Radico Khaitan Limited
Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying standalone financial statements of Radico Khaitan Limited ('the Company'), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ('the Act') in the manner so required and give a true and fair view in conformity with the 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 2024, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. 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 opinion.
Key Audit Matters
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the 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 and trade receivables
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Our audit procedures related to revenue recognition
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Refer to note 1.05 to the accompanying
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included, but were not limited, to the following:
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standalone financial statements for the Company's
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• Understood the nature of revenue transactions
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significant accounting policies relating to revenue
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and evaluated the appropriateness of the
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recognition and note 27 for the details of revenue
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accounting policy adopted by the management
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recognized during the year.
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in accordance with Ind AS 115;
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The Company derives its revenue from sale
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• Evaluated the design and tested the operating
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of alcohol and other alcoholic products to a
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effectiveness of Company's internal controls
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wide range of customers through a network of
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around revenue recognition including relating
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distributors and state government corporations.
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to determination of variable consideration and
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Owing to the multiplicity of the Company's
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satisfaction of performance obligations;
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products, volume of sales transactions, size of distribution network, nature of customers and varied terms of contracts with different customers, revenue is determined to be an area involving significant risk in line with the requirements of the Standards on Auditing and hence required significant auditor attention.
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• On a sample basis, tested revenue transactions recorded during the year, and transactions recorded before and after year end basis inspection of supporting documents such as customer contracts, purchase orders, price lists, proof of dispatch and
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Key audit matter
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How our audit addressed the key audit matter
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Further Ind AS 115, “Revenue from Contracts
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delivery including regulatory documents used for
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with Customers” ('Ind AS 115'), requires
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movement of liquor as per applicable regulations,
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management to make certain key judgements,
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invoices, etc. For such samples tested, reviewed
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such as, identification of performance obligations
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the terms of the contracts with customers to assess
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in contracts with customers, determination
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the appropriateness of Company's identification
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of transaction price for the contract including
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of performance obligations, its determination of
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variable consideration in the form of rebates,
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transaction price, including allocation thereof to
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discounts and pay-outs to distributors under
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performance obligations and identification of the
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various promotional schemes of the Company,
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point of revenue recognition, in order to ensure
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and assessment of satisfaction of the performance
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revenue is recorded with the correct amount and
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obligations under each contract representing
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in the correct period;
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the transfer of control of the products sold
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• Tested the adequacy of accruals made for
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to the customers including state government
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various rebates and discounts committed to the
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corporations.
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distributors of the company basis the promotion
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Evaluation is also required to be made in respect
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schemes active as at the year-end;
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of principal versus agent relationship of the
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• Performed substantive analytical procedures
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Company with its 'tie-up units' and 'royalty units'
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including review of price, quantity and product
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as explained in the significant accounting policy disclosures referred above.
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mix variances and analysis of discounts; and • Evaluated adequacy of the disclosures made in
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Further, the Company has significant balance
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the accompanying financial statements in respect
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of trade receivables amounting to ' 97,815.01
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of revenue recognition in accordance with
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Lacs as at 31 March 2024 as disclosed under note 9 to the accompanying standalone financial
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financial reporting framework.
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statements. These receivables include dues
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Further, our audit procedures pertaining to related
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from state government corporations and private
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trade receivables included, but were not limited, to
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distributors. The Company provides for expected
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the following:
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credit loss on such trade receivables based on past
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• Circularised requests for direct balance
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experience which is adjusted to reflect current
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confirmations to a sample of customers for
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and estimated future economic conditions.
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outstanding balances as at year-end and
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Due to the extent of industry knowledge and skills
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evaluated the responses received;
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needed to design and execute audit procedures
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• Performed other alternate procedures which
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to address the risks of material misstatements in
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included testing of invoices, proof of supply
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revenue recognition and related trade receivables,
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and subsequent collection of invoices for the
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significance of the amounts and judgments involved in assessing appropriate revenue
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confirmations not received;
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recognition, and existence and recoverability of
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• Evaluated the appropriateness of the model used
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trade receivables, these matters are considered
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by the management in determination of expected
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key audit matters in the current year audit.
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credit losses, including inputs and assumptions such as classes of customers, past trends of recovery and default rates as adjusted for future expectations, basis our understanding of the business and relevant market conditions;
• Recomputed the ageing of trade receivables for a sample of invoices and tested mathematical accuracy of the workings prepared by the management;
• Evaluated the disclosures made in accompanying standalone financial statements in respect of trade receivables in accordance with applicable financial reporting framework.
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Key audit matter
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How our audit addressed the key audit matter
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Additions to property, plant and equipment
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Our audit procedures with respect to additions to
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including capital work in progress
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property, plant and equipment including capital work
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Refer notes 1.08, 2 and 2A to the accompanying
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in
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progress included, but were not limited, to the
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standalone financial statements
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following.
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The Company has capitalized expenditure incurred in setting up a new manufacturing facility plant at Sitapur, UP amounting to ' 45,419.15
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•
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Evaluated the design and implementation and tested the operating effectiveness of key controls surrounding the capitaliszation of costs;
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Lacs in the current year towards such expansion
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•
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Reviewed management's capitalisation policy,
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plans as further explained in note 2 and 2A to the
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including application of the aforesaid policy,
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accompanying Standalone financial statements.
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in accordance to assess consistency with the
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Determining whether expenditure incurred is
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requirements set out by under Ind AS 16;
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operational or capital in nature may require
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•
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Ensured that the borrowing cost capitaliszed is as
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judgement and is essential in order to ensure that
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per the principles of Ind AS 23;
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the recognition and measurement principles given under Ind AS 16, Property, Plant and Equipment ('Ind AS 16') are met
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•
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Tested the additions made to property, plant and equipment and capital work-in-progress on a sample basis for their nature and purpose to
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Further, the aforementioned capital expenditure
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ensure that the capitaliszation is as per Company's
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has been partly funded from the specific
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accounting policy and is recorded in the correct
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borrowing raised for such purpose. Accordingly,
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period and in the correct class of assets;
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the borrowing costs incurred on such borrowings have been included as a capital expenditure in accordance with the provisions of Ind AS 23, Borrowing Costs ('Ind AS 23').
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•
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For projects completed during the year, reviewed the project completion/handover certificate provided by the management to determine whether the asset is in the location and condition
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This has been determined as a key audit matter
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necessary for it to be capable of operating in the
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due to the significance of the capital expenditure
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manner intended by the management;
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during the year and the risk that the elements of costs (including borrowing costs) that are eligible for capitalization are appropriately capitalised in accordance with the recognition criteria provided under Ind AS 16 and Ind AS 23.
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•
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Assessed the appropriateness and adequacy of the related disclosures in the consolidated financial statements in accordance with the applicable accounting standards.
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Information other than the Financial Statements and Auditor’s Report thereon
6. The Company's Board of Directors are responsible for the other information. The other information comprises the information such as Management Discussion and Analysis, Report on Corporate Governance, Directors' Report, etc. 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.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
7. 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.
8. In preparing the 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.
9. The Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor’s Responsibilities for the Audit of the Standalone Financial Statements
10. 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 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 financial statements.
11. 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 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;
• 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 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; and
• 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.
12. 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.
13. 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.
14. 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 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
15. 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.
16. 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 I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
17. Further to our comments in Annexure I, 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 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) 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 except for the matters stated in paragraph 17(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
c) The standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) 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 2024 from being appointed as a director in terms of section 164(2) of the Act;
f) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 17(b) above reporting under paragraph 17(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on 31 March 2024 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we have expressed an unmodified 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. the Company, as detailed in note 37 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2024;
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 2024;
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 2024;
iv. a. The management has represented
that, to the best of its knowledge and belief, as disclosed in note 64(h) 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(s) or entity(ies), 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 64(i) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), 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 sub-clauses (a) and (b) above contain any material misstatement.
v. The final dividend paid by the Company during the year ended 31 March 2024 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 Further, as stated in note no 40 to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31 March 2024 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. Based on our examination which included test checks, the Company, in respect of financial year commencing on April 01, 2023, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except that, audit trail feature was not enabled at database level for accounting software SAP to log any direct data changes, as described in note 66 to the standalone financial statements. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of the accounting software where such feature is enabled.
For Walker Chandiok & Co LLP
Chartered Accountants Firm's Registration No.: 001076N/N500013
Ashish Gupta
Partner
Place: New Delhi Membership No.: 504662
Date: May 14, 2024 UDIN: 24504662BKGECJ7858
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