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UPL Ltd.

BSE: 512070 Sector: Agri and agri inputs
NSE: UPL ISIN Code: INE628A01036
BSE 00:00 | 24 Apr 2020 UPL Ltd
NSE 05:30 | 01 Jan 1970 UPL Ltd

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OPEN 346.90
PREVIOUS CLOSE 348.55
VOLUME 120637
52-Week high 709.25
52-Week low 240.30
P/E 50.83
Mkt Cap.(Rs cr) 25,672
Buy Price 336.00
Buy Qty 5.00
Sell Price 336.00
Sell Qty 70.00
OPEN 346.90
CLOSE 348.55
VOLUME 120637
52-Week high 709.25
52-Week low 240.30
P/E 50.83
Mkt Cap.(Rs cr) 25,672
Buy Price 336.00
Buy Qty 5.00
Sell Price 336.00
Sell Qty 70.00

UPL Ltd. (UPL) - Auditors Report


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Company auditors report

To the members of

UPL limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of UPL Limited ("theCompany") which comprise the standalone balance sheet as at 31 March 2019 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31 March 2019 and profit and othercomprehensiveincomechangesinequity after tax reported for the year ended and its cash.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor’s Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and basis for our opinion.

Emphasis of matter

We draw attention to Note 45 of the standalone financial statements relating to theaccounting treatment of goodwill aggregating Rs. 3697 crores arising on amalgamation oferstwhile Advanta limited with the Company accounted during the year ended 31 March 2017and amortization of the said goodwill arising therefrom both of which are different fromthe treatment prescribed under Indian Accounting Standard (Ind AS) 103 - ‘BusinessCombinations ‘ for business combination of entities under common control. Had theaccounting treatment prescribed under Ind AS 103 been followed profit 31 March 2019 wouldhave been higher by Rs. 370 crores. Our opinion is not modified in respect of this matter.

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

The key audit matter How the matter was addressed in our audit
Revenue recognition and rebates accrual a) Revenue recognition
(Refer note 2.2(b) to accounting policies.)
a) Revenue recognition
The timing of revenue recognition is relevant to the reported performance of the Company. We tested the accuracy of revenue cut off around the year end. Our work comprised the agreement of sales transactions to supporting documentation and performing analytical procedures across various sales categories.
b) Rebates accrual
The Company provides rebates and has arrangements with various customers. Some of these arrangements involve estimation when determining the amount of liability to be recognised as at the year end. b) Rebates accrual
Our focus was on assessing if the rebates and related provisions made were based on relevant agreements and Company policies and approvals We have reviewed business processes and tested the design and implementation of controls surrounding the rebate expense accrual provision. We also compared year end customer rebate accruals and rebate costs in the year to prior year amounts and analysed the rebate trend. We have also verified the appropriateness of rebate provision calculations by agreeing amounts recognised to terms of agreements approvals and other supporting workings.
Inventory valuation (Refer note 2.2(i) to accounting policies.) We obtained the inventory ageing report and understood with management their procedures to identify slow moving and obsolete inventories.
We identified valuation of inventories as a key audit matter because the Company held significant inventories at the reporting date and because of the significant degree of management judgment involved in evaluating slow- moving obsolete inventory and the net realizable value of such inventories. We analysed the ageing profile of inventories to identify slow and obsolete inventories.
We tested the standard cost assessment and year-end adjustment to actual cost by performing walkthroughs of the costing exercise and testing the actual costs of production for a representative sample of products.
We assessed the adequacy of the allowance for obsolete inventories by checking on a sample basis whether inventory items were categorized appropriately in the relevant ageing bracket and assessed the reasonableness of the allowance percentages applied.
We also inquired for any obsolete or slow-moving inventories identified during our inventory count observation and also separately performed net realisable value testing on selected inventory items to check that inventories are carried at the lower of cost and net realisable value.

Other Information

The Company’s management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in theCompany’s annual report but does not include the financialstatements and ourauditors’ report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management’s Responsibility for the Standalone Financial Statements

The Company’s management and Board of Directors are responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the state of affairs profit/lossand other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management and Board of directors areresponsible for assessing the Company’s ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company’s financialreporting process.

Auditors’ 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 fraudor error and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higherthan for one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3) (i) ofthe Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor’s report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor’s report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors’ report unless law or regulation precludes public disclosure aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated to provide a basis in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

1. As required by the Companies (Auditor’s Report) Order 2016 (‘theOrder’) issued by the Central Government of India in terms of Section 143(11) of theAct we give in the "Annexure A" a statement on the matters specified in theparagraphs 3 and 4 of the Order to the extent applicable.

(A) 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 bestof 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 theCompany so far as it appears from our examination of those books;

(c) The standalone balance sheet the statement of profit and loss (including othercomprehensive income) the standalone statement of cash flows and the standalone statementof changes in equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statements comply with the IndAS specified under section 133 of the Act;

(e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164(2) of the Act;

(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

(a) The Company has disclosed the impact of pending litigations as at 31 March 2019 onits financial position in its standalone financial statements; - Refer Note 35(c) to thestandalone financial statements;

(b) The Company did not have any long-term has contracts including derivative contractsas at the year end for which there were any material foreseeable losses;

(c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company;

(d) The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditors’ Report undersection 197(16): In our opinion and according to the information and explanations given tous the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act.

The remuneration paid to any director is not in excess of the limit laid down underSection 197 of the Act. The not prescribed other Ministryof Corporate Affairs detailsunder Section 197(16) which are required to be commented upon by us

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022
Bhavesh Dhupelia
Place: Mumbai Partner
Date: 17 May 2019 Membership No: 042070

Annexure A to the Independent Auditors’ Report - 31 March 2019

(Referred to in our report of even date)

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

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to the programme certain fixedassets were physically verified by the management during the year. In our opinion andaccording to the information and explanations given to us no material discrepancies werenoticed on such verification

(c) In our opinion and according to the information and explanations given to us by themanagement and on the basis of an examination of the records of the Company the titledeeds of the immovable properties as disclosed in Note 3 of the standalone financialstatements are held in the name of the Company except in the case of leasehold landfreehold land and buildings with a carrying value of Rs. 11 crores Rs. 2 crores and Rs.47lakhs (Gross block of Rs. 11 crores Rs. 2 crores and Rs.1 crore) as at 31 March 2019respectively wherein as explained to us the Company is not able to reconcile with fixedassets register with the title deeds and hence we are unable to comment on the same

(ii) The inventory except goods in transit and stocks lying with third parties hasbeen physically verified by the management at reasonable intervals during the year. In ouropinion the frequency of such verification is reasonable. For stocks lying with thirdparties at the year- end written confirmations have been obtained by management and inrespect of goods-in- transit subsequent goods receipts have been verified orconfirmations have been obtained from the parties. The discrepancies noticed onverification between the physical stocks and the book records were not material and havebeen dealt with in the books of account

(iii) The Company has granted unsecured loan to two companies covered in the registermaintained under Section 189 of the Act.

(a) In respect of the aforesaid loans the terms and conditions under which such loanswere granted are not prejudicial to the Company’s interest.

(b) One of the aforesaid loans along with interest thereon has been fully repaid duringthe year. In respect of another loan which is repayable on demand we are informed thatthe amount of interest and principal demanded by the company has been fully paid duringthe year and thus there has been no default on the part of parties to whom the money hasbeen lent.

(c) There are no amounts overdue for more than ninety days at the balance sheet date inrespect of the aforesaid loan

(iv) In our opinion and according to the information and explanation given to us theCompany has complied with provisions of Section 185 and 186 of the Act in respect of loansgranted investments made and providing guarantees as applicable.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits under Sections 73 to 76 or any other relevantprovisions of the Act and the rules framed thereunder. Accordingly para 3(v) of the Orderis not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the Company asspecified under Section 148(1) of the Act for maintenance of cost records in respect ofthe products manufactured by the Company and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of cost records with a view to determine whether they are accurate orcomplete.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees’State Insurance Income-tax Goods and Service tax Duty of Customs and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities though there has been slight delay in a few cases except forthe provident fund dues as referred to in Note 35(d) of financial statements.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees’ State Insurance Income-tax Goodsand Service Tax Duty of customs and other material statutory dues were in arrears as at31 March 2019 for a period of more than six months from the date they became payable.Also refer note 35 (d) to the standalone the financial statements. Refer Note 35(d) offinancial statements.

(c) According to the information and explanations given to us and based on ourexamination of the records of the Company there are no dues of Income-tax Sales TaxService tax Duty of customs Goods and service tax duty of excise and value added tax asat 31 March 2019 which have not been deposited with the appropriate authorities onaccount of any dispute except as stated below

* AY Assessment year FY Financial year

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings from financialinstitution bank or dues to debenture holders. The Company did not have any loans orborrowings from the government during the year.

(ix) According to the information and explanations given to us the Company did notraise money by way of initial public offer debt instruments) and term loans during theyear. Accordingly para 3(ix) of the Order is not applicable to the Company.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or fraud on the Company by its officers or employeeshas been noticed or reported during the year nor have we been informed of such case by themanagement.

(xi) According to the information and explanations given to us the managerialremuneration has been paid/ provided in accordance with the requisite approvals mandatedby the provisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us the Company is not aNidhi company as prescribed under Section 406 of the Act. Accordingly para 3(xii) of theOrder is not applicable to the Company.

(xiii) According to the information and explanations given to us all transactions withthe related parties are in compliance with provisions of Section 177 and 188 of the Actwhere applicable and the details have been disclosed in the standalone Ind AS financialstatements as required by the applicable Indian accounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company no preferential allotment or private placementof shares or fully or partly convertible debentures was made during the year. Accordinglypara or further public offer 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly para 3(xv) of theOrder is not applicable to the Company.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly reporting under the clause 3(xvi) of the Order is not applicable to theCompany

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022
Bhavesh Dhupelia
Place: Mumbai Partner
Date: 17 May 2019 Membership No: 042070

Annexure B to the Independent Auditors’ Report - 31 March 2019

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of sub-section 3 of Section 143 of the CompaniesAct 2013

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements’ section of our report of even date)

Opinion

We have audited the internal financial controls with reference to the standalonefinancial statements of UPL Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management’s Responsibility for Internal Financial Controls

The Company’s management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct its business including adherence to Company’s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor’s judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

Auditors’ Responsibility (Continued)

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis opinion on the Company’s internal financial controls with referenceto financial statements.

Meaning of Internal Financial Controls with reference to financial statements.

A company’s internal financial controls with reference to financial statements isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal financialcontrols with reference to financial statements include those policies and procedures that(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions company; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statementsin accordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements.

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes of theassetsofthe in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022
Bhavesh Dhupelia
Place: Mumbai Partner
Date: 17 May 2019 Membership No: 042070

 


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