To the Members of Bikaji Foods International Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Bikaji Foods International Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2023, and the Statement of Profit and Loss (Including Other Comprehensive Loss), Statement of Changes in Equity and 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.
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 Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards)
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Sr.
No.
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Key Audit Matter
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How the Key Audit Matter was addressed in our audit
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6.
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Performed analytical review procedures and trend analysis over revenue, discounts and rebates recorded during the year to identify any unusual and/or material variances.
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7.
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Examined manual journal entries posted at year end to identify unusual items booked to revenue and examine the underlying documentation.
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8.
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Evaluated the appropriateness and adequacy of disclosures in the standalone financial statements in respect of revenue recognition and related discounts and rebates (netted off) in accordance with applicable accounting standards.
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2.
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Fair Valuation of Investments (Refer note 2.2 (S) (a) to the
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Our key audit procedures around fair valuation of investments includes
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standalone financial statements)
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but were not limited to, the following:
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As at March 31, 2023, the Company has total investment of
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1.
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Evaluated the design, implementation, and operating effectiveness
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T 14,041.52 lakhs in the form of various financial instruments
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of controls over fair valuation of investments, including controls
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such as compulsory convertible preference shares, optionally
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relating to review of future cash flow forecasts and controls
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convertible debentures, compulsory convertible debentures,
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relating to review of assumptions of discount rates and the long-
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which are measured at fair value through statement of
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term growth rates.
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profit and loss and other comprehensive income, as per requirements of applicable Ind AS.
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2.
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Obtained report of external valuation specialist appointed by the Management for the valuation of investment. Evaluated the
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As per fair value measurement hierarchy under Ind AS 113,
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competence and objectivity of the valuation specialist engaged by
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these investments are categorised as Level 3 and accordingly
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the management.
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inputs used for valuation are unobservable. The fair value is determined basis management's estimate and assumptions which included use of discounted cash flow model to estimate the fair value and requires management to make significant estimates and assumptions related to future cash flow forecasts (including forecast of future revenue and operating margins), discount rates and the long-term growth rates
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3.
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Together with our internal valuation experts, assessed the Company's valuation methodology applied in estimating the fair value of the Investments and the appropriateness of the valuation methodology applied, and also tested reasonableness of the assumptions around the key drivers of the cash flow forecasts, i.e., future growth rates, discount rates used.
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applied to these future cash flow forecasts. Changes in these
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4.
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Assessed the reasonableness of the input data for future cash
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estimates and assumptions could have a significant impact on
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flows, the historical accuracy of the Company estimates by
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the assessment of the fair value of these investments and the
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comparing the forecasts used in the prior year model with the
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consequential impact on gain/loss recognised in statement of
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actual performance in the current year and its ability to produce
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profit and loss and other comprehensive income.
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accurate long- term forecasts.
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Considering the material impact of the amounts involved, and the significant degree of management judgement and subjectivity involved in the estimates and assumptions used in determining the fair values, we have determined fair valuation of such investments as a key audit matter.
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5.
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Evaluated the appropriateness and adequacy of disclosures in the standalone financial statements in compliance with the applicable accounting standards.
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Rules, 2015, as amended (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, and profit (including other comprehensive loss), 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 Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion.
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 March 31, 2023. 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.
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Sr.
No.
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Key Audit Matter
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How the Key Audit Matter was addressed in our audit
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i.
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Revenue Recognition (Refer note 2.2 (B) (a) to the standalone financial statements).
Company’s revenue from operations consists primarily of sale of food products, sold through distributors, modern trade, and direct sales channel. Revenue is recognised when the control is transferred to customers and performance obligations are fulfilled as per Ind AS 115 “Revenue from contracts with customers”. The revenue from sale of products is measured net of returns and allowances for trade discounts and volume rebates (collectively ‘discount and rebates’).
Owing to the large volume of sales transactions, number of distribution networks and varied terms of contracts with customers, revenue from sale of products is considered to be an area involving significant risk. Also, the Company and its external stakeholders focus on revenue as a key performance indicator.
Further, significant estimation is involved in recognition and measurement of discounts and rebates, based on historical experience and the specific terms of the scheme, there is a risk that these discounts and rebates are incorrectly recorded as it requires certain degree of judgements and estimation which are subject to uncertainty and might result in understatement of the associated expenses and its accruals.
Considering the aforesaid revenue recognition has been considered as a key audit matter.
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Our key audit procedures around revenue recognition includes but
were not limited to, the following:
1. Assessed the appropriateness of Company’s accounting policy on revenue recognition and its policy related to adjustment of discounts, returns and rebates in accordance with the requirements of Ind AS 115 “Revenue from contracts with customers”.
2. Assessed the design, implementation and tested the operating effectiveness of key internal controls related to revenue recognition, discounts and rebates including general and key information technology controls.
3. Performed substantive testing on selected samples of revenue transactions recorded during the year by testing the underlying documents like sales invoice, sales order, gate outward slips, E-way bills, customer acknowledgement, on test check basis.
4. To test cut off, selected sample of sales transactions made pre-and post- year end, agreeing the period of revenue recognition to third party support, such as transporter invoice and customer confirmation of receipt of goods.
5. Understood and evaluated the Company’s process of recording accruals for discounts, rebates and ongoing incentive schemes. Tested the provision calculations related to discounts, and rebates by agreeing a sample of amounts recognized to underlying arrangements with customers and other supporting documents.
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Information Other than the Standalone 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 Director’s report and Business Responsibility Sustainability Report but does not include the standalone financial statements and our auditor’s report thereon.
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. 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
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
2. The Management has represented, that, to the best of its knowledge and belief, as stated in Note 51 to 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, as on the date of this audit report, that the Company shall, 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.
3. Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided
presentation of the standalone financial statement 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, the Board of Directors 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 the Board of Directors 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
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.
We give in “Annexure A” a detailed description of Auditor’s responsibilities for Audit of the Standalone Financial Statements.
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 “Annexure B” 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 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 loss), the Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.
(d) I n 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, 2023 taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 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 statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure C”.
(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 standalone financial statements - Refer Note 37 to the standalone financial statements.
ii. The Company did not have any longterm 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. 1. The Management has represented that,
to the best of its knowledge and belief, as stated in Note 51 to 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 person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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.
to us by the Management in this regard nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) as provided under (1) and (2) above, contain any material mis-statement.
v. The final dividend declared and paid by the Company during the year until the date of this audit report is in accordance with section 123 of the Companies Act 2013. However, the dividend amount of INR 0.75 lakhs is unclaimed and yet to be paid on the date of this audit report.
vi. As proviso to rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the company only w.e.f. April 1, 2023, reporting under this clause is not applicable.
3. I n our opinion, according to information, explanations given to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 of the Act and the rules thereunder.
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