PATANJALI FOODS LIMITED
(Formerly known as Ruchi Soya Industries Limited)
Report on the Audit of Standalone Financial Statements Opinion
We have audited the standalone financial statements of Patanjali Foods Limited (“the Company”), which comprise the standalone balance sheet as at 31st March 2023, and the standalone statement of profit and loss (including other comprehensive income), standalone statement of changes in equity and 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 (hereinafter referred to as “standalone financial statements”).
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 31st March 2023, and profit (including other comprehensive income), statement of changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) 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 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 (“ICAI”) together with the ethical requirements that are relevant to our audit of the standalone 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 ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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Key Audit Matter
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How our audit addressed the key audit matter
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Revenue recognition as per Ind AS 115
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(As described in note no. 2(B)(k), 21 and 45 of the standalone financial statements)
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Revenue is recognised net of discounts & rebates earned by the customers
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In view of the significance of the matter we applied the following audit procedures in
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on the Company’s sales. The discounts & rebates recognised based on sales
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this area, among others to obtain sufficient audit evidence:
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made during the year.
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• Assessing the environment of the IT system related to invoicing and measurement
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Revenue is recognised when control of the underlying products have been
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and accounting of revenue.
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transferred along with satisfaction of performance obligation. The terms
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• On a sample basis, tested supporting documentation for sales transactions
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of sales arrangements, including the timing of transfer of control, the
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recorded during the year which included customer contracts, sales orders, sales
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nature of discount and rebates arrangements and delivery specifications,
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invoices, shipping documents, discounts and rebates conditions and other related
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create complexity and judgment in determining sales revenues.
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documents.
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Further customer’s rebate/discounts represent a material reduction in sales and process for calculating and recording the above involves significant manual process. Risk exists that revenue is recognised without substantial transfer of control and is not in accordance with Ind AS115 “Revenue from contracts with customers”, resulting into recognition of revenue in incorrect period.
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• Evaluated the appropriateness of revenue recognition policy and adequacy of disclosures in the standalone financial statements in respect of revenue recognition in accordance with the Ind AS 115.
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Considering the above factors, revenue recognition has been considered as a key audit matter.
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Key Audit Matter
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How our audit addressed the key audit matter
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Acquisitions of food retail business undertaking from Patanjali Ayurved Limited on going concern basis by way of slump sale
(As described in note no. 2(B)(v) and 47 (B) of the standalone financial statements)
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The Board of Directors of the Company in its meeting held on 18th May 2022 has approved the acquisition of food business undertaking from Patanjali Ayurved Limited. Pursuant to Business Transfer Agreement, as amended, entered with Patanjali Ayurved Limited (PAL), with effect from 1st July, 2022 (“Acquisition Date”), the Company has acquired Food Retail Business (‘Food Retail Business Undertaking”) as a going concern on a Slump Sale basis for a cash consideration of H 69,000 Lakh. Accordingly, on acquisition date, all the assets acquired including intangible assets identified aggregating to H 73,733.69 Lakh are accounted at fair value in accordance with “IND AS 103” — “Business Combination”, differential amount of H 3,646.68 Lakh after considering effects of deferred tax liabilities are credited to Capital Reserve.
As food retail business acquisitions is significant event during the year and acquisition of this business has contributed revenue from operation amounting to H 387,527.90 Lakh for the Company, we considered it to be a key audit matter.
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In view of the significance of the matter we applied the following audit procedures in
this area, among others to obtain sufficient audit evidence:
• Performed inquiry procedures with the key managerial persons of the Company with reference to above said transfer.
• Obtained and read the minutes of board of directors and shareholders, business transfer agreement (BTA) and amendments thereto, for acquisitions of food retail business.
• Understanding the process followed by the Company for the accounting treatment of pursuant to the BTA.
• Evaluating whether the measurement, recognition and disclosure of the said transaction is in line with the applicable Indian Accounting Standards.
• We obtained management’s workings for the accounting of the acquisitions and evaluated management’s determination of the fair value of the assets acquired, including valuation of intangible asset which is based on independent valuer’s report engaged by the Management.
• Assessing whether the accounting entries recorded in the books is in line with the accounting treatment assessed above, including the arithmetical accuracy of the
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Review of disclosures provided in the standalone financial statements in this regard.
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Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended 31st March 2023. This matter was 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 this matter. 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 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 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 Financial Statements.
Information other than the financial statements and auditor’s report thereon
The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the annual report but does not include the standalone 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 standalone 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 standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the other information identified above, if we conclude that there is a material misstatement therein we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone 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 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 implementation and maintenance of 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.
That 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
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.
(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, as detailed in Note no. 31 (A) (c) & (d) to the standalone financial statements has disclosed the impact of pending litigations on its financial position.
(ii) The Company did not have any material foreseeable losses on 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) Management has represented to us that, to the
best of it’s knowledge and belief, as disclosed in the standalone financial statements, 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 persons or entities, 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) Management has represented to us that, to the best of it’s knowledge and belief, as disclosed in the standalone financial statements, 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,
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 financial controls 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 the 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 management5 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 ability of the Company 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.
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 financial statements of the current year 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, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (“the Order”), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. Further to our comment in the Annexure A, 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 Cash Flow Statement 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 Indian Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31st March, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2023 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 statement of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”.
(g) In our opinion, the managerial remuneration for the year ended 31st March, 2023 has been paid / provided by the Company to its director in accordance with the provisions of section 197 read with Schedule V to the Act.
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;
(c) Based on our audit procedures conducted that are considered reasonable and appropriate in the circumstances, nothing has come to our attention that cause us to believe that the representation given by the management under paragraph (2) (h) (iv) (a) & (b) contain any material misstatement.
(v) The final dividend paid by the Company during the year which was declared for the previous year is in accordance with section 123 of the Companies Act 2013 to the extent it applies to payment of dividend.
As stated in note no 50 to the standalone 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.
(vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from 1st April, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended 31st March, 2023.
For Chaturvedi & Shah LLP Chartered Accountants
Firm’s Registration No. 101720W/W100355
Vijay Napawaliya Partner
Place: Mumbai Membership No. 109859
Date: 30th May, 2023 UDIN: 23109859BGXRUC8388
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