We have audited the accompanying Standalone financial statements of M/s. Sunil Agro Foods Limited (“the Company") which comprises the Balance Sheet as at March 31,2024, the Statement of Profit and Loss(including Other Comprehensive Income), the Statement of changes in Equityand the Statement of Cash Flowsfor the year then endedand notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner sorequired 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 31 March 2024, and its Profit, total comprehensive income, the changes in equity and its cash flowsfor the year ended on that date.
Basis for Qualified Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those (SAs) are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 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 on the financial statement.
1. The Company has not made provisions for Bad debt of Rs 97.56 lakhs (PY Rs.97.56 lakhs) in case of one debtor Maiyas Beverage and Foods Private Limited which was referred to NCLT under Indian Bankruptcy Code and NCLT has passed the order on 10th May, 2019.As per NCLT order only 15.14% amount is payable to all the Sundry Creditors of Maiyas Beverage and Foods Private Limited. Company's total outstanding against MaiyasBeverage and Foods Private Limited at the time of referral to NCLT stood Rs.114.97 lakhs (PYRs.114.97 lakhs). Due to this Company's profit and Sundry debtors are overstated by Rs.97.56 lakhs (PYRs.97.56 lakhs).
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements 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. For each matter below, our description of how our audit addresses the matter is provided in that context.
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Descriptions of Key Audit Matter
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How we addressed the matter in our audit
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A. Valuation of Inventories
Refer to note 6 to the financial statements.
The value of inventory is a key audit matter due to involvement of high risk, basis the nature of the food industry wherein value per unit is relatively insignificant but high volumes are involved which are dispersed across different point of sales .
Our audit procedures on the valuation and existence of inventories consisted mainly of the following:
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We obtained assurance over the appropriateness of the management's
assumptions applied in calculating the value of the inventories and related provisions by:
• Completed a walkthrough of the inventory valuation process andassessed the design and implementation of the key controls addressing the risk.
• Verifying the effectiveness of key inventory controls operating over inventories; including sample based physical verification.
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• The inventories of the Company amounted
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• Verify that the adequate cut off procedure has been
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to ^4839.15 lakhs as on 31st march 2024.
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applied to ensure that purchased inventory and sold
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• Our audit of inventories was focused
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inventory are correctly accounted.
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around the risk that there would be a
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• Reviewing the document and other record related to
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material misstatement relating to the
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physical verification of inventories done by the
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existence of inventories and that the
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management during the year.
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valuation of inventories which involves
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• Verify that inventories are valued in accordance with
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judgement of the management.
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Ind AS 2
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• According to the standalone financial
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• As for the valuation of inventories, we assessed and
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statements' accounting policies in note 45
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reviewed the controls relating to valuation. For
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(2.2) to the financial statements,
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materials and supplies, we compared the price
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inventories are measured at the lower of
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recognized in the balance sheet to the latest
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cost or net realizable value. The company
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purchase invoice, to ensure that the inventory of
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has procedures for identifying risk for
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materials and supplies is valued in accordance with
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obsolescence inventories based on estimated usage and shelf life of products.
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the accounting policies applied.
• Verifying for a sample of individual products that costs
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• To ensure that all inventories owned by the
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have been correctly recorded.
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entity are recorded and recorded inventories exist as at the year-end and
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• Comparing the net realisable value to the cost price of inventories to check for completeness of the
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valuation has been done correctly.
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associated provision.
• Reviewing the historical accuracy of inventory provisioning and the level of inventory write-offs during the year.
Our Conclusion:
Based on the audit procedures performed we did not identify any material Exceptions in the Inventory valuation.
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B. Revenue Recognition
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Refer to Note 22 to the financial statements.
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Our key audit procedures around revenue recognition
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The revenue of the Company consists
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included, but were not limited to, the following:
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primarily of sale of food products that are sold
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• Assessed the appropriateness of the revenue
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through distributors, modern trade and direct
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recognition accounting policies of the Company
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sale channels amongst others. Revenue is
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including those relating to rebates and trade
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recognized when the control of products is
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discounts, by evaluating compliance with the
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transferred to the customer and there is no
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applicable accounting standards;
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unfulfilled obligation. Depending on the
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• Performed substantive testing on selected samples
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contractual terms with the customers, this can
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of revenue transactions recorded during the year by
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be either at the time of dispatch or delivery of
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testing the underlying documents including contracts
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goods.
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for conversion charges and soudha settlement,
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The Company has large number of customers
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invoices, goods dispatch notes, shipping documents
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and the sales contracts with customers have
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and customer receipts, wherever applicable;
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different terms relating to transfer of control of
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• Performed analytical review procedures on revenue
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underlying goods and the right of return.
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recognised during the year to identify any unusual
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Owing to the volume of sales transactions,
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and/or material variances;
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size of the distribution network and varied
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• Performed confirmation and alternative procedures
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terms of contracts with customers, revenue is
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on selected invoices outstanding as at the year-end;
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determined to be an area involving significant
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and examining whether money is actually received or
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risk in line with the requirements of the
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income is reversed back in case of settlement
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Standards on Auditing and hence, requiring significant auditor attention.
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contracts;
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The management is required to make certain key
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• Tested a select sample of revenue transactions
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judgementsaround determination of transaction
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recorded before the financial year end date to
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price in accordance with the requirements of Ind
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determine whether the revenue has been recognised
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AS 115, Revenue from Contracts with Customers
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in the appropriate financial period;
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along with Conversion Charges and settlement of Soudha on cancellation of the contract, and on account of consideration payable to customers in
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• Examine a sample of manual journal entries posted to revenue ledgers to identify any unusual items; and
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the form of various discount schemes, returns and
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• Evaluated the appropriateness and adequacy of
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rebates.
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disclosures in the financial statements in respect of revenue recognition in accordance with the
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The Company and its external stakeholders focus on revenue as a key performance indicator and
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applicable requirements.
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this could create an incentive for revenue to be
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Our conclusion:
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overstated or recognized before control has been
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Based on the audit procedures performed we did not
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transferred. Considering the aforesaid
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identify any material exceptions in the recognition of
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significance to our audit and the external stakeholders, revenue recognition has been considered as a key audit matter for the current year's audit.
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revenue and incentives and discount expenses.
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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 Board's Report including Annexure to the Board's Report, but does not include the financial statements and our auditor's report thereon. The Company's annual report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.
Responsibility of Management for the Standalone Financial Statements
The Company's Management and Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equityof the Company in accordance with the Indian Accounting standards (Ind AS) prescribedunder section 133 of the Act, read with the Companies (Indian Accounting standards)Rules, 2015, as amended, and other accounting principles generally accepted in India.
Thisresponsibility 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, application, implementation and maintenance of appropriate 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Management and Board of Directors are also responsible for overseeing the company's financial reporting process.
Auditor's Responsibilityfor the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system 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 the Management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
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 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.
Emphasis of Matter
1. We draw attention to the following:
The Company is having Debtors outstanding for more than 1 year amounting to Rs. 54.22 lakhs, for more than 2
years amounting to Rs. 84.78 lakhs and more than 3 years amounting to Rs. 296.70 lakhs those include disputed debtors of Rs. 178.89 lakhs. The company has not made any allowance for doubtful debtors as the Company is confidence of receiving the entire dues.
Our Audit opinion is not modified for the above matters.
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 Companies Act, 2013, we give in the “Annexure 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. Except for the effect of the matters described in basis of qualified opinion paragraph above, 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, Statement of changes in Equityand the Statement of Cash Flow dealtwith by this Report are in agreement with the books of account.
d. In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting standards) Rules, 2015
e. On the basis of the written representations received from the directors as on 31st March, 2024taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2024 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. Our Report expresses an Qualified opinion on the adequacy and operating effectiveness of the company's internal financial controls over financial reporting.
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, as amended, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company hasdisclosed the impact of pending litigations which could impact its financial position as mentioned in Note No.32 to financial statement.
ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.
iii. The amount which was required to be transferred to the Investor Education and Protection Fund has been transferred by the company on time and there has been no delay in transferring amount.
iv. a. The management has representedthat, to the best of its knowledgeand belief, no funds have
beenadvanced or loaned or invested(either from borrowed fundsor share premium or any other source or kind of funds) by theCompany to or in any otherpersons or entities, includingforeign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise ,that the Intermediary shall:
• directly or indirectly lendor invest in other personsor entities identified inany manner whatsoever(“Ultimate Beneficiaries”) byor on behalf of the Companyor
• provide any guarantee,security or the like to oron behalf of the UltimateBeneficiaries.
b. The management has represented, that, to the best of it's knowledge and belief, no funds have been received by the company from any person or entities, including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether,
• directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or
• provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c. Based on audit procedures as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause iv(a) and iv(b) contain any material mis-statement.
v. The company has not declared dividend during the year.
vi. Based on our examination, the company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the audit trail has been made operational during the year for all relevant transactions recorded .Further, during the course of our audit we did not come across any instance of audit trail which being been tampered with.
h. With respect to the matter to be includedin the Auditor's Report under Section197(16) of the Act as Amended:
In our opinion and according to theinformation and explanations given to us,the remuneration paid by the Company toits directors during the current year is inaccordance with the provisions of Section197 of the Act. The remuneration paid toany director is not in excess of the limitlaid down under Section 197 of the Act.The Ministry of Corporate Affairs has notprescribed other details under Section197(16) of the Act which are required tobe commented upon by us.
For G R V & P K.
Chartered Accountants FRN.008099S
G. VirchandNahar Partner M N.206169
UDIN:24206169BKGYIZ4457
Place: Bangalore Date: 24-05-2024
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