Shri Vile Parle Kelavani Mandal’s

Narsee Monjee College of Commerce & Economics

(Autonomous)

Bachelor of Management Studies (BMS) Programme

2020-21

SY BMS Semester IV Division B

Course Name: Auditing
Project Title: Audit Report of Nestle India Ltd.

Submitted by:
Student’s Name SAP ID Roll No
Nandini Shukla 45401190089 B057

Declaration of Originality
I, hereby declare that this assignment titled ‘Audit Report of Nestle India Ltd.’ is entirely my
own work and that any additional sources of information have been duly cited.
I hereby declare that any offline/online sources, published or unpublished, from which I have
quoted or drawn references have been referenced fully in the bibliography list. I understand
that failure to do so will lead to plagiarism and severe disciplinary action will be initiated
against me.
I understand that I may be required to present the assignment and /or appear for viva (Offline
and/ or Online). I acknowledge it is my responsibility to keep myself updated with the
schedule of the presentation/ viva and I will ensure I am available during the same.

Student Name:
Nandini Shukla

Sign:
Name of the Company- Nestle India Ltd

Nestlé India Limited is the Indian subsidiary of Nestlé which is a Swiss multinational company.
The company is headquartered in Gurgaon, Haryana. The company's products include food,
beverages, chocolate, and confectioneries.
The company was incorporated on 28 March 1959 and was promoted by Nestle Alimentana S.A.
via a subsidiary, Nestle Holdings Ltd. As of 2020, the parent company Nestlé owns 62.76% of
Nestlé India. The company has 9 production facilities in various locations across India.

1) Name & Details of the Statutory Auditor-

The Audit is conducted by SRBC & Co LLP which is a Limited Liability Partnership firm
incorporated on 01 April 2013. It is registered at Registrar of Companies, Kolkata. Its total
obligation of contribution is Rs. 69,500,000. Designated Partners of SRBC & Co LLP are Vikas
Kumar Pansari, Santosh Agarwal, Sudhir Murlidhar Soni, Jayesh Manhar Gandhi, Navin Kumar
Agarwal, Arvind Sethi. Current status of S R B C & Co LLP – Active.

2) Year of Annual Report- 2020

3) Type of Opinion- The auditor has a clean or unqualified opinion about the standalone financial
statements of the company. In their opinion and according to the information provided,
statements present a true and fair representation of the financials

4) Basis of Opinion-

The auditors conducted the audit in accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Act. Their responsibilities under those SAs are further described in
the Auditor’s Responsibilities for the Audit of the Financial Statements section of the report.
They 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 their audit of the financial statements under the provisions of the Act and the Rules
thereunder, and they have fulfilled their other ethical responsibilities in accordance with these
requirements and the Code of Ethics. They believe that the audit evidence they have obtained is
sufficient and appropriate to provide a basis for their opinion on the financial statements.

5) Key Audit Matters- According to their judgment, these are the key audit matter which played
an imperative role while auditing the standalone financial statements of the year 2020:

a) Revenue Recognition-
Revenue from the sale of goods is recognized at the moment when control has been
transferred to the customer and is measured net of trade discounts, rebates and pricing
allowances to customers (collectively ‘trade spends’). There is a risk that revenue may be
overstated because of fraud, resulting from the pressure local management may feel to
achieve performance targets. Revenue is also an important element of how the company
measures its performance, upon which management is incentivized. The Company focuses on
revenue as a key performance measure, which could create an incentive for revenue to be
recognized before control has been transferred.

How the matter was addressed in the audit-

 The audit procedures included:

• They assessed the appropriateness of the revenue recognition accounting policies by

comparing with applicable accounting standards.
• They evaluated the design, tested the implementation and operating effectiveness of key
internal controls including general IT controls and key IT application controls over
recognition of revenue.
• They performed substantive testing by selecting samples of revenue transactions recorded
during the year by testing the underlying documents which included invoices, good dispatch
notes, customer acceptances and shipping documents (as applicable).
• They carried out analytical procedures on revenue recognised during the year to identify
unusual variances.
• They tested, on a sample basis, specific revenue transactions recorded before and after the
financial year end date to determine whether the revenue had been recognised in the
appropriate financial period.
• They tested manual journal entries posted to revenue to identify unusual items.

b) Provision for Contingencies-

The management is required to make judgments and estimates in relation to the issues and
exposures arising from a range of matters relating to direct tax, indirect tax, general legal
proceedings and other eventualities arising in the regular course of business. The Company is
also subject to complexities arising from uncertain tax positions on deductibility of expenses.
The key judgment lies in determining the likelihood and magnitude of the possible cash
outflows and interpretations of the legal aspects, tax legislations and judgments previously
made by authorities. By nature, these are complex and include many variables.

How the matter was addressed in the audit-

Our audit procedures included:

• They tested the design, implementation and operating effectiveness of key internal controls
around the recognition and measurement of provisions.
• They inquired the status in respect of significant provisions with the Company’s internal tax
and legal team.
• They involved our subject matter experts, wherever required, to assess the value of material
provisions in light of the nature of the exposures, applicable regulations and related
correspondence with the authorities.
• They challenged the assumptions and critical judgements made by the Company which
impacted their estimate of provision required, considering judgements previously made by
the authorities in the relevant jurisdictions or any relevant opinions given by the Company’s
advisors and assessing whether there was an indication of management bias.
• They verified the calculation of provision on a test check basis

6) Overall comment on the financial performance of the company from the point of view of the
stakeholders on the basis of auditor’s report-

1- Total comprehensive income increased from Rs 24,940 million to Rs 28,775 million in FY

2020.
2- Current Assets increased from Rs 71,729 million to 78,997 million.
3- Current Liabilities increased from Rs 71,729.4 million in 2019 to Rs 78,997.3 in 2020.
4- Net increase in Cash is Rs 1,771.3 million in FY 2020.
Stakeholders are content with the financial performance and are happy with the transparency
and integrity regarding operations of the company
Audit Report of Nestle India-
Link to the Annual Report 2020- https://www.nestle.in/sites/g/files/pydnoa451/files/2021-04/Nestle-
India-Annual-Report-2020.pdf