V2 Retail Limited
Report on the Audit of the Standalone Financial Statements
Qualified Opinion
We have audited the accompanying standalone financial statements of V2 RetailLimited ("the Company"), which comprise the Balance sheet as at March 31, 2023, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters 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 accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, its loss including other comprehensive income, the changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
As described in Note 47 to the accompanying standalone financial statement, the Company has performed physical verification of property, plant and equipment during the year ended March 31, 2023 in accordance with the phased program of conducting such verification over a period of 3 years. However, the Company is in process of performing related reconciliation of such physical verification with the underlying fixed asset register maintained by the Company. Pending completion of the said reconciliation, we are unable to comment on any adjustment that may be required to the carrying value of such Property, Plant and Equipment as at March 31, 2023. Our opinion on the standalone financial statements for year ended March 31, 2023 is qualified in respect of this matter.
We conducted our audit in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Companies Act, 2013, as amended ("the Act"). Our responsibilities under those Standards are further described in the 'Auditor's Responsibilities for the Audit of the Standalone Financial Statement' 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 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 we have obtained is sufficient and appropriate to provide a basis forour qualified opinion on the standalone financial statements.
Emphasis of Matter
We draw attention toNote 16 to the accompanying standalone financialstatement, theCompany restructured its business in the financial year 2010-11 resulting in creation of Capital Reserve amounting to Rs. 60,523.24 lakhs. The aforementioned reserve has been reconciled to amount recognized in the books of accounts except for Rs. 365.36 lakhs which the Company is in the process of reconciling. Our opinion is not qualified in respect of this matter.
We draw attention to Note 44 of the accompanying standalone financial statement, which describes that an advance amounting to Rs. 1,557.65 lacs outstanding since April 2019, has been considered good basis management's assessment of extension of the underlying contract with Bennett, Coleman and Co. Limited ('BCCL') till July 07, 2023. The management is confident of the utilization of such advance against future advertisement services to be provided by BCCL within the extended period of the contract and hence, has considered the aforesaid balance as fully recoverable as on date. Our opinion is not qualified in respect of this matter.
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 financial 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. We have determined the matters described below to be the key audit matters to be communicated in our report.
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S.N.
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Key Audit Matter
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Auditor's Response
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1.
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Existence and valuation of Inventories:
Refer note 1(v)(k) for significant accounting policy and note 9 and 37 for the financial statement disclosure. At the end of each reporting period, management of the Company assesses whether there is adequate provision for inventory losses on account of lower net realizable value and obsolete inventory. The management applies judgement in determining appropriate provisions for inventory losses which include:
a) Applying specific identification process to ascertain slow moving and obsolete inventory.
b) Assessing the net realizable value of such slow moving and obsolete inventory.
In addition to the above, the management adopts a cyclical count for physical verification of inventory which is a complex exercise owing to the nature of the inventory and the multiple locations covered in such cyclical counts. Considering the aforesaid complexities involved in cyclical physical verification of inventory which required us to undertake alternate audit techniques as described in this key audit matter, and significant management judgements and estimates required with respect to allowance for inventory loss, existence and valuation of inventory was determined to be a key audit matter for the current year audit.
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How our audit addressed the key audit matter:
Our audit included, but was not limited to, the followingaudit
procedures over inventory existence andvaluation:
• Understood the management process for cyclical physical counts, identification of slow moving, nonmovingor obsolete inventories and determiningnet realisable value, and evaluated whether suchprocesses are consistently followed.
• Evaluated design and tested the operatingeffectiveness of controls implemented aroundabove mentioned processes throughout the year.
Cyclical physical counts and physical count performed
subsequent to year end:
• Inspected management's inventory count recordsand observed physical inventory verification forlocations selected based on materiality and riskconsiderations.
• Performed independent test counts to corroboratethe management count for the locations selectedas above performed roll-back procedures byverification of movement between the year-enddate and sample test count date with the supportingdocuments which included purchase invoice, salesinvoice, dispatch register, gate inward/outwardregister, etc. to substantiate the existence ofinventory as at the reporting date;
Slow-moving/obsolete inventory provisions:
• Tested the adjustment made in the books of accounts basis the results of the physical counts performed by the management.
Slow-moving/obsolete inventory provisions:
• Tested inventory ageing obtained through system reports, where applicable.
• Obtained from management the list of slow and nonmoving inventories identified as at March 31, 2023 and their corresponding expected sales in future periods.
• Tested the computation for allowance for slow moving, non-moving and obsolete inventories by performing an independent age-wise analysis of the inventory line items.
• Tested the net realizable value of traded goodsinventory on a sample basis to recent selling prices.
• Compared and assessed the actual utilization/sales to the previous estimates done by the management in prior periods to determine the efficacy of the process of estimation by the management.
Obtained written representations from management on the completeness and adequacy of inventory allowance as at the year end.
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S.N.
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Key Audit Matter
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Auditor's Response
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2.
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Accounting of Leases Under Ind AS 116-
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How our audit addressed the key audit matter:
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(Leases) :
Leases Refer note 1(v)(h) for significant accounting policy and note 46 for the financial statement disclosure relating to accounting for leases in accordance with Ind AS 116, Leases ('Ind AS 116').
The Company has recognised the Right of Use asset (ROU) and corresponding lease liability amounting to Rs 30,029.30 lakhs and Rs 36,400.42 lakhs as at March 31, 2023, respectively.
Owing to the volume of the lease contracts, and the estimates involved, we have considered this matter to be a key audit matter in our audit.
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Our audit included, but was not limited to, the following audit
procedures:
• • Understood the management process for identification of leasing arrangements for accounting of leases by applying the practical expedient.
• Evaluated design and tested the operating effectiveness of controls implemented around above mentioned process throughout the year.
• Reviewed the overall impact analysis prepared by the Company including completeness of lease contracts and application of practical expedients.
• Tested the accuracy of the revised lease agreements entered for a sample of leases through the inspection of lease documentation.
• Verified the accuracy of the underlying lease data used to calculate the lease liability, by agreeing are presentative sample of leases to original contracts or other supporting information.
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• Evaluated the appropriateness and adequacy of disclosures made in the financial statements with respect to Lease liability, Right of Use Assets and application of practical expedient, in conformity with the Ind AS 116 (Leases).
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Obtained written representations from management on the completeness of lease data and application of practical expedient.
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Other Information
The Company's Board of Directors are responsible for the other information. The other information comprises the information included in the Company's 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 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. 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 and take necessary actions, as applicable under the applicable laws and regulations.
Responsibilities of Management for the Standalone Financial Statements
The Company's 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 StandaloneFinancial statements that give a true and fair view of the financial position, financial performance including other comprehensive income,cash flows and statement of changes in equity of the Company in
accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 Standalone Financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalonefinancial 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 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 standalonefinancial 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.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
• Identify and assess the risks of material misstatement
of the standalonefinancial 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 theAct, 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 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 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.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statementsmay be influenced. We consider quantitative materiality and qualitative factors in planning the scope of our audit work and in evaluating the results of our work and to evaluate the effect of any identified misstatements in the standalone 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.
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 the "Annexure A"a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report that:
A. We have sought and except for the matters described in the Basis of Qualified Opinion section, 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, except for the matters described in the Basis of Qualified Opinion section;
C. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Change in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account;
D. Except for the matters described in the Basis of Qualified Opinion section, in our opinion, the aforesaid standalonefinancial statements comply with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act;
E. Qualification on financial statement has no adverse effect on the functioning of the Company;
F. 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 is disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act;
G. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in Basis for Qualified Opinion section;
H. With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B" to this report;
I. 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:
a. The Company has disclosed the impact of pending litigations on its financial position in its standalonefinancial statements - Refer Note 35 to the standalonefinancial statements;
b. The Company did not have any material foreseeable losses in long-term contracts including derivative contracts;
c. The Company did not have any amount which required to be transferred to the Investor Education and Protection Fund.
i. The management has represented that, to the best of it's knowledge and belief, as disclosed in the Note 50 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) during the year by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediaries shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
ii. The management has represented, that, to the best of it's knowledge and belief, as disclosed in the Note 52 to the standalone financial statements, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), during the year 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
iii. Based on such audit procedures, we have considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under subclause (d)(i) and (d)(ii) contain any material misstatement
e. The Company has not declared any dividend during the year therefore reporting regarding compliance of section 123 of the Companies Act, 2013 is not applicable.
f. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.
J. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
Other Matter
The audit of financial statement for the year ended March 31, 2022 included in these standalone financial statements are carried out by the previous auditor, whose report issued on May 30, 2022 expressed qualified opinion on those financial statements.
For Singhi & Co.
Chartered Accountants Firm Reg. No. 302049E
Bimal Kumar Sipani
Partner
Place: Noida (Delhi-NCR) Membership No. 088926 Date: May 25, 2023 UDIN:23088926BGXBBI4117
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