KRBL Limited
Report on the Audit of the Standalone Financial Statements
Qualified Opinion
1. We have audited the accompanying standalone financial statements of KRBL Limited (‘the Company’), which comprise the Standalone Balance Sheet as at 31 March 2023, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Cash Flow and the Standalone Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of the 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, except for the possible effect of the matter described in the Basis for Qualified Opinion section of our report, 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 (‘Ind AS’) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2023, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Qualified Opinion
3. As stated in Note 47(C) to the accompanying standalone financial statements, the Enforcement Directorate (‘ED’) is investigating the Company’s Joint Managing Director (‘JMD’), Mr. Anoop Kumar Gupta under the Prevention of Money Laundering Act, 2002, for alleged involvement in Agusta Westland case. Further, the ED has filed criminal complaint and made certain allegations against the Company, KRBL DMCC (a subsidiary of the Company) and JMD. As further described in the said note, a review of the impact of the allegations on the financial statements and its control environment was performed by an independent professional firm appointed by the Board of Directors during the year ended 31 March 2022, and as per their report, there is no conclusive evidence to ascertain impact of the aforesaid matter on the financial statements of the Company and its control environment. Pending the completion of ongoing investigation of the above matter by regulatory authorities, we are unable to comment on any adjustment that may be required to the accompanying standalone financial statements in this respect.
4. We conducted our audit in accordance with the Standards on Auditing 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 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 qualified opinion.
Emphasis of Matter
5. We draw attention to Note 47(B) to the accompanying standalone financial statements, wherein it is stated that a portion of land parcels and building thereupon owned by the Company as identified in the aforesaid note has been attached by the Enforcement Directorate (‘ED’) under the Prevention of Money Laundering Act, 2002 (‘PMLA’), in connection with a money laundering investigation which is currently pending before the Special Judge, CBI Court. The Appellate Tribunal, PMLA (Government of India), New Delhi (’Appellate Tribunal’), where the matter was first heard, vide its order dated 17 January, 2020, restored the possession in favor of the Company while the aforesaid attachment would continue till the conclusion of the matter. The ED filed an appeal against granting of possession of the aforesaid land parcels and building to the Hon’ble High Court of Delhi (‘High Court’). The High Court vide its order dated 23 October 2020 had restored the physical possession of the aforesaid land parcels and building thereupon for specified purposes against deposit of ?1,113 lacs, as an interim relief until conclusion of the aforesaid matter. Based on the legal assessment of the outcome of the aforesaid matter, the management is of the view that no adjustment is required to the accompanying standalone financial statements.
Our opinion is not modified in respect of this matter.
Key Audit Matters
6. 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.
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7. In addition to the matters described in the Basis for Qualified Opinion, we have determined the matters described below to be the
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key audit matters to be communicated in our report.
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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 - Sale of Goods
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Our audit work included, but was not limited to, the following procedures:
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Refer Note 2(g) in the Summary of significant accounting policies and other explanatory information
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Obtained an understanding of the process of each revenue stream, particularly of sale of rice and by products;
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Evaluated the design and implementation and tested the operating
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The Company recognised an amount of
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effectiveness of controls over revenue recognition including around quantity
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?536,323 lacs revenue for the year ended 31
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sold, pricing and accounting of revenue transactions;
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March 2023, as disclosed in Note 28 to the
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Performed substantive analytical procedures on revenue which includes ratio
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standalone financial statements.
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analysis, product mix analysis, region wise analysis;
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Revenue for the Company primarily comprises
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Evaluated the terms and conditions of the contracts, including incoterms, with
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of revenue from sale of manufactured goods
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customers to ensure that the revenue recognition criteria are assessed by the
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(rice) and by products.
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management in accordance with the accounting standards;
On a sample basis, tested revenue transactions recorded during the year, and
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In accordance with Standards on Auditing,
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revenue transactions recorded in the period before and after year-end with
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there is a presumed fraud risk relating to
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supporting documents, such as invoices, agreements with customers, proof of
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revenue recognition. Accordingly, occurrence and existence of revenue is a key focus area on account of the multiplicity of Company’s products, multiple channels for sales, various categories of customers having varying terms
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deliveries, and subsequent collection of payment;
Performed other substantive audit procedures including obtaining debtor confirmations on a sample basis, reviewed the subsequent collection of payment and proof of deliveries document of such selected debtors;
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of contracts and the volume of the sales made
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Tested, on sample basis, manual journal entries recorded in revenue accounts,
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to them.
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credit notes and claims, if any, to the relevant approvals and the supporting documents;
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Due to the above factors, we have
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Evaluated disclosures made in the standalone financial statements for revenue
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identified testing of revenue recognition as
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recognition from sale of goods for appropriateness in accordance with the
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a key audit matter.
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accounting standards.
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Inventory existence and valuation of
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Our audit work included, but was not limited to the following procedures:
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finished goods
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Existence:
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Refer Note 2(f) in the Summary of significant accounting policies and other explanatory information.
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Obtained an understanding of the management’s process of inventory management and inventory physical verification performed subsequent to year-end;
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Inventory of the Company consists primarily
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of variety of rice, paddy and their by-products,
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Evaluated the design effectiveness of controls over inventory management
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manufactured during the process of conversion
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process/ inventory physical verification and tested key controls for their
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of paddy into rice.
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operating effectiveness;
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The Company held inventories amounting to
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Reviewed the instructions given by management to stock count teams,
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?418,627 lacs as at 31 March 2023. The inventory
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including ensuring proper segregation of stock, use of calibration scales/
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primarily comprises of Paddy as raw material and finished goods in the form of rice and by-
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charts, identification of damaged inventory, if any, etc.;
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products. Inventory holding is generally significant considering the finished goods are aged for 18-
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Observed physical count carried out by the management at locations selected based on materiality and risk factors;
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24 months and also due to seasonality of the
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During the above said observation, noted whether the instructions given by
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purchase/produce. Such inventory is stored in plants, warehouses, silos, etc. High quantity of
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management to stock count teams were followed;
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inventory makes inventory physical verification
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Recounted inventory, on sample basis, to match with inventory records and
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an extensive procedure for the management, at
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results of management conducted count;
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the year end.
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Obtained inventory records and results of management conducted count;
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The valuation of finished rice and by products is a complex exercise and is carried out manually. The valuation process involves estimation around determination of -
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Reviewed reconciliation of differences, if any, between management physical count and inventory records, and tested the necessary adjustment made in the inventory records by the management;
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For the inventory lying with the third party, obtained the confirmation that the
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• Allocable overheads and their absorption rates;
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management obtained from the third parties and for the inventory lying at
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• Determination of net realisable value of
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foreign ports (in the course of sale) / private warehouse, tested the subsequent
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by-products such as husk, bran, etc, and
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clearance for the said export.
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• Determination of net realisable value of the different variety of rice.
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Valuation:
• Obtained an understanding of management process of inventory valuation;
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Accordingly, existence and valuation of the year-
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• Evaluated design effectiveness of controls over inventory valuation process
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end inventory balance, which is significant with respect to the total assets held by the Company,
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and tested key controls for their operating effectiveness;
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is considered to be one of the areas which
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• Tested inputs into the valuation process from source documents/ general
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required significant auditor attention owing to
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ledger accounts;
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the complexity and judgements involved in the
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• Tested reconciliation of opening inventory, purchase/ production, sales and
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process of physical count and valuation.
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year-end inventory to validate the amount of yield during the year and to identify any abnormal production loss;
• Compared key estimates, including those involved in computation of allocable overheads and their absorption rate, to prior years and enquired reasons for any significant variations;
• Checked net realisable value of rice and by-products from actual sale proceeds near to the year-end;
• Tested arithmetical accuracy of valuation calculations;
• Evaluated appropriateness of disclosure of inventory year-end balance in the standalone financial statements.
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Information other than the Standalone Financial Statements and Auditor’s Report thereon
8. The Company’s Board of Directors are 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 identified above when it becomes available 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 Annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. We have nothing to report in this regard.
Responsibilities of Management and Those Charged withGovernance for the Standalone Financial Statements
9. The accompanying standalone financial statements have been approved by the Company’s Board of Directors. The Company’s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other
comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act and other accounting principles generally accepted in India. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
10. In preparing the standalone financial statements, the Board of Directors are 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 intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
11. Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the StandaloneFinancial Statements
12. 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 Standards on Auditing 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.
13. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism 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 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 Board of Directors’ 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.
14. 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.
15. 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.
16. 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.
Report on Other Legal and Regulatory Requirements
17. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
18. As required by the Companies (Auditor’s Report) Order, 2020 (‘the Order’) issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure A, a Statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
19. Further to our comments in Annexure A, as required by section 143(3) of the Act based on our audit, we report, to the extent applicable, that:
a) We have sought and except for the matter described in the Basis for Qualified Opinion section, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying standalone financial statements;
b) Except for the possible effect of the matter described in the Basis for Qualified Opinion section, 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 standalone financial statements dealt with by this report are in agreement with the books of account.
d) Except for the possible effect of the matter described in the Basis for Qualified Opinion section, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) The matter described in paragraph 3 under the Basis for Qualified Opinion section, 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 and taken on record by the Board of Directors, none of the directors is disqualified as on 31
March 2023 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 financial statements of the Company as on 31 March 2023 and the operating effectiveness of such controls, refer to our separate report in Annexure B wherein we have expressed a modified opinion; and
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. Except for the possible effect of the matter described in paragraph 3 of the Basis for Qualified Opinion section, the Company, as detailed in note 47 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2023;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2023;
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 ended 31 March 2023;
iv. a. The management has represented that, to the
best of its knowledge and belief, as disclosed in note 51(vii) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person or entity, including foreign entities (‘the 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 (‘the Ultimate
Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 51(viii) to the standalone financial statements, no funds have been received by the Company from any person or entity, including foreign entities (‘the 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 as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclauses (a) and (b) above contain any material misstatement.
v. a. The Company has not declared or
paid any dividend during the year ended 31 March 2023.
b. The final dividend paid by the Company during the year ended 31 March 2023 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 requires all companies which use accounting software for maintaining their books of account, to use such an accounting software which has a feature of audit trail, with effect from the financial year beginning on 1 April, 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 (as amended) is not applicable for the current financial year.
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