K.A.

M : 1

REVENUE RECOGNITION –
DISCOUNTS AND REBATES

K.A.M : 2

PROVISIONS AND CONTINGENT

LIABILITIES

K.A.M : 3

ACCOUNTING FOR ACQUISITION

K.A.M : 4

IMPAIRMENT ASSESSMENT
K.A.M : 1
REVENUE RECOGNITION – DISCOUNTS &
REBATES

Description How our audit addressed it.

Certain discounts and rebates for goods
sold during the year are only finalized
when the precise amounts are known and
revenue therefore includes an estimate of
variable consideration. there is a risk of
revenue being overstated due to fraud
through manipulation of discounts and
rebates accruals recognized
-Understanding the process
-Evaluating the design and implementation
and testing
-Inspecting and testing on a sample and
substansive basis
-Testing actualization of estimated accruals
-Critically assessing manual journal entries
-
K.A.M : 2
PROVISIONS AND CONTINGENT LIABILITIES
RELATING TO TAXATION, LITIGATIONS AND CLAIMS

Description How our audit addressed it.

•The provisions and contingent liabilities
relate to ongoing litigations and claims
with various authorities and third parties.
the amounts involved are significant and
are subject to changes in the outcomes of
litigations and claims and the positions
taken by the Company. It involves
significant judgement and estimation to
determine the likelihood and timing of the
cash outflows and interpretations
- Understanding the process followed by the Company
for assessment and determination of the amount.
-Evaluating the design and implementation and testing
-Involving our tax professionals with specialized skills
and knowledge for assistance.
-•Testing data used to develop the estimate for
completeness and accuracy.
-Assessing the Company’s disclosures in the
standalone financial statements
 K.A.M : 3
ACCOUNTING FOR ACQUISITION OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
Description How our audit addressed it.
As disclosed in note 40 to the standalone financial Understanding the process followed by the
statements, on 1 April 2020, the Company acquired
Company for assessment and determination
GlaxoSmithKline Consumer HealthCare Limited
(GSK CH India) under a scheme of amalgamation. of the effective date and the accounting
The fair value of the consideration transferred by treatment
the Company was Rs.40,242 crores. Accounting for
-Evaluating the design and implementation
the acquisition involves judgement in order.
Complex auditor’s judgement and specialized skills and testing the operating effectiveness of key
were also required in evaluating these assumptions internal controls
for which management had engaged external
-Testing the completeness of the identified
valuation experts. This was a material acquisition for
the Company and given the level of estimation and assets acquired and liabilities assumed by
judgement required, we considered it to be a key comparison
audit matter
 K.A.M : 3
ACCOUNTING FOR ACQUISITION OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED

How our audit addressed it.

Challenging the reasonableness of the key assumptions

-•Involving valuation professionals with specialized skills and knowledge to assist in:
-Testing the completeness of the identified assets acquired and liabilities assumed by
comparison
 K.A.M : 4
IMPAIRMENT ASSESSMENT OF FOOD &
REFRESHMENT CASH GENERATING UNIT (F&R CGU)
Description
•As disclosed in note 4 to the standalone involves inherent uncertainty since they are based on
financial statement, the F&R CGU includes future business prospects and economic outlook.
`17,301 crores of goodwill and `27,210 crores
of indefinite life intangible assets which •Due to the materiality of above assets in context of
together represents 65% of total assets of the standalone financial statements and sensitivity of
the Company as at 31 March 2021.
discount rate and near and long-term revenue growth
•The recoverable value of the F&R CGU
which is based on the value in use model, has rate assumptions where a minor changes could have a
been derived from discounted forecast cash significant impact on the recoverable value, we have
flow model. This model requires the
considered the impairment assessment of F&R CGU to
Company to make significant assumptions
such as discount rate, near and long-term be a key audit matter
revenue growth rate and projected margins
which
 K.A.M : 4
IMPAIRMENT ASSESSMENT OF FOOD &
REFRESHMENT CASH GENERATING UNIT (F&R CGU)
How our audit addressed it.
•Understanding the process followed by the
Company in respect of the annual impairment
analysis for F&R CGU.
•Evaluating the design and implementation
and testing the operating effectiveness of key
internal controls related to the Company’s
process relating to review of the annual
impairment analysis, including controls over
determination of discount rate, near and long-
term revenue growth rate and projected
margins.
Challenging the reasonableness of the assumptions,
particularly forecasted revenue growth rate and
margins based on our knowledge of the Company
and market. Assessing historical accuracy by
comparing past forecasts to actual results achieved
•Involving the valuation professionals with
specialized skills and knowledge to assist in
evaluating the impairment model used and
assumptions (including discount rate and long-term
sales growth rate applied by the Company by
comparing it to a range of rates that were
 K.A.M : 4
IMPAIRMENT ASSESSMENT OF FOOD &
REFRESHMENT CASH GENERATING UNIT (F&R CGU)

How our audit addressed it.

independently developed using publicly available market indices and market data for comparable
entities). Applying additional sensitivities to assess the reasonableness of the above key
assumptions.
•Testing data used to develop the estimate for completeness and accuracy.
•Performing a sensitivity analysis to evaluate the impact of change in key assumption individually or
collectively to the recoverable value.
•Assessing the adequacy of the Company’s disclosures in respect of its impairment testing.