To the Members of V-Mart Retail Limited
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTSOPINION
We have audited the accompanying financial statements of V-Mart Retail Limited (“the Company”), which comprise the Balance sheet as at March 31, 2022, 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 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, 2022, 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 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 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 financial statements.
emphasis of matter
We draw attention to note no. 46 to the Ind AS financial statement, which describes the uncertainties and impact of COVID-19 pandemic on the Company's operations and results as assessed by the management. Our opinion in is not modified in respect of this matter.
KEY AuDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the financial year ended March 31, 2022. These matters were addressed in the context of our audit of the 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 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 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 financial statements.
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Key audit matters
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How our audit addressed the key audit matter
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Valuation of inventory with respect to estimated markdown due to slow moving and obsolete inventories (including shrinkage)
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(as described in Note 31, 42 and 46 of the financial statements)
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As at March 31, 2022, the carrying value of inventories (including
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Our audit procedures included the following:
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packing material and accessories) amounted to ' 66,822.28 lakhs after considering markdown on account of slow moving, obsolete inventory and shrinkage of ' 3,247 lakhs.
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• We obtained an understanding, evaluated the design and tested the operational effectiveness of controls over receipt, sorting, tagging and dispatch of inventories to various
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The prevalent financial, economic and health crisis caused due to
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stores, maintenance of stock records and assessment of
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Covid-19 has impacted the business operations of the Company
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carrying value of inventory including markdown.
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having consequential impact on the assessment with respect to estimated markdown due to slow moving and obsolete inventories.
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• We obtained ageing of inventory and tested on sample basis the ageing and have obtained calculation for
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Accordingly, the Company has assessed inventory levels at
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inventory markdown.
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warehouse and stores, and further, evaluated the process of determining the markdown to be made to the inventory including shrinkage.
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• We have reperformed calculation of inventory markdown as per the policy of the Company basis the historic and
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anticipated sales trend.
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Key audit matters
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How our audit addressed the key audit matter
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Such assessment involves significant estimates, such as
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•
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We have assessed the evaluation of markdown and
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management expectations of forecast inventory demand,
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estimated loss on account of shrinkage based on factors
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anticipated future recoverability of such inventory items, the
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such as historical and anticipated sales performance of
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estimated costs to sell and potential impact of Covid-19 (if any).
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the products and average value of inventory loss from last
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Since, it involves significant management's judgement and
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inventory count as a % of sales respectively.
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estimate during the year, this area has been determined as Key
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We have obtained management representation in
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Audit Matter.
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respect of control over inventory count procedures and appropriateness of management assessment for estimated markdown due to slow moving and obsolete inventories (including shrinkage)
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We assessed the adequacy of the disclosures concerning this in Note 31 on significant accounting estimates and judgements and Note 42 to the financial statements.
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Accounting for acquisition of assets from a third party (as described in Note 45 of the financial statements)
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The Company pursuant to ‘Asset Transfer Agreement' acquired
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Our audit procedures included the following:
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certain assets and other agreements/ arrangements from a third party during the year.
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•
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We evaluated the Company's accounting policies pertaining to asset acquisitions and assessed compliance with the
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The purchase consideration for the transaction is ' 16,895.10
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applicable accounting policies.
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lakhs (net off recoveries as per the terms of ATA and other agreements as mentioned above, excluding GST).
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Read the Asset Transfer Agreement and other subsequent agreements in relation to the acquisition to obtain an
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The management has identified acquisition cost of various
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understanding of the transactions and the key terms.
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assets which largely comprises of fixed assets, inventories and security deposits and some others with the relevant supporting documents and registers obtained from the seller.
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Assessed the accounting treatment in line with the requirements of respective Ind AS's including Ind AS 16 ‘Property, Plant and Equipment', Ind AS 116 ‘Leases',
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The Company has performed physical verification of Fixed Assets
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Ind AS 2 ‘Inventories' and reviewed relevant underlying
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and inventories and obtained assignment of lease deeds in its
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documents.
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favour.
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We have performed procedures and have verified the cost
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The Company has obtained Chartered engineer certificate to
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of various assets identified by the management from the
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confirm the life of the assets.
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supporting records and documentation.
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The Company has also appointed an independent valuer to re-
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Observed the physical verification conducted by the
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confirm the value of fixed and inventories purchased from the
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management in respect of inventories and compared the
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seller under the asset transfer agreement.
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same with books of accounts and other records.
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Considering the above transaction as significant event during
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Obtained the physical verification reports in respect of
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the year, accounting and involvement of significant judgement
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fixed assets conducted by the management and traced the
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and assumptions in value of assets acquired, this has been
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same from fixed asset register.
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considered as Key Audit Matter.
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Traced the life of fixed assets acquired under the said agreement with the life assessed by chartered engineer
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Traced the fair valuation of such fixed assets and inventories provided by the independent expert to the accounting records.
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Assessed the competence, capabilities and relevant experience of the experts engaged by the management and evaluated the appropriateness of assumptions and valuation methodology.
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Assessed the appropriateness of the disclosures made in the financial statements.
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OTHER INFORMATION
The Company's Board of Directors is responsible for the other information. The other information comprises the Annual Report, but does not include the financial statements and our auditor's report thereon. The Annual Report is expected to be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
The Company's Board of Directors is responsible for the other information. The other information comprises the Message from Chairman, Director's report, Management discussion and analysis report and Corporate governance report but doesn't include the Ind AS financial statements and our auditor's report thereon.
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 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 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 financial statements that give a true and fair view and are
free from material misstatement, whether due to fraud or error.
In preparing the 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 FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the 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 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 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 financial statements, including the disclosures, and whether the 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 financial statements for the financial year ended March 31, 2022 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, 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 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 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) The matter described in Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;
(f) 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;
(g) With respect to the adequacy of the internal financial controls with reference to these financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;
(h) In our opinion, the managerial remuneration for the year ended March 31, 2022 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;
(i) 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 financial statements - Refer Note 32 (ii) 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 has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. a) The management has represented that,
to the best of its knowledge and belief, 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;
b) The management has represented that, to the best of its knowledge and belief, 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; and
c) Based on such audit procedures performed that have been 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. No dividend has been paid during the year by the Company. As stated in note 53 to the Ind AS financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Vikas Mehra
Partner
Membership Number: 094421
UDIN: 22094421AJPJMP6860
Place of Signature: New Delhi
Date: May 25, 2022
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