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 2024, 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 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, except for the possible effects 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 2024, and its profit (including other comprehensive loss), 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(A)(3) to the accompanying standalone financial statements, the Enforcement Directorate (‘ED’) is investigating Company’s Joint Managing Director (‘JMD’) 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 was performed by an independent professional firm appointed by the Board of Directors and in our view, as per the report of the independent professional firm, there is no conclusive evidence to ascertain impact of the aforesaid matter on the Statement and control environment of the Company. 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(A)(2) 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 was 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 with the Hon’ble High Court of Delhi (‘High Court’) against granting of possession of the aforesaid land parcels and building. 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
7. In addition to the matters described in the Basis for Qualified Opinion, 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 under IND AS 115, Revenue from
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Our
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audit work included, but was not limited to, the following
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Contract with Customers
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procedures:
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Refer Note 2 (iii) (e) of the notes to the standalone financial
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Obtained an understanding of the management process
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statements.
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for each revenue stream, particularly of sale of rice and by-
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The Company recognised revenues amounting to ' 5,38,469 lacs for the year ended 31 March 2024, as disclosed in Note 28 to the standalone financial statements.
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products and evaluated the appropriateness of the accounting policy adopted by the management in accordance with Ind AS 115;
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Revenue primarily comprises of revenue from sale of manufactured goods (rice) and by products which is recognized when control of such goods is transferred to the customers and there is no unfulfilled obligation in accordance with the requirements of Ind AS 115 - Revenue from Contracts with Customers (‘Ind AS
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Obtained an understanding of the management process for each revenue stream, particularly of sale of rice and byproducts and evaluated the appropriateness of the accounting policy adopted by the management in accordance with Ind AS 115;
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115’). Revenue is measured at the amount of transaction price
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Evaluated the design and tested the operating effectiveness
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determined net of variable consideration pertaining to rebates
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of internal controls over revenue recognition including
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and discounts given to the customers.
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around quantity sold, pricing and accounting of revenue
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In accordance with Standards on Auditing, there is a presumed
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transactions;
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fraud risk relating to revenue recognition. Accordingly, occurrence
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Performed substantive analytical procedures on revenue
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of revenue is a key focus area on account of the multiplicity
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which includes ratio analysis, product mix analysis, region
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of Company’s products, multiple channels for sales, various
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wise analysis;
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categories of customers having varying terms of contracts and the volume of the sales made to them.
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Evaluated the terms and conditions of the contracts, including incoterms, with customers to ensure that the revenue
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Due to the above factors, we have identified testing of revenue
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recognition criteria are assessed by the management in
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recognition as a key audit matter.
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accordance with the accounting standards;
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On a sample basis, tested revenue transactions recorded during the year, and revenue transactions recorded in the period before and after year-end with supporting documents, such as invoices, agreements with customers, proof of deliveries, and subsequent collection of payment to ensure revenue is recorded in the correct period with correct amount
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Tested, on sample basis, the year end accruals made by the management with respect to rebates and discounts in accordance with the terms of approved schemes communicated to the customers of the Company;
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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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Tested, on sample basis, manual journal entries recorded in revenue accounts, credit notes and claims, if any, to the relevant approvals and the supporting documents;
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Evaluated the adequacy of disclosures given in the standalone financial statements, including disclosure of revenue recognition from sale of goods for appropriateness in accordance with the accounting standards.
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Key audit matter
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How our audit addressed the key audit matter
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Inventory existence and valuation of finished goods
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Our
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audit work included, but was not limited to the following
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procedures:
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Refer Note 2 (iii) (d) of the notes to the standalone financial
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statements.
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Existence:
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Inventory of the Company consists primarily of variety of rice,
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Obtained an understanding of the management’s process of
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paddy and their by-products, manufactured during the process
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inventory management and inventory physical verification
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of conversion of paddy into rice.
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performed subsequent to year-end;
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The Company held inventories amounting to ' 4,45,071 lacs as
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Evaluated the design and tested the operating effectiveness
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at 31 March 2024. The inventory primarily comprises of Paddy as raw material and finished goods in the form of rice and by-
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of internal controls over inventory management process/ inventory physical verification;
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products. Inventory holding is generally significant considering
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Reviewed the instructions given by management to stock
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the finished goods are aged for 18-24 months and also due to
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count teams, including ensuring proper segregation of stock,
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seasonality of the purchase/produce. Such inventory is stored in
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use of calibration scales/charts, identification of damaged
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plants, warehouses, silos, etc. High quantity of inventory makes
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inventory, if any, etc.;
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inventory physical verification an extensive procedure for the
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Observed physical count carried out by the management at
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management, at the year end.
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locations selected based on materiality and risk factors;
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The valuation of finished rice and by products is a complex
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During the above said observation, noted whether the
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exercise and is carried out manually. The valuation process
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instructions given by management to stock count teams were
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involves estimation around determination of -
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followed;
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Ý Allocable overheads and their absorption rates;
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Recounted inventory, on sample basis, to match with inventory records and results of management conducted count;
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Ý Determination of net realisable value of by-products such as
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husk, bran, etc, and
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Obtained inventory records and results of management conducted count;
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Ý Determination of net realisable value of the different variety
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Reviewed reconciliation of differences, if any, between
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of rice.
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management physical count and inventory records, and
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Accordingly, existence and valuation of the year-end inventory
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tested the necessary adjustment made in the inventory
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balance, which is significant with respect to the total assets held
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records by the management;
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by the Company, is considered to be one of the areas which required significant auditor attention owing to the complexity
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Valuation:
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Obtained an understanding of management process of
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and judgements involved in the process of physical count and
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valuation.
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inventory valuation;
Evaluated design and tested the operating effectiveness of internal controls over inventory valuation process;
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Tested the key inputs used in the valuation process from underlying source documents/ general ledger accounts;
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Re-performed reconciliation of opening inventory, purchase/ production, sales and year-end inventory and on sample basis validated the amount of yield during the year and to identify any abnormal production loss;
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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;
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Verified net realisable value of rice and by-products from actual sale proceeds near to the year-end;
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Tested arithmetical accuracy of valuation calculations;
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Evaluated the adequacy of disclosure given in the standalone financial statements, including disclosure of inventory year-end balance in the standalone financial statements, in accordance with applicable accounting standards.
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INFORMATION OTHER THAN THE FINANCIAL STATEMENTSAND 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.
RESPONSIBILITIES OF MANAGEMENT AND THOSECHARGED WITH GOVERNANCE FOR THE STANDALONEFINANCIAL 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
10. I n preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
11. The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THESTANDALONE FINANCIAL 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:
Ý 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;
Ý 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;
Ý Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
Ý 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; and
Ý 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 REGULATORYREQUIREMENTS
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) 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 possible effects of the matter described in the Basis for Qualified Opinion section and except for the matter stated in paragraph 19(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
c) t he standalone financial statements dealt with by this report are in agreement with the books of accounts;
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 2024 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 paragraph 19(b) above on reporting under section 143(3)(b) of the Act and paragraph 19(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
h) 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 ‘B’ wherein we have expressed a modified opinion; and
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:
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(A) 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. t here 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 50(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 50(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. 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.
As stated in Note 43(B) 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 1 April 2023, have used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same have been 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 used for maintaining books of accounts as described in Note 52 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
Sd/-
Nitin Toshniwal
Partner
Place: New Delhi Membership No.: 507568
Date: 20 May 2024 UDIN: 24507568BKEJVU8682
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