We have audited the accompanying standalone financial
statements of Hindustan Foods Limited ("the Company"),
which comprise the Balance Sheet as at March 31, 2026,
and 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 standalone financial statements,
including material accounting policy information and other
explanatory information (hereinafter referred to as the
"standalone financial statements").
In our opinion and to the best of our information and
according to the explanations given to us, 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 prescribed under section
133 of the Act read with Companies (Indian Accounting
Standards) Rules, 2015, as amended ("Ind AS") and other
accounting principles generally accepted in India, of the
state of affairs of the Company as at March 31, 2026, and
its profit (including other comprehensive income), changes
in equity and its cash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone financial
statements in accordance with the Standards on Auditing
(SAs) specified under section 143(10) of the Act. Our
responsibilities under those SAs 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 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 for
our opinion.
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 of the current period.
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.
|
Sr.
No
|
Key Audit Matters
|
How the Key Audit Matters were addressed in our audit
|
|
1.
|
Revenue is a key driver of the Company's
profitability and is therefore susceptible to
misstatement. Revenue is recognised when
control of the products being sold is transferred
to the customer and when the performance
obligation related to service has been fulfilled
by the Company based on the terms of the
agreements. Accordingly, the timing of revenue
recognition and completion of performance
obligation has a direct impact on the Company's
reported performance.
|
Our audit procedures include the following:
1. Obtained an understanding of the management's process
and controls around revenue recognition.
2. Evaluated and tested the design and operating effectiveness
of controls addressing this risk.
3. Verified, on a test-check basis, revenue transactions recorded
during the year and around the reporting date and assessed
whether revenue has been recognised in accordance with
Ind AS 115 by performing the following procedures:
• Reviewed underlying customer contracts, purchase
orders and sales arrangements to identify performance
obligations and assess the basis of revenue recognition;
|
|
Sr.
No
|
Key Audit Matters
|
How the Key Audit Matters were addressed in our audit
|
| |
We have identified revenue recognition as a key
audit matter due to the presumed risk of fraud,
particularly in relation to the overstatement of
revenue at the reporting date. This may arise from
the recognition of revenue for transactions where
control of the goods has not been transferred
to customers as at year-end, including instances
where the timing of transfer of control may have
been inappropriately altered or performance
obligations have not been satisfied.
|
• Examined supporting documents such as invoices,
dispatch documents and lorry receipts, to determine
whether control of goods/ performance obligation
related to service had passed to the customers at the
time revenue was recognised;
4. Performed substantive cut-off testing for revenue transactions
recognised immediately before and after the year-end,
including review of supporting dispatch and delivery
documentation to evaluate whether revenue had been
recorded in the appropriate accounting period.
5. Obtained evidence on the existence and accuracy of unbilled
revenue recognized, on sample basis, from underlying
supporting documents, including customer approvals and
acceptance.
6. Performed Analytical procedures on revenue recognized
during the year to identify and inquire on unusual variances, if
any and getting the reasons for variances confirmed from the
management.
7. Assessed the valuation and accuracy of trade receivables
and sales returns/discount provisions, where applicable,
by examining underlying supporting documentation and
subsequent adjustments.
8. Assessed the adequacy and appropriateness of the disclosures
made in the financial statements in respect of revenue
recognition in accordance with Ind AS 115 and the applicable
financial reporting framework.
|
|
2.
|
The Scheme of Arrangement ('the Scheme')
under section 230-232 and other applicable
provisions of the Companies Act, 2013 read with
the rules prescribed thereunder for merger of the
Contract Manufacturing (Nashik) Business unit of
Avalon Cosmetics Private Limited ("transferor")
into Hindustan Foods Limited ("transferee") and
Amalgamation of Vanity Case India Private Limited
("transferor") with Hindustan Foods Limited was
approved by the Hon'ble National Law Tribunal
vide its order dated March 06, 2026 ("the NCLT
Order").
|
Our audit procedures include the following:
1. Obtained understanding of the process followed by the
Company in respect of the assessment of accounting for the
business combination during the year.
2. We understood from the management, assessed and tested
the design and operating effectiveness of the Company's
key controls over the accounting of business combination
including those over assessment of business, common
control, acquisition date, identification of assets, liabilities and
reserves, and disclosures related to the same.
3. We have read the order passed by the National Company
Law Tribunal and other related documents to obtain an
understanding of the transactions and the key terms and
conditions.
|
|
Sr.
No
|
Key Audit Matters
|
How the Key Audit Matters were addressed in our audit
|
| |
The business combination with Contract
Manufacturing (Nashik) Business unit of Avalon
Cosmetics Private Limited and amalgamation with
the Vanity Case India Private Limited is accounted
in accordance with the Appendix C of Ind AS
103 'Business Combinations' and the approved
scheme of amalgamation.
|
4. We tested management's assessment of accounting for the
business combination and determined that it was appropriately
accounted for in accordance with Ind AS 103 Business
Combination and the approved scheme of amalgamation.
|
| |
Considering the magnitude and complex
accounting involved, the aforesaid business
combination treatment in standalone financial
statements has been considered to be a key audit
matter.
The carrying value of the assets and liabilities
of the as at April 1, 2024 (being the beginning
of the previous period presented), as appearing
in the consolidated financial statements of the
Transferor Companies before the merger have
been incorporated in the books of Transferee with
merger adjustments, as applicable.
|
5. We have verified supporting workings and evidence relating
to the accounting as per the terms of the Scheme of
Arrangement.
6. We have traced the assets, liabilities and reserves of Avalon
Cosmetics Private Limited ("transferor") from unaudited
financial statements and from audited financial statements of
Vanity Case India Private Limited ("transferor").
7. We also assessed the adequacy and appropriateness of the
disclosures made in the standalone financial statements are
in accordance with the Ind AS.
|
INFORMATION OTHER THAN THE STANDALONE
FINANCIAL STATEMENTS AND AUDITOR'S REPORT
THEREON
The Company's Board of Directors is responsible for
the other information. The other information comprises
the information included in the Annual Report, but does
not include the standalone financial statements and our
auditor's report thereon, which 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 BOARD
OF DIRECTORS FOR THE STANDALONE FINANCIAL
STATEMENTS
The Company's Management and Board of Directors are
responsible for the matters stated in section 134(5) of the
Act with respect to the preparation of these standalone
financial statements that give a true and fair view of the
financial position, financial performance, changes in equity
and cash flows of the Company in accordance with the
accounting principles generally accepted in India, including
the Indian Accounting Standards specified under section
133 of the Act. 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 statement that give a true and fair view and are
free from material misstatement, whether due to fraud or
error.
In preparing the standalone financial statements, the Board
of Directors of the Company are 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.
The Board of Directors is 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 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 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.
We give in "Annexure A" a detailed description of Auditor's
responsibilities for Audit of the Standalone Financial
Statements.
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 "Annexure B" a statement on the
matters specified in paragraphs 3 and 4 of the Order,
to the extent applicable.
2. As required by Section 143(3) of the Act, we report
that:
(a) We have sought and obtained all the information
and explanations which to the best of our
knowledge and belief were necessary for the
purposes of our audit of the aforesaid standalone
financial statements.
(b) In our opinion, proper books of account as
required by law relating to preparation of the
aforesaid standalone financial statements have
been kept by the Company so far as it appears
from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and
Loss (including other comprehensive income),
the Statement of Changes in Equity and the
Statement of Cash Flows dealt with by this Report
are in agreement with the books of account
maintained for the purpose of preparation of the
standalone financial statements.
(d) In our opinion, the aforesaid standalone financial
statements comply with the Ind AS specified
under Section 133 of the Act.
(e) On the basis of the written representations
received from the directors as on March 31, 2026
taken on record by the Board of Directors, none
of the directors are disqualified as on March 31,
2026 from being appointed as a director in terms
of Section 164 (2) of the Act.
(f) The modification relating to the maintenance of
accounts and other matters connected therewith
are as stated in paragraph 2(b) above on reporting
under Section 143(3)(b) and paragraph 2(h)(vi)
below on reporting under Rule 11(g).
(g) With respect to the adequacy of the internal
financial controls with reference to standalone
financial statements of the Company and the
operating effectiveness of such controls, refer to
our separate Report in "Annexure C".
(h) 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 does not have any pending
litigations which would impact its financial
position.
ii. The Company did not have any long-term
contracts including derivative contracts for
which there were any material foreseeable
losses.
iii. There are no amounts which are required to
be transferred to the Investor Education and
Protection Fund by the Company during
the year ended March 31, 2026.
iv. a. The Management has represented
that, to the best of it's knowledge and
belief, no funds have been advanced
or loaned or invested (either from
borrowed funds or share premium or
any other sources or kind of funds)
by the Company to or in any other
person(s) or entity(ies), including
foreign entities ("Intermediaries"),
with the understanding, whether
recorded in writing or otherwise,
that the Intermediary shall, 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.
b. The Management has represented
that, to the best of it's knowledge and
belief, no funds have been received
by the Company from any person(s)
or entity(ies), including foreign
entities ("Funding Parties"), with the
understanding, whether recorded in
writing or otherwise, that the Company
shall, 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.
c. Based on the audit procedures
performed that have been considered
reasonable and appropriate in the
circumstances, nothing has come
to our notice that has caused us to
believe that the representations under
sub-clause (i) and (ii) of Rule 11(e)
contain any material mis-statement.
v. The Company has neither declared nor paid
any dividend during the year.
vi. Based on our examination which included
test checks, the Company has used Focus
7 Accounting Software for Nashik unit of
Avalon Cosmetics Private Limited and Focus
9 Accounting Software for other locations
for maintaining its books of account during
the year ended March 31, 2026, which has
a feature of recording audit trail (edit log)
facility except that the audit trail feature
for Focus 9 Accounting Software at the
application level was enabled from Jan
01, 2026 and was enabled at the database
level from Jan 09, 2026 and that no audit
trail feature is available in the system at
the database level in respect of Focus 7
Accounting Software to log any direct data
changes for the entire year.
Further, where enabled for Focus 7
Accounting Software and Focus 9
Accounting Software, audit trail feature
has operated for all relevant transactions
recorded in the accounting software. Also,
during the course of our audit, we did not
come across any instance of audit trail feature
being tampered with in respect of such
accounting software. Additionally, the audit
trail of prior years for Focus 7 Accounting
Software and Focus 9 Accounting Software
has been preserved by the Company as
per the statutory requirements for record
retention to the extent it was enabled and
recorded in respective years.
3. In our opinion, according to information, explanations
given to us, the remuneration paid or provided by
the Company to its directors is within the limits laid
prescribed under Section 197 of the Act.
For M S K A & Associates LLP
(Formerly known as M S K A & Associates)
Chartered Accountants
ICAI Firm Registration No. 105047W/W101187
Virendra Kanak
Partner
Membership No.: 110811
UDIN: 26110811AOLPIV1962
Place: Mumbai
Date : May 21, 2026
|