FUTURE BATA INDIA Auditors Report

Report on the Standalone Ind AS Financial Statements


We have audited the accompanying standalone Ind AS financial statements of Bata India Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.


Management’s Responsibility for the 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


Auditor’s Responsibility


Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.


Opinion


In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS financial statements give the information required by 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, 2017, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.


Report on Other Legal and Regulatory Requirements


1. As required by the Companies (Auditor’s report) Order, 2016 (“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 1 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 obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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;


(c) The Balance Sheet, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of accounts;


(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 Companies (Indian Accounting Standards) Rules, 2015;


(e) On the basis of written representations received from the directors as on March 31, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017, 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 2” to this report;


(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, in our opinion and to the best of our information and according to the explanations given to us:


i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 33 to the standalone Ind AS financial statements;


ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;


iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;


iv. The Company has provided requisite disclosures in Note 45 to these standalone Ind AS financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on our enquiries, test check of the books of account and other details maintained by the Company and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company.


Annexure 1 referred to in paragraph 1 under the heading “Report on other legal and regulatory requirements” of our report of even date


Re: Bata India Limited (the Company)


(i)(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.


(i)(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.


(i)(c) According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment/fixed assets are held in the name of the company.


(ii)(a) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.


(iii)(a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.


(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of section 185 and 186 of the Companies Act 2013 are applicable and hence not commented upon.


(v) The Company has not accepted any deposits from the public.


(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under Section 148(1) of the Companies Act, 2013, for the products/services of the Company.


(vii)(a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it.


(vii)(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income-tax, service tax, sales-tax, custom duty, excise duty, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.


(vii)(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, service tax, custom duty, excise duty, value added tax and cess on account of any dispute, are as follows:











































































































































Name of the statute



Nature of the dues



Amount (Rs. million)



Period to which the amount relates



Forum where the dispute is pending



Various State Sales Tax Acts



Purchase tax dispute at Faridabad



8.2



1984-1985



Supreme Court



Various State Sales Tax Acts



Revenue Recovery against non-payment of demand in assessment



6.7



1994-1995 1998-1999 2000-2001



STAT, Kerala



Various State Sales Tax Acts



Tax in dispute u/s 92 of Central Sales Tax act regarding non submission of forms.



2.8



1991-1992



High court, UP



Karnataka Sales Tax Act



Unclaimed input tax credit adjusted against VAT



4.1



2005-2006 to 20082009



Joint Commissioner’s Appeal



Various State Sales Tax Acts



Misclassification of Article for VAT payment



9.7



2005-06 to 2006-07



VAT for tribunal, Kerala



Central Excise Act,1944



Excise duty demand on closing balance of exempted footwear



1.5



1987-88



CESTAT- Kolkata



Central Excise Act,1944



Duty demanded for sale of footwear at domestic tariff area which final hearing before commissioner concluded and order is pending.



7.0



1997-99



Commissioner of Central Excise, Chennai



Central Excise Act,1944



Disallowance for trade discount for sale of footwear to retail outlet.



2.8



1995-97



CESTAT-Chennai



Central Excise Act,1944



Excise duty demanded for movement of raw material to job worker without payment of duty.



15.5



2004-05 to 2005-06



CESTAT-Kolkata



Central Excise Act,1944



Disallowing abatement @ 40% on MRP for institutional sales. Sale of Industrial Boots and Mine Safety Boots.



9.0



2007


2008


2009


2010



CESTAT-Kolkata



Central Excise Act,1944



Non-compliance of the condition ofthe notification for marking MRP on factory seconds cleared on payment of appropriate C.E. duty,



21.5



July 2004 to Jan 2008



CESTAT- Kolkata



Central Excise Act,1944



Exclusion of Sales tax @8% for payment of an amount equal to 8%/10% on exempted footwear as per CCR 6(3)(b)



3.0



August 2004 to Jan 2008



CESTAT- Kolkata



Finance Act, 1994



Disallowance of service tax input credit on input service availed for outward transportation



4.3



2006-2010



Commissioner of Central Excise, Kolkata



Customs Act,1942



Duty Demand on account of short levy of customs duty (antidumping duty) for which hearing before commissioner concluded and order received



10.8



2001



CESTAT- Kolkata



Finance Act,1994



Availment of wrong input service tax credit



86.2



April 2008 to May 2012



CESTAT- Chennai



Customs Act,1942



Wrong availment of concessional rate of customs duty etc., against which the hearing has not been finalised as yet.



83.8



1998-2003



CESTAT- Kolkata



Income Tax Act,1961



Short term capital gains



117.5



2007-2008



ITAT, Kolkata



Income tax Act,1961



Disallowance of certain expenditure



312.8



AY 2011-2012 to AY 2013-2014



Commissioner of Income Tax (Appeal), Kolkata



(viii) The Company has neither taken any loan from financial institution or bank nor issued any debentures, therefore the provision of clause (viii) of the Order is not applicable, hence not commented upon.


(ix) According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer / debt instruments and term loans hence, reporting under clause (ix) of the Order is not applicable to the Company and hence not commented upon.


(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the company or no material fraud on the company by the officers and employees of the Company has been noticed or reported during the year.


(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.


(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.


(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.


(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.


(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him.


(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.


For S.R. Batliboi & Co. LLP


Chartered Accountants


ICAI Firm Registration Number: 301003E/E300005


per Sanjay Vij


Place : Gurgaon Partner


Date: May 15, 2017 Membership Number: 95169

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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