compared the current position with prior years, past precedents. - Assessed the consistency of data used in the deferred tax assets amount calculation with the financial budgets approved by senior management of the Company. - We compared the projections with past trends and enquired for the significant variations. - We assessed the disclosures in Note 9 and 36 of the Ind AS financial statements in accordance with the requirements of Ind AS 12 "Income Taxes". |
Other Information
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report with respect to following sections but does not include the Ind AS financial statements and our auditor''s report thereon.
- Letter to Shareholders from Chairman
- Report of the Board of Directors (includes Management Discussion and Analysis) only with respect to the following sections
- Business Overview
- Business Strategy
- Financial Performance and Analysis
- Risk Management
- Internal Control Systems and their Adequacy
- Share Capital
- Disclosure in terms of the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
- Corporate Governance Report
Our opinion on the Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Ind AS Financial Statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error
In preparing the Ind AS financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS financial statements as a whole are free from material misstatement, whether due 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 audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls system in place and the operating effectiveness of such controls.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the Ind AS financial statements, including the disclosures, and whether the Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Ind AS financial statements for the financial year ended March 31, 2019 and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be 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 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order
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 best of 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 the Company so far as it appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and 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 financial position in its Ind AS financial statements - Refer Note 45 to the Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
Annexure 1 to the Independent Auditor''s Report of even date on the Ind AS Financial Statements of Aditya Birla Fashion and Retail Limited
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, plant and equipment.
(i) (b) All Property, plant and equipment have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(i) (c) According to information and explanations given by the management, the title deeds of immovable properties, included in Property, plant and equipment are held in the name of the Company except for the following immovable properties other than self-constructed buildings aggregating to Rs,6.05 crore which are held in the name of the demerged companies and is in the process of being transferred to the Company:
Total Asset Amount as at |
Remarks |
number of category March 31, 2019 |
|
cases (''in Crores) |
|
12 Freehold 5.92 |
Title deeds are in names of the companies whose divisions |
Land |
got merged with the Company and are pending to be |
1 Building 0.13 |
transferred in the name of the Company. |
(Flat) |
(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification. There was no inventory lying with third parties.
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013 ("the Act"). Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of section 185 and 186 of the Act are applicable and hence not commented upon.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under section 148(1) of the Act, for the products/ services of the Company.
(vii) (a) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, service tax, sales-tax, customs duty, excise duty, value added tax, goods and service tax, cess and other statutory dues as applicable, have generally been regularly deposited with the appropriate authorities.
(vii) (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, service tax, sales-tax, customs duty, excise duty, value added tax, goods and service tax, cess and other statutory dues were outstanding as applicable, at the year end, for a period of more than six months from the date they became payable.
(vii) (c) According to the records of the Company, the dues of income-tax, service tax, sales-tax, custom duty, excise duty, value added tax and cess on account of any dispute, are as follows:
Statute |
Nature of |
Unpaid Amount |
Period to which |
Forum Where dispute is pending |
dues |
involved (Rs, in Crores)* |
the amount relates |
||
Central Excise Act |
Excise duty |
1.86 |
May, 2001 to April, 2003 |
Customs, Excise and Service Tax Appellate Tribunal, Bengaluru |
Central Sales Tax |
Central sales |
0.01 |
2006-07 |
The Appellate Deputy Commissioner (CT), |
Act |
tax |
Secunderabad |
||
Customs Act |
Custom duty |
2.04 |
1998-99 |
Supreme Court |
Customs Act |
Custom duty |
0.50 |
2010 |
Commissioner - Appeal, Chennai |
Gujarat |
Sales tax |
2.26 |
2011-12 |
Joint Commissioner - JCCT(A), Ahmadabad |
Commercial Tax |
||||
Act |
||||
Central Excise Act |
Excise duty |
24.10 |
June - July, 2013 |
Commissioner of Central Tax, Bengaluru |
Karnataka Sales |
Sales tax |
0.01 |
2005-07 |
Joint Commissioner of Commercial Taxes - |
Tax Act |
Appeal, Bengaluru |
|||
Karnataka Sales |
Sales tax |
6.78 |
2012-13 to |
Joint Commissioner of Commercial Taxes - |
Tax Act |
2014-15 |
Appeal, Bengaluru |
||
Karnataka Tax on |
Entry tax |
0.02 |
2002-03 to |
Joint Commissioner of Commercial Taxes - |
Entry of Goods Act |
2004-05 |
Appeal- 1, Bengaluru |
||
Kerala Commercial |
Surcharge |
2.44 |
April, 2008 to |
Kerala High Court, Ernakulum |
Tax Act |
June, 2017 |
|||
Kerala General |
Kerala sales |
0.01 |
2004-05 |
Kerala Sales Tax Appellate Tribunal, Ernakulum |
Sales Tax Act |
Tax |
|||
Kerala Commercial |
Goods and |
0.59 |
2017-18 |
Assistant Commissioner (Appeals) of State |
Tax Act |
service tax |
Goods and Service Tax Department, Kozhikode |
||
Odisha Sales tax |
Sales tax |
0.74 |
2014-15 |
Joint Commissioner of Commercial Tax, |
Act |
Bhubaneshwar |
|||
Odisha Sales tax |
Sales tax |
0.005 |
2002-03 |
Assistant Commissioner of Commercial Taxes, |
Act |
Bhubaneshwar |
|||
Odisha Entry tax |
Entry tax |
0.001 |
2002-03 |
Assistant Commissioner of Commercial Taxes, Bhubaneshwar |
Textile Committee |
Textile cess |
0.59 |
1999-2005 |
Hon''ble High Court - Karnataka |
Act |
||||
Uttar Pradesh |
Value added |
2.15 |
2009-10 to |
Deputy Commissioner of Commercial Taxes, |
Commercial Tax |
tax |
2010-11 |
Lucknow |
|
Uttar Pradesh |
Value added |
5.07 |
2011-12 to |
Additional Commissioner - Appeal, Lucknow |
Commercial Tax |
tax |
2012-13 |
||
Uttarakhand |
Value added |
0.92 |
2012-13 to |
Deputy Commissioner of Commercial Taxes, |
Commercial Tax |
tax |
2014-15 |
Dehradun |
|
West Bengal |
Sales tax |
0.05 |
2005-06 & |
Joint Commissioner Appeal - JCCT (A), Kolkata |
Commercial Tax |
2013-14 |
|||
West Bengal |
Sales tax |
0.20 |
2011-12 |
Appellate and Revisional Board, Kolkata |
Commercial Tax |
||||
West Bengal |
Sales tax |
0.28 |
2015-16 |
Sr. Joint Commissioner, Kolkata |
Commercial Tax |
||||
Madhya Pradesh |
Sales tax |
0.24 |
2013-14 & |
Deputy Commissioner of Commercial Taxes, |
Commercial Tax |
2015-16 |
Indore |
||
Income tax Act, |
Withholding |
0.24 |
2011-12 |
Commissioner of Income Tax (Appeals), |
1961 |
tax |
Mumbai |
* The unpaid amount mentioned above is net of '' 45.74 Crore paid under protest.
(viii) In our opinion and according to information and explanations given by the management, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. The Company does not have any borrowing from the government during the year
(ix) In our opinion and according to the information and explanations given by the management, monies raised by way of term loans and debt instruments were applied for the purposes for which those were raised. The Company has not raised any money way of initial public offer/ further public offer.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) of the Order are not applicable to the Company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
Annexure 2 to the Independent Auditor''s Report of even date on the Ind AS Financial Statements of Aditya Birla Fashion and Retail Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Aditya Birla Fashion and Retail Limited ("the Company") as of March 31, 2019 in conjunction with our audit of the standalone 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 internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditor''s Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting with reference to these Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these Ind AS financial statements was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these Ind AS financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these Ind AS financial statements.
Meaning of Internal Financial Controls Over Financial Reporting with reference to these Ind AS financial statements
A company''s internal financial control over financial reporting with reference to these Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting with reference to these Ind AS financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting with reference to these Ind AS financial statements
Because of the inherent limitations of internal financial controls over financial reporting with reference to these Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting with reference to these Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting with reference to these Ind AS financial statements and such internal financial controls over financial reporting with reference to these Ind AS financial statements were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Vijay Maniar
Partner
Membership Number: 36738
Place: Mumbai
Date: May 15, 2019
Aditya Birla Fashion and Retail Limited
Mar 31, 2018
Report on the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Aditya Birla Fashion and Retail Limited (formerly known as Pantaloons Fashion & Retail Limited) (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.
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 best of our knowledge and belief were necessary for the purpose of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of written representations received from the directors as on March 31, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018, from being appointed as a director in terms of section 164(2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in âAnnexure 2â to this report;
(g) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and 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 financial position in its Ind AS financial statements - Refer Note 45 to the Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
Annexure 1 to the Independent Auditorâs Report of even date on the Ind AS Financial Statements of Aditya Birla Fashion and Retail Limited
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, plant and equipment.
(i) (b) All Property, plant and equipment have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(i) (c) According to information and explanations given by the management, the title deeds of immovable properties, included in Property, plant and equipment are held in the name of the Company except for the following immovable properties other than self-constructed buildings aggregating to Rs.6.05 Crore which are held in the name of the demerged companies and is in the process of being transferred to the Company:
Total number of cases |
Asset category |
Amount as at March 31, 2018 (Rs.in Crores) |
Remarks |
12 |
Freehold land |
5.92 |
Title deeds are in names of the companies whose divisions got merged with the Company and are |
1 |
Building (Flat) |
0.13 |
pending to be transferred in the name of the Company. |
(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013 (âthe Actâ). Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted in respect of which provisions of section 185 and 186 of the Act are applicable and hence not commented upon.
(v) The Company has not accepted any deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under section 148(1) of the Act, for the products/services of the Company.
(vii) (a) Undisputed statutory dues including provident fund, employeesâ state insurance, income tax, sales tax, service tax, customs duty, excise duty, value added tax, goods and services tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities.
(vii) (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employeesâ state insurance, income tax, sales tax, service tax, customs duty, excise duty, value added tax, goods and services tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
(vii) (c) According to the records of the Company, the dues outstanding of income tax, sales tax, service tax, customs duty, excise duty , value added tax and cess on account of any dispute, are as follows:
Statute |
Nature of dues |
Unpaid amount involved (Rs. in Crores)* |
Period to which the amount relates |
Forum where dispute is pending |
Central Excise Act |
Excise duty |
1.86 |
May, 2001 to April, 2003 |
Customs, Excise and Service Tax Appellate Tribunal, Bangalore |
Central Sales Tax Act |
Central sales tax |
0.01 |
2006-07 |
The Appellate Deputy Commissioner (CT) Secunderabad Division |
Customs Act |
Customs duty |
2.04 |
1998-99 |
Honâble High Court -Karnataka |
Customs Act |
Customs duty |
0.50 |
2010 |
Customs, Excise and Service Tax Appellate Tribunal, Chennai |
Gujarat Commercial Tax Act |
Sales tax |
2.26 |
2011-12 |
Joint Commissioner -JCCT(A) |
Karnataka Sales Tax Act |
Sales tax |
5.28 |
2011-12 |
Karnataka Appellate Tribunal |
Karnataka Sales Tax Act |
Sales tax |
1.01 |
2005-07 |
Joint Commissioner of Commercial Taxes -Appeal |
Karnataka Sales Tax Act |
Sales tax |
6.46 |
2012-13 to 2014-15 |
Joint Commissioner of Commercial Taxes -Appeal |
Karnataka Tax on Entry of Goods Act |
Entry tax |
0.02 |
2002-03 to 2004-05 |
Joint Commissioner of Commercial Taxes -Appeal-1 |
Kerala Commercial Tax Act |
Surcharge |
2.44 |
April, 2008 to June, 2017 |
Kerala High Court, Ernakulum |
Kerala General Sales Tax Act |
Kerala sales tax |
0.01 |
2004-05 |
Kerala Sales Tax Appellate Tribunal, Ernakulum |
Orissa Sales Tax Act |
Sales tax |
0.74 |
2014-15 |
Joint Commissioner of Commercial Tax |
Orissa Sales Tax Act |
Sales tax |
0.005 |
2002-03 |
Assistant Commissioner of Commercial Taxes, Bhubaneswar |
Orissa Entry Tax Act |
Entry tax |
0.001 |
2002-03 |
Assistant Commissioner of Commercial Taxes, Bhubaneswar |
Textile Committee Act Textile cess |
0.59 |
1999-2005 |
Honâble High Court -Karnataka |
|
Uttar Pradesh Commercial Tax Act |
Value added tax |
2.15 |
2008-09 to 2009-10 |
Deputy Commissioner of Commercial Taxes |
Uttar Pradesh Commercial Tax Act |
Value added tax |
5.22 |
2008-09, 2011-12 and 2012-13 |
Additional Commissioner - Appeal |
Uttarakhand Commercial Tax Act |
Value added tax |
3.75 |
2008-09 to 2010-11, 2012-13 and 2013-14 |
Additional Commissioner - Appeal |
West Bengal Commercial Tax Act |
Sales tax |
0.05 |
2013-14 |
Joint Commissioner Appeal - JCCT (A) |
West Bengal Commercial Tax Act |
Sales tax |
0.20 |
2011-12 |
Appellate and Revisional Board |
Employee State Insurance Act |
Employee state insurance |
0.11 |
2003-06 |
Honâble Court of Labour Tribunal, Bangalore |
KVAT Act |
Value added tax |
0.08 |
2008-09 |
Joint Commissioner of Commercial Tax |
Madhya Pradesh VAT Act |
Value added tax |
0.08 |
2013-14 |
Commercial Tax Department |
Haryana Commercial Tax Act |
Central sales tax |
0.08 |
2013-14 |
Joint Commissioner of Commercial Taxes -Appeal |
* The unpaid amount mentioned above is net of Rs.39.14 Crore paid under protest.
(viii) According to information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. The Company does not have any borrowing from the government during the year.
(ix) In our opinion and according to the information and explanations given by the management, monies raised by way of term loans and debt instruments were applied for the purposes for which those were raised. The Company has not raised any money by way of initial public offer/ further public offer.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Vijay Maniar
Partner
Membership No.: 36738
Place: Mumbai
Date: May 11, 2018
Mar 31, 2017
INDEPENDENT AUDITORâS REPORT
To the Members of Aditya Birla Fashion and Retail Limited Report on the Ind AS financial statements
We have audited the accompanying Ind AS financial statements of Aditya Birla Fashion and Retail Limited ("the Company") (formerly Pantaloons Fashion & Retail Limited), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss and Statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Ind AS financial statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended.
This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, its profit and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to Note - 44 in the financial statements regarding the acquisition of the demerged undertakings i.e Madura Undertaking and MGL Retail Undertaking in the previous year. For reasons more fully described therein regarding the accounting, no adjustments are considered necessary as regards the manner of recording of the said transaction.
Our opinion is not qualified in respect of this matter.
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 of the Act, we give in the Annexure
1 a statement on the matters specified in paragraphs 3 and 4 of the Order.
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 best of our knowledge and belief were necessary for the purpose of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet, Statement of Profit and Loss including the Statement of Other comprehensive income, the Statement of cash flows and Statement of changes in equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of written representations received from the Directors as on March 31, 2017, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2017, from being appointed as a Director in terms of section 164(2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report dated May 12, 2017 in "Annexure 2" to this report;
(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and 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 financial position in its Ind AS financial statements - Refer Note - 38 to the Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;
iv. The Company has provided requisite disclosures in Note - 32 to these Ind AS financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on our enquiries, test check of the books of account and other details maintained by the Company and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of account maintained by the Company.
Other Matter
The comparative financial information for the year ended March 31, 2016 and the transition date opening Balance Sheet as at April 1, 2015 pertaining to the Madura division of the Company included in these Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by predecessor branch auditor whose report for the year ended March 31, 2016 and March 31, 2015 dated May 25, 2016 and May 11, 2015 respectively expressed an unmodified opinion on those financial information of the branch, as adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have been audited by us.
Annexure 1 referred to in paragraph 1 under the heading âReport on Other Legal and Regulatory
Requirementsâ of our report of even date.
(i)(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(i)(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(i)(c) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to information and explanations given by the management, the title deeds of immovable properties are held in the name of the Company except for the following immovable properties other than self-constructed buildings aggregating to Rs. 605 Lakh which are held in the name of the demerged companies and is in the process of being transferred to the Company (Refer Note - 44 to the financial statements):-
Total number of cases |
Asset category |
Amount as at March 31, 2017 in Lakhs |
Remarks |
12 |
Freehold Land |
592 |
Title deeds are in names of the companies whose divisions got merged with the Company and are pending to be transferred in the name of the Company. |
1 |
Building (Flat) |
13 |
Title deeds are in names of the companies whose divisions got merged with the Company and are pending to be transferred in the name of the Company. |
(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of section 185 and 186 of the Companies Act, 2013 are applicable and hence not commented upon.
(v) The Company has not accepted any deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under clause 148(1) of the Companies Act, 2013, for the products / services of the Company.
(vii)(a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, excise duty, income tax, sales tax, wealth tax, service tax, customs duty, value added tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities
(vii)(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income tax, wealth tax, service tax, sales tax, value added tax, excise duty, customs duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. (vii)(c) According to the records of the Company, the dues outstanding of income tax, sales tax, wealth tax, service tax, duty of customs, excise duty, value added tax and cess on account of any dispute, are as follows:
Name of the statute |
Nature of the dues |
Unpaid amount (Rs. in Lakhs)1 |
Period to which the amount relates |
Forum where dispute is pending |
Karnataka - Value Added Tax |
Value Added Tax |
8 |
2008-09 |
Deputy Commissioner of Commercial Taxes, Bangalore |
Madhya Pradesh -Value Added Tax |
Value Added Tax |
8 |
2013-14 |
Commercial Tax Department |
Rajasthan - Value Added Tax |
Value Added Tax |
4 |
2014-15 |
Commercial Tax Department |
Central Excise Act |
Excise duty |
186 |
May''01 to Apr03 |
Customs, Excise and Service Tax Appellate Tribunal, Bangalore |
Central Sales Tax Act |
Sales tax |
1 |
2006-07 |
The Appellate Deputy Commissioner (CT) Secunderabad Division |
Customs duty |
Customs duty |
408 |
1998-99 |
Hon''ble High Court - Karnataka |
Customs duty |
Customs duty |
50 |
2010 |
Customs, Excise and Service Tax Appellate Tribunal, Chennai |
Gujarat -Commercial tax |
Sales tax |
226 |
2011-12 |
DEO - Joint Commissioner - JCCT(A) |
Karnataka Sales Tax Act |
Sales tax |
528 |
2011-12 |
Karnataka Appellate Tribunal |
Karnataka Sales Tax Act |
Sales tax |
985 |
2005-07 to 2014-15 |
JCCT - Appeals |
Karnataka Tax on Entry of Goods Act |
Entry tax |
2 |
2002-03 to 2004-05 |
Joint Commissioner of Commercial Taxes - Appeal - 1 |
Kerala Commercial Tax |
Surcharge |
180 |
April 2008 to June 2017 |
Kerala High Court, Ernakulum |
Kerala General Sales Tax Act |
Kerala sales tax |
1 |
2004-05 |
Kerala Sales Tax Appellate Tribunal, Ernakulum |
Orrisa Entry tax |
Entry dues |
0 |
2002-03 |
Assistant Commissioner of Commercial Taxes, Bhubaneshwar |
Orrisa Sales Tax Act |
Sales tax |
0 |
2002-03 |
Assistant Commissioner of Commercial Taxes, Bhubaneshwar |
Textile Committee Act |
Textile cess |
122 |
1981-2005 |
Honourable High Court |
Uttar Pradesh Commercial tax |
Value Added Tax |
737 |
2008-2013 |
DCCT - Uttar Pradesh |
Uttarkhand Commercial tax |
Value Added Tax |
375 |
2008-2014 |
Additional Commissioner - Appeal |
West Bengal Commercial tax |
Sales tax |
1 |
2005-06 |
Joint Commissioner Appeal -JCCT(A) |
we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. The Company has not taken any loans or borrowings from the government.
(ix) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer. The monies raised by way of term loans and debt instruments were applied for the purposes for which those were raised.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud on or by the officers and employees of the Company has been noticed or reported during the year.
(xi) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013, where applicable, and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with Directors or persons connected with him as referred to in section 192 of Companies Act, 2013.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
Annexure 2 referred to in paragraph 2 under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date on the financial statements of Aditya Birla Fashion and Retail Limited. Report on the Internal Financial Controls under clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 (âthe Actâ)
To the Members of Aditya Birla Fashion and Retail Limited
We have audited the internal financial controls over financial reporting of Aditya Birla Fashion and Retail Limited ("the Company") (formerly Pantaloons Fashion & Retail Limited) as at March 31, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Vijay Maniar
Partner
Membership No.: 36738
Place: Mumbai
Date: May 12, 2017
Mar 31, 2016
We have audited the accompanying financial statements of Aditya Birla
Fashion and Retail Limited ("the Company") (formerly Pantaloons Fashion
& Retail Limited), which comprise the Balance Sheet as at March 31,
2016, the Statement of Profit and Loss and Cash Flow Statement for the
year then ended, and a summary of significant accounting policies and
other explanatory information, in which are incorporated the branch''s
financial statements for the year ended on that date audited by the
branch auditors of the Company''s branches at Bengaluru.
Management''s Responsibility for the Financial Statements
The Company''s Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these financial statements that give a true and
fair view of the financial position, financial performance and cash
flows of the Company in accordance with accounting principles generally
accepted in India, including the Accounting Standards specified under
Section 133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014. This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of the Act for
safeguarding of the assets of the Company and for preventing and
detecting frauds and other irregularities; selection and application of
appropriate accounting policies; making judgements and estimates that
are reasonable and prudent; and the design, implementation and
maintenance of adequate internal financial control that were operating
effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder. We conducted our
audit in accordance with the Standards on Auditing, issued by the
Institute of Chartered Accountants of India, as specified under Section
143(10) of the Act. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgement, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal financial control relevant to the Company''s
preparation of the financial statements that give a true and fair view
in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by the Company''s Directors, as well as evaluating the
overall presentation of the financial statements. We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the financial statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India of the state of affairs of the Company as at March 31, 2016, its
loss and its cash flows for the year ended on that date.
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 of the Act, we give in the Annexure 1 a
statement on the matters specified in paragraphs 3 and 4 of the Order.
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 best of our knowledge and belief, were necessary for the
purpose of our audit;
(b) In our opinion proper books of account as required by law have been
kept by the Company so far as it appears from our examination of those
books;
(c) The report on the accounts of the branch offices of the Company,
audited under Section 143(8) of the Act by the branch auditor, has been
sent to us and have been properly dealt by us in preparing this report;
(d) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account and with the audited financial statements received from
branches;
(e) In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014 and Companies
(Accounting Standards) Amendment Rules, 2016;
(f) On the basis of written representations received from the
Directors, as on March 31, 2016, and taken on record by the Board of
Directors, none of the Directors is disqualified as on March 31, 2016,
from being appointed as a Director in terms of Section 164(2) of the
Act;
(g) With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating effectiveness
of such controls, refer to our separate Report in "Annexure 2" to this
report;
(h) With respect to the Other Matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and 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
financial position in its financial statements  Refer Note 36 to the
financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses;
iii. There were no amounts which were required to be transferred to
the Investor Education and Protection Fund by the Company.
Other Matters
The accompanying financial statements include total assets of
Rs.184,996 lakh as at March 31, 2016, and total revenues and profit
before tax of Rs.391,118 lakh and Rs.21,935 lakh, respectively for the
year ended on that date, in respect of two branches, which have been
audited by the branch auditors, which financial statements, other
financial information and auditor''s reports have been furnished to us.
Our opinion, in so far as it relates amounts and disclosures included
in respect of these branches, is based solely on the report of such
branch auditors. Our opinion is not modified in respect of this matter.
Annexure 1 referred to in paragraph 1 under the heading "Report on
Other Legal and Regulatory Requirements" of our report of even date
(i)(a) The Company has maintained proper records showing full
particulars, including quantitative details and situation, of fixed
assets.
(i)(b) All fixed assets have not been physically verified by the
management during the year but there is a regular programme of
verification which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. No material
discrepancies were noticed on such verification.
(i)(c) Based on our audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given by the management,
the title deeds of immovable properties are held in the name of the
Company except for the following immovable properties other than
self-constructed buildings aggregating to Rs.605 lakhs which are held
in the name of the demerged companies and is in the process of being
transferred to the Company (refer Note 32 to the financial statements).
Total
Number Asset Amount Remarks
of Cases Category as at 31
March 2016
(Rs.in
lakhs)
12 Freehold
Land 592 Title deeds are in the names of
the companies whose divisions got
merged with the Company and are
pending to be transferred in the
name of the Company.
1 Building
(Flat) 13 Title deeds are in the names of
the companies whose divisions got
merged with the Company and are
pending to be transferred in the
name of the Company.
(ii) The management has conducted physical verification of inventory at
reasonable intervals during the year and no material discrepancies were
noticed on such physical verification.
(iii)(a) According to the information and explanations given to us, the
Company has not granted any loans, secured or unsecured, to companies,
firms, Limited Liability Partnerships or other parties covered in the
register maintained under Section 189 of the Companies Act, 2013.
Accordingly, the provisions of Clause 3(iii)(a), (b) and (c) of the
Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations
given to us, there are no loans, investments, guarantees and securities
granted, in respect of which provisions of Sections 185 and 186 of the
Companies Act, 2013, are applicable and hence not commented upon.
(v) The Company has not accepted any deposits from the public.
(vi) To the best of our knowledge and as explained, the Central
Government has not specified the maintenance of cost records under
Clause 148(1) of the Companies Act, 2013, for the products/services of
the Company.
(vii)(a) Undisputed statutory dues, including provident fund, investor
education and protection fund, employees'' state insurance, excise duty,
income tax, sales tax, wealth tax, service tax, customs duty, value
added tax, cess and other material statutory dues, have generally been
regularly deposited with the appropriate authorities.
(vii)(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, employees''
state insurance, income tax, wealth tax, service tax, sales tax, value
added tax, excise duty, customs duty, cess and other material statutory
dues were outstanding, at the year end, for a period of more than six
months from the date they became payable.
(vii)(c) According to the records of the Company, the dues outstanding
of income tax, sales tax, wealth tax, service tax, duty of custom,
excise duty, value added tax and cess on account of any dispute, are as
follows:
Name of Nature of the Amount Period to
which Forum where
the
Statute Dues Involved the Amount Dispute is Pending
(in Rs.) Relates
Central
Excise Excise Duty 21,121,944 1.05.2001 to Customs, Excise and
Service Tax
Act 30.04.2003 Appellate Tribunal,
Bengaluru
Orissa
Sales Sales Tax 81,000 2002-03 Assistant
Commissioner of
Tax Act Commercial Taxes,
Bhubaneswar
Orissa
Entry
tax Entry Tax 32,000 2002-03 Assistant
Commissioner of
Commercial Taxes,
Bhubaneswar
Kerala
General Kerala Sales 68,000 2004-05 Kerala Sales Tax
Appellate
Sales
Tax Act Tax Tribunal, Ernakulam
Karnataka
Tax on Entry Tax 221,000 2002-03 to Joint Commissioner of
Entry of
Goods
Act 2004-05 Commercial Taxes -
Appeal-1
West
Bengal
Sales Sales Tax 121,000 2005-06 Asst. Commissioner of
Tax Commercial Taxes
Textile
Commit
tee Textile
Cess 13,266,000 1981-99 Textile Committee
Cess
Act Appellate Tribunal,
Mumbai
8,130,669 1999-05 Assessing Officer -
Textiles Committee,
Coimbatore
Karna
taka
Sales Sales Tax 341,445 2005-07 JCCT - Appeals
Tax
48,287,594 2011-12 Hon''ble High Court,
Karnataka
Central
Sales
Tax Central
Sales 161,000 2006-07 The Appellate Deputy
Act Tax Commissioner (CT),
Secunderabad Division
Uttar
Pradesh Value Added 72,556,564 2009-10,
2010-11 DCCT, Uttar Pradesh
Commer
cial Tax Tax and 2011-12
Uttar
Pradesh- Value Added 41,101,963 2008-09 DCCT, Uttar Pradesh
Value
Added
Tax Tax
Custom
Duty Custom Duty 40,800,000 1998-99 Hon''ble High Court,
Karnataka
Karna
taka - Value Added 817,012 2008-09 Deputy Commissioner
of
Value
Added
Tax Tax Commercial Taxes,
Bengaluru
Madhya
Pradesh
- Value Added 236,400 2013-14 Commercial Tax
Department
Value
Added
Tax Tax
(viii) Based on our audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to information and explanations given by the management, we
are of the opinion that the Company has not defaulted in repayment of
dues to a financial institution, bank or debenture holders. The Company
has not taken any loans or borrowings from the government.
(ix) Based on our audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given by the management,
the Company has not raised any money by way of initial public offer/
further public offer/ debt instruments. The monies raised by way of
term loans were applied for the purposes for which those were raised.
(x) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given by the management,
we report that no fraud on or by the officers and employees of the
Company has been noticed or reported during the year.
(xi) Based on our audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given by the management,
we report that the managerial remuneration has been paid/ provided in
accordance with the requisite approvals mandated by the provisions of
Section 197 read with Schedule V to the Companies Act, 2013.
(xii) In our opinion, the Company is not a nidhi company. Therefore,
the provisions of Clause 3(xi) of the order are not applicable to the
Company and hence not commented upon.
(xiii) Based on our audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given by the management,
transactions with the related parties are in compliance with Sections
177 and 188 of Companies Act, 2013, where applicable, and the details
have been disclosed in the notes to the financial statements, as
required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on
an overall examination of the Balance Sheet, the Company has not made
any preferential allotment or private placement of shares or fully or
partly convertible debentures during the year under review and hence
not commented upon.
(xv) Based on our audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given by the management,
the Company has not entered into any non-cash transactions with
directors or persons connected with him.
(xvi) According to the information and explanations given to us, the
provisions of Section 45-IA of the Reserve Bank of India Act, 1934 are
not applicable to the Company.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration No.: 324982E/E300003
per Vijay Maniar
Partner
Membership No.: 36738
Place: Bengaluru
Date: 25th May, 2016
Mar 31, 2015
We have audited the accompanying Financial Statements of Pantaloons
Fashion & Retail Limited ("the Company") (formerly Peter England
Fashions and Retail Limited), which comprise the Balance Sheet as at
March 31, 2015, the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 ("the Act")
with respect to the preparation of these financial statements that give
a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and the design,
implementation and maintenance of adequate internal financial control
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the Financial Statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these Financial
Statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder. We conducted our
audit in accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India, as specified under Section
143(10) of the Act. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance about whether the Financial Statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the Financial Statements. The procedures
selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the Financial Statements,
whether due to fraud or error. In making those risk assessments, the
auditor considers internal financial control relevant to the
Company's preparation of the Financial Statements that give a true
and fair view in order to design audit procedures that are appropriate
in the circumstances but not for the purpose of expressing an opinion
on whether the Company has in place an adequate internal financial
controls system over financial reporting and the effectiveness of such
controls. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the Financial Statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion on the Financial Statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the Financial Statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India, of the state of affairs of the Company as at March 31,2015, its
loss and its cash flows for the year ended on that date.
Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's report) Order, 2015
("the Order") issued by the Central Government of India in terms of
sub-section (11) of Section 143 of the Act, we give in the Annexure 1 a
statement on the matters specified in 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 best of our knowledge and belief were necessary for the
purpose of our audit;
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books;
(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
(d) In our opinion, the aforesaid Financial Statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of written representations received from the Directors
as on March 31,2015, and taken on record by the Board of Directors,
none of the Directors is disqualified as on March 31, 2015, from being
appointed as a Director in terms of section 164 (2) of the Act;
(f) With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and 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
financial position in its financial statements - Refer Note 35 to the
Financial Statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company.
Annexure 1 referred to in paragraph 1 under the heading "Report on
Other Legal and Regulatory Requirements" of our report of even date.
(i)(a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(i) (b) All fixed assets have not been physically verified by the
management during the year but there is a regular programme of
verification which, in our opinion, is reasonable having regard to
the size of the Company and the nature of its assets. No material
discrepancies were noticed on such verification.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(ii)(b) The procedures of physical verification of inventory followed
by the management are reasonable and adequate in relation to the size
of the Company and the nature of its business.
(ii) (c) The Company is maintaining proper records of inventory.
Discrepancies noted on physical verification of inventories were not
material and have been properly dealt with in the books of account.
(iii) (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or unsecured to companies,
firms or other parties covered in the register maintained under Section
189 of the Companies Act, 2013. Accordingly, the provisions of clause 3
(iii)(a) and (b) of the Order are not applicable to the Company and hence
not commented upon.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
major weakness or continuing failure to correct any major weakness in
the internal control system of the company in respect of these areas.
(v) The Company has not accepted any deposits from the public.
(vi) To the best of our knowledge and as explained, the Central
Government has not specified the maintenance of cost records under
clause 148(1) of the Companies Act, 2013, for the products/ services of
the Company.
(vii) (a) Undisputed statutory dues including provident fund, investor
education and protection fund, employees' state insurance, income-tax,
sales-tax, wealth-tax, service tax, customs duty, value added tax,cess
and other material statutory dues have generally been regularly
deposited with the appropriate authorities though there have been
slight delays in few cases.The provisions relating to excise duty are
not applicable to the Company.
(vii)(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, employees'
state insurance, income-tax, wealth-tax, service tax, sales- tax, value
added tax, customs duty, cess and other material statutory dues were
outstanding, at the year end, for a period of more than six months from
the date they became payable.
(vii)( c) According to the information and explanations given to us
there are no dues of income tax, sales tax, wealth tax, service tax,
custom duty, excise duty, value added tax and cess which have not been
deposited on account of any dispute.
(vii) (d) There were no amounts which were required to be transferred
to the Investor Education and Protection Fund by the Company in
accordance with the relevant provisions of the Companies Act, 1956
(1 of 1956) and rules made thereunder.
(viii) The Company's accumulated losses at the end of the financial
year are more than fifty percent of its net worth. The Company has
incurred cash loss during the year and in the immediately preceding
financial year.
(ix) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
(x) According to the information and explanations given to us the
Company has not given any guarantee for loans taken by others from bank
or financial institution.
(xi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xii) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the Financial Statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the year.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm registration number: 324982E
Per Vijay Maniar
Partner
Membership no.: 36738
Place: Mumbai
Date : 13 May 2015
Mar 31, 2014
We have audited the accompanying financial statements of Pantaloons
Fashion & Retail Limited ("the Company"), which comprise the Balance
Sheet as at 31st March, 2014, and the Statement of Profit and Loss, and
the Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the accounting principles generally accepted in India, including the
Accounting Standards notified under the Companies Act, 1956, read with
General Circular 8/2014 dated 4th April, 2014, issued by the Ministry
of Corporate Affairs. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by the management, as well as evaluating the overall
presentation of the financial statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Companies Act, 1956 ("the Act"), in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2014;
(b) in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
We draw attention to Note 38 to the financial statements, wherein the
appointment of the managing director is subject to the approval of the
shareholders and the managerial remuneration paid in excess of the
limits prescribed under Schedule XIII of the Act. The management has
taken necessary steps for obtaining Central Government''s approval.
Pending the approval from the Shareholders of the Company and the
Central Government, as aforesaid, no adjustments have been made to the
Financial Statements. Our opinion is not qualified in respect of this
matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order"), issued by the Central Government of India in terms of
Sub-section (4A) of Section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by Section 227(3) of the Act, we report that:
(a) We have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purpose of our
audit.
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books.
(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account.
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards notified
under the Act read with General Circular 8/2014 dated 4th April, 2014,
issued by the Ministry of Corporate Affairs.
(e) On the basis of written representations received from the directors
as on 31st March, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March, 2014, from
being appointed as a director in terms of Clause (g) of Sub-Section (1)
of Section 274 of the Act.
Annexure referred to in paragraph 1 under the heading "Report on other
legal and regulatory requirements" of our report of even date
Re: Pantaloons Fashion & Retail Limited (Formerly Peter England
Fashions and Retail Limited) ("the Company")
(i)(a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(i)(b) The management has a planned program of verifying the fixed
assets once in three years which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets,
however, during the year, physical verification has been carried out by
the management only in respect of few stores as against the planned
program. No material discrepancies were noticed on such verification.
(i)(c) There was no disposal of a substantial part of fixed assets
during the year.
(ii)(a) The management has conducted physical verification of inventory
at reasonable intervals during the year.
(ii)(b) The procedures of physical verification of inventory followed
by the management are reasonable and adequate in relation to the size
of the Company and the nature of its business.
(ii)(c) The Company is maintaining proper records of inventory.
Discrepancies noted on physical verification of inventories were not
material and have been properly dealt with in the books of account.
(iii)(a) According to the information and explanations given to us, the
Company has not granted any loans, secured or unsecured, to companies,
firms or other parties covered in the register maintained under Section
301 of the Act. Accordingly, the provisions of Clauses 4(iii)(a) to (d)
of the Order are not applicable to the Company and hence not commented
upon.
(iii)(e) According to the information and explanations given to us, the
Company has not taken any loans, secured or unsecured, from companies,
firms or other parties covered in the register maintained under Section
301 of the Act. Accordingly, the provisions of Clauses 4(iii)(e) to (g)
of the Order are not applicable to the Company and hence not commented
upon.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
major weakness or continuing failure to correct any major weakness in
the internal control system of the Company in respect of these areas.
(v)(a) In our opinion, there are no contracts or arrangements that need
to be entered in the register maintained under Section 301 of the Act.
Accordingly, the provisions of Clause 4(v)(b) of the Order is not
applicable to the Company and hence not commented upon.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed the maintenance of cost records under
Clause (d) of Sub-section (1) of Section 209 of the Act, for the
products of the Company.
(ix)(a) Undisputed statutory dues including provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
sales tax, wealth tax, service tax, customs duty, cess and other
material statutory dues have generally been regularly deposited with
the appropriate authorities.The provisions relating to excise duty are
not applicable to the Company.
(ix)(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
wealth tax, service tax, sales tax, customs duty, cess and other
material statutory dues were outstanding, at the year end, for a period
of more than Six months from the date they became payable.
(ix)(c) According to the information and explanations given to us,
there are no dues of income-tax, sales tax, wealth tax, service tax,
customs duty and cess which have not been deposited on account of any
dispute.
(x) The Company''s accumulated losses at the end of the financial year
are less than fifty per cent of its net worth.The Company has incurred
cash losses in the current year and in the immediately preceding
financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
(xii) According to the information and explanations given to us and
based on the documents and records produced before us, the Company has
not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society. Therefore, the provisions of Clause 4(xiii) of
the Order are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of Clause 4(xiv) of the Order are not applicable to the
Company.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that short-term sources of funds in the form of trade payables
amounting to Rs. 5,703 Lakh have been used for long-term purpose for
fixed assets, loans and advances and funding of losses.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
Section 301 of the Act.
(xix) According to the information and explanations given to us, the
Company had issued unsecured non-convertible redeemable 3000 debentures
of Rs.1,000,000 each, during the period, covered by our audit report,
on which no security or charge is required to be created.
(xx) The Company has not raised money from public issue during the
year.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud by the Company and no material fraud on the Company has
been noticed or reported during the year.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E
per Vijay Maniar
Partner
Membership No. 36738
Mumbai, 5th May, 2014
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of Pantaloons
Fashion & Retail Limited (Formerly Peter England Fashions and Retail
Limited) ("the Company"), which comprise the Balance Sheet as at 31
March 2013, and the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the accounting principles- generally accepted in India, including
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956 ("the Act"). This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether
due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March 2013,
(b) In the case of the Statement of Profit and Loss, of the loss for
the year ended on that date, and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
We draw attention to Note 32 (9) to the Financial Statements, wherein,
the Company has accounted for the demerger expenses which, though, not
in compliance with the accounting standards notified by the Companies
(Accounting Standards) Rules, 2006 (as amended), is in accordance with
the scheme of arrangement approved by the Honorable Bombay High
Court,). Our opinion is not qualified in respect of this matter.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
(a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
(b) In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books.
(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the accounting standards referred to in
sub-section (3C) of section 211 of the Act.
(e) On the basis of written representations received from the directors
as on 31 March 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31 March 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
Annexure referred to in paragraph 1 under the heading "Report on other
legal and regulatory requirements" of our report of even date
Re: Pantaloons Fashion & Retail Limited (Formerly Peter England
Fashions and Retail Limited) ("the Company")
(i)(a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(i)(b) The management has a planned program of verifying the fixed
assets once in three years which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets, however
the fixed assets have not been physically verified by the management
during the year as the assets have been taken over under the scheme of
arrangement described under Note 32 to the financial statements which
is effective from a date subsequent to the Balance Sheet date, hence,
we are unable to comment on the discrepancies, if any, in respect of
such assets that have been taken over.
(i)(c) There was no disposal of a substantial part of fixed assets
during the year.
(ii)(a) The management has conducted physical verification of inventory
at reasonable intervals during the year.
(ii)(b) The procedures of physical verification of inventory followed
by the management are reasonable and adequate in relation to the size
of the Company and the nature of its business.
(ii)(c) The Company is maintaining proper records of inventory.
Discrepancies noted on physical verification of inventories were not
material and have been properly dealt with in the books of account.
(iii)(a) According to the information and explanations given to us, the
Company has not granted any loans, secured or unsecured to companies,
firms or other parties covered in the register maintained under section
301 of the Act. Accordingly, the provisions of clause 4(iii)(a) to (d)
of the Order are not applicable to the Company and hence not commented
upon.
(iii)(e) According to information and explanations given to us, the
Company has not taken any loans, secured or unsecured, from companies,
firms or other parties covered in the register maintained under section
301 of the Companies Act, 1956. Accordingly, the provisions of clause
4(iii)(e) to (g) of the Order are not applicable to the Company and
hence not commented upon.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
major weakness or continuing failure to correct any major weakness in
the internal control system of the Company in respect of these areas.
(v)(a) In our opinion, there are no contracts or arrangements that need
to be entered in the register maintained under Section 301 of the Act.
Accordingly, the provisions of clause 4(v)(b) of the Order is not
applicable to the Company and hence not commented upon.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed the maintenance of cost records under
clause (d) of sub-section (1) of section 209 of the Companies Act,
1956, for the products of the Company.
(ix)(a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident fund,
investor education and protection fund, employees'' state insurance,
income-tax, sales-tax, service tax, customs duty, cess and other
material statutory dues applicable to its business other than the
demerged undertaking (refer Note 32 to the financial statements). In
case of the demerged undertaking, we have relied on certificate
received from the statutory auditor''s of the demerged Company that the
Company is regular in depositing the respective undisputed statutory
dues with appropriate authorities.
(ix)(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
wealth-tax, service tax, sales-tax, customs duty, cess and other
material statutory dues were outstanding, at the year end, for a period
of more than six months from the date they became payable.
(ix)(c) According to the information and explanations given to us,
there are no dues of income tax, sales- tax, wealth tax, service tax,
customs duty and cess which have not been deposited on account of any
dispute.
(x) The Company''s accumulated losses at the end of the financial year
are less than fifty per cent of its net worth. The Company has incurred
cash losses in the current year and not in the immediately preceding
financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
(xii) According to the information and explanations given to us and
based on the documents and records produced before us, the Company has
not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Order are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) The Company has not taken any term loans during the year.
Accordingly we are not required to comment on the same. In case of term
loans taken over in pursuant to the scheme of demerger explained in
note 32 to the financial statements and outstanding during the year, as
explained to us, the demerged Company had utilized the said loans in
the earlier years.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that short term sources of funds amounting to Rs. 17,320 lacs in the
form of short term borrowings and trade payables taken over under the
scheme of arrangement described under Note 32 to the financial
statements have been used for long-term investment representing fixed
assets, long term loans and advances taken over under the Scheme and
towards funding of losses.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) The Company has unsecured debentures outstanding during the year,
on which no security or charge is required to be created.
(xx) The Company has not raised money from public issue during the
year.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the year.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E
per Vijay Maniar
Partner
Membership No.: 36738
Mumbai, 23rd May, 2013
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