To the Members of Devyani International Limited Basis for Opinion
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
Opinion
1. We have audited the accompanying standalone financial statements of Devyani International Limited (the Company'), which comprise the Standalone Balance Sheet as at 31 March 2025, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Cash Flow and the Standalone Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information.
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 March 2025, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
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 ('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 we have 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 standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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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 matters
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How our audit addressed the key audit matters
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Impairment assessment of franchisee rights, goodwill and other non-current assets
Refer note 2 (f) of material accounting policies information and the note 30 and 45 of the standalone financial statements of the Company for the year ended 31 March 2025.
As at 31 March 2025, the Company is carrying franchisee rights of ' 700.37 million, goodwill of ' 495.08 million and other non-current assets (representing property, plant and equipment, intangible assets, right-of-use assets net of lease liabilities and allocated corporate assets) of ' 9516.31 million representing identifiable group of assets pertaining to cash generating units ("CGUs") (refer note 45), in its standalone financial statements.
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Our audit procedures for impairment assessment of franchisee rights, goodwill and other non-current assets included but were not limited to the following:
a) Obtained an understanding from the management with respect to process and internal financial controls implemented by the Company to identify impairment indicators and determine recoverable value of all CGUs and evaluated the design implementation and tested the operating effectiveness of key internal financial controls;
b) Assessed the professional competence and objectivity of the external valuation expert engaged by the management for performing the required valuations to estimate the recoverable value of CGUs;
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Key audit matters
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How our audit addressed the key audit matters
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In accordance with the requirements of Ind AS 36,
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c)
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With the help of auditor's valuation experts, performed
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Impairment of Assets, the Company has performed an annual impairment assessment of such franchisee
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the following procedures:
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rights, goodwill and other non-current assets, (where
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o Evaluated appropriateness of identification of
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impairment indicators have been identified), in order
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CGUs basis our understanding of the business
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to determine whether the carrying value exceeds
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and the valuation model used by the Company for
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recoverable value as at 31 March 2025.
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determining the recoverable value of the CGUs;
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The management has determined that investment in
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o Assessed the reasonableness of the key
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each store as indicated by other non- current assets
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assumptions used in the DCF Model for computation
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constitutes a separate CGU which is tested for
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of business projections and recoverable value as at
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impairment as above. For this purpose, the Company,
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31 March 2025 such as growth rates and discount
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with the help of external valuation experts, as
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rates.
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applicable, has determined recoverable value of CGUs and also allocated franchisee rights and goodwill to
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o Performed sensitivity analysis in respect of such
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group of CGUs to which they relate. Recoverable value
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key assumptions to verify its appropriateness and
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is determined using Discounted Cash Flow Model (DCF Model) which required consideration of certain
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impact on the recoverable value;
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assumptions and estimates of future performance,
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o Tested the arithmetical accuracy of the computation
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operating margins, growth rates and discount rates.
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of recoverable value of the CGUs;
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Consequent to such impairment assessment, the
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d)
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Analysed the performance of the CGUs basis our
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Company has recorded an impairment charge of
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evaluation of the key assumptions and understanding of
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INR Nil against franchisee rights and goodwill and
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the business including current and expected market and
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an impairment charge of INR 221.31 million against
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economic conditions, and benchmarked growth rates for
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other non-current assets.
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projections used in approved business plans and;
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Due to the materiality of the amounts, significance of
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e)
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Assessed the adequacy and appropriateness of the
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these management estimates and judgements to the
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accounting policy used and disclosures made by the
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Company's standalone financial statements, which
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management included in note 30 and note 45 in respect of
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are inherently subjective, we have identified this area
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impairment of franchisee rights, goodwill and other non-
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as a key audit matter for current year's audit.
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certain current assets, in accordance with the accounting standards respectively.
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Impairment of investments in a subsidiary company
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Our audit procedures relating to assessment of the carrying
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(Continuing matter)
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values of investment in subsidiary included, but were not limited to the following:
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Refer note 2 (q) of material accounting policy information and the note 49 of the standalone
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a)
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Obtained an understanding from the management with
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financial statements of the Company for the year
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respect to process and controls implemented by the
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ended 31 March 2025.
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Company to identify impairment indicators and determine
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The Company has investments in a subsidiary company amounting to ' 3,427.07 million as at 31 March 2025.
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recoverability of the amounts from its subsidiary company and evaluated the design implementation and tested the operative effectiveness of key internal financial controls;
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The recoverability of the aforesaid amount is
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b)
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Assessed the professional competence and objectivity of the external valuation expert engaged by the management
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dependent on the operational performance of aforesaid subsidiary company including its step down subsidiaries. The actual business performance of one of the step-down subsidiaries has been lower than the
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for performing the required valuations to estimate the recoverable value of subsidiary company considering operational performance of stem down subsidiary
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anticipated performance which has been identified by
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the management as possible impairment indicators
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c)
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With the help of auditor's valuation experts, performed
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under the principles of Ind AS 36.
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the following procedures:
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Key audit matters
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How our audit addressed the key audit matters
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In accordance with the requirements of Ind AS 36, the
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o
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Evaluated appropriateness of the valuation model
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Company has performed an impairment assessment
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used by the Company for determining the recoverable
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of investment in such subsidiary basis indicators
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value of the step down subsidiary company;
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identified as mentioned in paragraph above, to determine whether the carrying value exceeds
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Assessed the reasonableness of the key assumptions
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recoverable value as at 31 March 2025.
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used in the DCF Model for computation of business projections and recoverable value as at 31 March
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The recoverable value has been determined by carrying out a valuation of the step-down subsidiary's
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2025 such as growth rates and discount rates;
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business with the help of an external valuation expert
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Performed sensitivity analysis in respect of such
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using the DCF Model, which requires management to
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key assumptions to verify its appropriateness and
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make significant estimates and assumptions related to forecast of future revenue, operating margins,
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impact on the recoverable value; and
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growth rate, expansion plans and selection of the
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Tested the arithmetical accuracy of the computation
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discount rates to determine the recoverable value to
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of recoverable value of the step-down subsidiary
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be considered for impairment testing of the carrying value of the aforesaid balances.
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company;
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d)
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Analysed the performance of the that step down
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Due to the materiality of the amounts, significance
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subsidiary company basis our evaluation of the key
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of these management estimates and judgements
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assumptions and understanding of the business including
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involved, which are inherently subjective, to the
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current and expected market and economic conditions,
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Company's financial position, we have identified this
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and benchmarked growth rates for projections used
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area as a key audit matter for current year's audit.
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in
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approved business plans and committed expansion
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plans and;
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a)
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Assessed the adequacy and appropriateness of the accounting policy used and disclosures made by the management included in note 6A and note 49 in respect of impairment of subsidiary company respectively.
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Information other than the Standalone 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 Annual Report, but does not include the standalone financial statements and our auditor's report thereon. The Annual Report 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 will 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 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. In preparing the standalone 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.
11. As part of an audit in accordance with 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 in place 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 management;
• Conclude on the appropriateness of 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; and
• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone 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 standalone
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 A 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 A, 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) 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)}, 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;
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 March 2025 from being appointed as a director in terms of section 164(2) of the Act;
f) The reservation 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 March 2025 and the operating effectiveness of such controls, refer to our separate report in Annexure B 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 39 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2025.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2025;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2025;
iv. a. The management has represented
that, to the best of its knowledge and belief, as disclosed in note 53(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 or entity, 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 53(f) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity, 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 subclauses (a) and (b) above contain any material misstatement.
v. The Company has not declared or paid any dividend during the year ended 31 March 2025.
vi. As stated in Note 56 to the standalone financial statements and based on our examination which included test checks, except for matters mentioned below, the Company, in respect of financial year commencing on 1 April 2024, has used 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. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with, other than the consequential impact of the exceptions given below. Furthermore, except for matters mentioned below the audit trail has been preserved by the Company as per the statutory requirements for record retention.
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Nature of exception noted
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Details of Exception
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Instances of accounting software for maintaining
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The audit trail feature was not enabled at the database
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books of account for which the feature of recording
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level for accounting software to log any direct data
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audit trail (edit log) facility was not operated
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changes, used for maintenance of accounting records,
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throughout the year for all relevant transactions
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sales invoicing and inventory management by the
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recorded in the software
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Company.
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For Walker Chandiok & Co LLP For O P Bagla & Co LLP
Chartered Accountants Chartered Accountants
Firm Registration No: 001076N/N500013 Firm Registration No: 000018N/N500091
Ankit Mehra Neeraj Kumar Agarwal
Partner Partner
Membership No. 507429 Membership No.: 094155
UDIN: 25507429BMIXFL9467 UDIN: 25094155BMKSEH5152
Place: Gurugram Place: Gurugram
Date: 23 May 2025 Date: 23 May 2025
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