1. We have audited the accompanying standalone
financial statements of Varun Beverages Limited
('the Company'), which comprise the Balance
Sheet as at 31 December 2024, the Statement of
Profit and Loss (including Other Comprehensive
Income), the Statement of Cash Flow and the
Statement of Changes in Equity for the year then
ended, and notes to the standalone financial
statements, including a summary of the material
accounting policies and other explanatory
information (hereinafter referred to as the
"standalone financial statements”).
2. 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 ('Ind AS') specified under
section 133 of the Act read with the Companies
(Indian Accounting Standards) Rules, 2015 and
other accounting principles generally accepted in
India, of the state of affairs of the Company as at
31 December 2024, and its profit (including other
comprehensive income), its cash flows and the
changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the
Standards on Auditing specified under section
143(10) of the Act. Our responsibilities under
those standards 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 ('the
ICAI') 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 obtained is
sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
4. 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
financial statements as a whole, and in forming
our opinion thereon, and we do not provide a
separate opinion on these matters.
5. We have determined the matters described below
to be the key audit matters to be communicated
in our report.
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Key audit matter
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How our audit addressed the key audit matter
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Impairment assessment of intangible assets
including goodwill
Refer note 3.5 and 3.11 for accounting policies on
Intangibles assets and Business combinations and
Goodwill respectively. Further refer note 5A and
5B to the standalone financial statements.
The Company carries Goodwill and franchise
rights/ trademarks as intangible assets having
indefinite life amounting to INR 19.40 million and
INR 5,385.99 million respectively, that are required
to be tested for impairment by the management
on an annual basis in accordance with Ind AS 36,
Impairment of Assets.
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Our audit procedures included, but were not limited, to the
following:
• Obtained an understanding of the management's
process for identification of cash generating unit and
processes performed by the management for their
impairment testing;
• Assessed the process by which management prepared
its cash flow forecasts and held discussions with
management to understand the assumptions used
and estimates made by them for determining such
projections;
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Key audit matter
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How our audit addressed the key audit matter
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The aforesaid assessment of the impairment
testing involves significant judgement around the
determination of the recoverable amounts, being
the higher of value in use and fair value less costs
of disposal. Recoverable amounts are based on
management's view of the future cash flows and
prospects of the business, the appropriate discount
rates and other industry specific risk factors.
The key judgements in determining the recoverable
amounts relates to the forecast of future cash
flows based on strategy using macroeconomic
assumptions such as industry growth, inflation
and expected growth in market share, capital
expenditure and working capital requirements,
among others.
Changes in the management forecasts or
assumptions can impact the assessment of the
discounted cash flows.
Considering the materiality of the amounts
involved and significant degree of judgement
and subjectivity involved in the estimates and key
assumptions used in determining the forecasted
cash flows used in the impairment evaluation, which
are dependent on current and future economic
factors and trading conditions varying for different
economic and geographical territories, impairment
assessment of Goodwill and the Franchise rights/
trademarks was determined as a key audit matter.
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• Tested the design and operating effectiveness
of internal controls over such identification and
impairment test procedures;
• Assessed the appropriateness of the Company's
accounting policies, including those relating to
recognition, measurement and impairment of
intangibles by comparing with the applicable Ind AS;
• Reviewed the valuation report obtained by the
management from an independent valuer for
Franchise rights and assessed the professional
competence, skills and objectivity for performing the
required valuations;
• Assessed the appropriateness of the significant
assumptions as well as the Company's valuation model
with the support of auditor's valuation specialists, who
assess the reasonableness of assumptions used and
valuation methodology applied relating to discount
rate, risk premium, industry growth rate etc. This
included a discussion of the expected development of
the business and results as well as of the underlying
assumptions used with those responsible for the
planning process.
• Assessed the robustness of financial projections
prepared by the management by comparing
projections for previous financial years with actual
results realised and discussed significant deviations, if
any, with the management;
• Tested mathematical accuracy of the projections
and performed a sensitivity analysis for reasonably
possible changes in the sales growth, discount rate
applied and the long-term growth rate; and
• Evaluated the adequacy and appropriateness of
disclosures made by the Company in the standalone
financial statements, as required by the applicable
provisions of the Act and Ind AS.
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Claims, Appeals and Litigations - provisions and
contingent liabilities
(Refer note 40 to the standalone financial
statements for the amounts of contingent liabilities)
The Company is involved in various direct, indirect
tax and other claims, appeals and litigations
(hereafter, referred to as "Matters”) that are
pending with different statutory authorities
and judicial courts. The management exercises
significant judgement for determining the need
for and the amount of provisions, for any liabilities,
arising from these matters.
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Our audit procedures included, but were not limited to, the
following:
• Assessed the appropriateness of the Company's
accounting policies relating to provisions and
contingent liabilities with the applicable accounting
standards;
• Assessed the Company's process and the underlying
controls for identification of the pending matters
and completeness for financial reporting and also for
monitoring of significant developments in relation to
such pending matters;
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Key audit matter
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How our audit addressed the key audit matter
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This judgement is dependent on a number of
significant assumptions and evaluations which
involves interpreting the various applicable rules,
regulations, practices and considering precedents
in the various jurisdictions including the opinions
received from various legal counsels.
This matter is considered as a key audit matter,
in view of the uncertainty regarding the
outcome of these matters, the significance of the
amounts involved and the subjectivity involved
in management's judgement as to whether any
amount should be recognised as a provision or
be disclosed or not as a contingent liability in the
standalone financial statements.
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• Assessed the management's assumptions and
estimates in respect of matters, including the liabilities
or provisions recognised or contingent liabilities
disclosed in the standalone financial statements. This
involved assessing the probability of an unfavorable
outcome of a given proceeding and the reliability of
estimates of related amounts based on the various
legal counsels' opinions received by the Company;
• Recomputed the arithmetical accuracy of the
underlying calculations supporting the provisions
recorded from the supporting evidences including the
correspondence with various authorities;
• Assessed the management's conclusions through
understanding relevant judicial precedents in similar
cases and the applicable rules and regulations and
through a discussion with Company's legal department
and legal counsels appointed by the Company;
• Obtained legal opinions and confirmation on
completeness from the Company's external legal
counsels, where appropriate;
• Engaged auditor's experts to gain an understanding
of the current status of matters and changes
in the disputes, if any, through discussions with
the management and by reading external advice
received by the Company, where relevant, to validate
management's conclusions; and
• Assessed the appropriateness of the Company's
description of the accounting policy, disclosures
related to matters and whether these are adequately
presented in the standalone financial statements.
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Information other than the Financial Statements
and Auditor’s Report thereon
6. The Company's Board of Directors are responsible
for the other information. The other information
comprises the information included in the
Management Discussion and Analysis, Report on
Corporate Governance and Director's Report, but
does not include the standalone financial statements
and our auditor's report thereon.
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 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. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we
are required to report that fact. We have nothing to
report in this regard.
Responsibilities of Management and Those Charged
with Governance for the Standalone Financial
Statements
7. The accompanying standalone financial statements
have been approved by the Company's Board
of Directors. The Company's Board of Directors
are responsible for the matters stated in section
134(5) of the Act with respect to the preparation
and presentation of these standalone financial
statements that give a true and fair view of the
financial position, financial performance including
other comprehensive income, changes in equity and
cash flows of the Company in accordance with the
Ind AS specified under section 133 of the Act and
other accounting principles generally accepted in
India. 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 financial statements that give a true and
fair view and are free from material misstatement,
whether due to fraud or error.
8. I n preparing the financial statements, the Board of
Directors is 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.
9. 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
10. 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 Standards on
Auditing 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.
As part of an audit in accordance with the Standards
on Auditing, specified under section 143(10) of the
Act, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the standalone financial
statements, whether due to fraud or error,
design and perform audit procedures responsive
to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher
than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal
control;
• Obtain an understanding of internal control
relevant to the audit in order to design
audit procedures that are appropriate in the
circumstances. Under section 143(3) (i) of the
Act, we are also responsible for expressing our
opinion on whether the Company has adequate
internal financial controls with reference
to financial statements and the operating
effectiveness of such controls;
• Evaluate the appropriateness of accounting
policies used and the reasonableness of
accounting estimates and related disclosures
made by the management;
• Conclude on the appropriateness of the Board
of Directors' use of the going concern basis of
accounting and, based on the audit evidence
obtained, whether a material uncertainty exists
related to events or conditions that may cast
significant doubt on the Company's ability to
continue as a going concern. If we conclude that
a material uncertainty exists, we are required
to draw attention in our auditor's report to the
related disclosures in the standalone financial
statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the
date of our auditor's report. However, future
events or conditions may cause the Company
to cease to continue as a going concern.
• Evaluate the overall presentation, structure
and content of the financial statements,
including the disclosures, and whether the
financial statements represent the underlying
transactions and events in a manner that
achieves fair presentation.
12. We communicate with those charged with
governance regarding, among other matters, the
planned scope and timing of the audit and significant
audit findings, including any significant deficiencies
in internal control that we identify during our audit.
13. We also provide those charged with governance with
a statement that we have complied with relevant
ethical requirements regarding independence, and
to communicate with them all relationships and
other matters that may reasonably be thought to
bear on our independence, and where applicable,
related safeguards.
14. From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the financial
statements of the current period and are therefore
the key audit matters. We describe these matters
in our auditor's report unless law or regulation
precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine
that a matter should not be communicated in our
report because the adverse consequences of doing
so would reasonably be expected to outweigh the
public interest benefits of such communication.
Report on Other Legal and Regulatory
Requirements
15. As required by section 197(16) of the Act based on
our audit, we report that the Company has paid
remuneration to its directors during the year in
accordance with the provisions of and limits laid down
under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor's Report)
Order, 2020 ('the Order') issued by the Central
Government of India in terms of section 143(11) of
the Act, we give in the Annexure I, a statement on
the matters specified in paragraphs 3 and 4 of the
Order, to the extent applicable.
17. Further to our comments in Annexure I, as required
by section 143(3) of the Act based on our audit, we
report, to the extent applicable, 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 of the accompanying
standalone financial statements;
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, except for the matters stated
in paragraph 17(h)(vi) below on reporting
under Rule 11(g) of the Companies (Audit and
Auditors) Rules, 2014 (as amended)}.
c) The standalone financial statements dealt with
by this report are in agreement with the books
of account;
d) in our opinion, the aforesaid standalone financial
statements comply with Ind AS specified under
section 133 of the Act;
e) On the basis of the written representations
received from the directors and taken on record
by the Board of Directors, none of the directors
is disqualified as on 31 December 2024 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 17(b) above
on reporting under section 143(3)(b) of the Act
and paragraph 17(h)(vi) below on reporting
under Rule 11(g) of the Companies (Audit and
Auditors) Rules, 2014 (as amended);
g) With respect to the adequacy of the internal
financial controls with reference to financial
statements of the Company as on 31 December
2024 and the operating effectiveness of
such controls, refer to our separate Report
in Annexure II wherein we have expressed an
unmodified opinion; and
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 (as amended), in our opinion and to the
best of our information and according to the
explanations given to us:
i. The Company, as detailed in note 40 to
the standalone financial statements, has
disclosed the impact of pending litigations
on its financial position as at 31 December
2024;
ii. The Company did not have any long-term
contracts including derivative contracts for
which there were any material foreseeable
losses as at 31 December 2024.
iii. There has been no delay in transferring
amounts, required to be transferred, to the
Investor Education and Protection Fund
by the Company during the year ended 31
December 2024; and
iv. a. The management has represented
that, to the best of its knowledge and
belief, as disclosed in note 57(e) to
the standalone financial statements,
no funds have been advanced or
loaned or invested (either from
borrowed funds or securities premium
or any other sources or kind of
funds) by the Company to or in any
person(s) or entity(ies), including
foreign entities ('the intermediaries'),
with the understanding, whether
recorded in writing or otherwise,
that the intermediary shall, whether,
directly or indirectly lend or invest in
other persons or entities identified
in any manner whatsoever by or
on behalf of the Company ('the
Ultimate Beneficiaries') or provide
any guarantee, security or the like on
behalf the Ultimate Beneficiaries;
b. The management has represented that,
to the best of its knowledge and belief, as
disclosed in note 57(f) to the standalone
financial statements, no funds have been
received by the Company from any
person(s) or entity(ies), including foreign
entities ('the Funding Parties'), with the
understanding, whether recorded in
writing or otherwise, that the Company
shall, whether 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; and
c. Based on such audit procedures
performed as considered reasonable
and appropriate in the circumstances,
nothing has come to our notice that
has caused us to believe that the
management representations under
sub-clauses (a) and (b) above contain
any material misstatement.
v. The interim dividend declared and paid
by the Company during the year ended 31
December 2024 and until the date of this
audit report is in compliance with section
123 of the Act.
The final dividend paid by the Company
during the year ended 31 December 2024
in respect of such dividend declared for the
previous year is in accordance with section
123 of the Act to the extent it applies to
payment of dividend.
As stated in note 61(i) to the accompanying
standalone financial statements, the
Board of Directors of the Company have
proposed final dividend for the year ended
31 December 2024 which is subject to the
approval of the members at the ensuing
Annual General Meeting. The dividend
declared is in accordance with section
123 of the Act to the extent it applies to
declaration of dividend.
vi. Based on our examination which included
test checks, the Company, in respect of
financial year commencing on 01 January
2024, has used two accounting software
for maintaining its books of account
which have a feature of recording audit
trail (edit log) facility and the same have
been operated throughout the year for
all relevant transactions recorded in the
software. However, the audit trail feature
was not enabled at database level for one
accounting software to log any direct data
changes, as described in note 60 to the
standalone financial statements.
Further, during the course of our audit we
did not come across any instance of audit
trail feature being tampered with in respect
of these accounting software
As proviso to Rule 3(1) of the Companies
(Accounts) Rules, 2014 applies to the
Company for the financial year commencing
on 01 January 2024, reporting under Rule
11(g) of Companies (Audit and Auditors)
Rules, 2014 on preservation of audit trail as
per the statutory requirements for record
retention is not applicable for the financial
year ended December 31, 2024.
For J C Bhalla & Co For O P Bagla & Co LLP
Chartered Accountants Chartered Accountants
Firm's Registration No. 001111N Firm’s Registration No: 000018N/N500091
Akhil Bhalla Neeraj Kumar Agarwal
Partner Partner
Membership No: 505002 Membership No. 094155
UDIN: 25505002BMIKXH2112 UDIN: 25094155BMKSDP4102
Place: Gurugram Place: Gurugram
Date: 10 February 2025 Date: 10 February 2025
B-5, Sector-6, Noida B-225, 5th Floor, Okhla Industrial Area,
Uttar Pradesh 201301 Phase 1, New Delhi 110020
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