Quick Bites Limited (QBL), public company incorporated under the Companies Act, 2013, has its Registered Office in Mumbai, India. Founded in 2014 by…

Quick Bites Limited (QBL), public company incorporated under the Companies Act, 2013, has its Registered Office in Mumbai, India. Founded in 2014 by Ms. Raspreet Kaur and Mrs. Rubeena Rani, the company operates a rapidly expanding international Quick Service Restaurant (QSR) and casual dining chain under the renowned brand name NIWALA. QBL is currently opting for 5% scheme for restaurant services under GST provisions. QBL has adopted a strategy centered on product differentiation and cost leadership, aiming to deliver authentic Indian cuisine tailored to global standards while maintaining superior efficiency. This dual approach is essential for gaining a competitive advantage in the highly saturated global food and hospitality industry. As of 31st March 2025, QBL is a significant player in the Indian market, though its shares are currently unlisted. Extract of Audited Financial Information (as on 31.03.2025 - FY 2024-25): Particulars (in Lakhs) Paid-up Equity Share Capital 12,000 Non-Current Borrowings (Term Loan - Balance) 12,500 Total Turnover (FY 2024-25) 48,000 Average Turnover (Immediate 3 preceding FYs) 35,000 Net Profits (before Managerial Remuneration and Tax) 3,800 The Board of Directors comprises seven members: Ms. Raspreet Kaur (Managing Director - MD), Mrs. Rubeena Rani (Whole-Time Director - WTD), Mr. Jaspal Julka (WTD), Mrs. Susheela Dhakrey (Woman Director), and three Independent Directors (Mr. Asa Ram, Mr. Hem Shankar, and Mr. Radhey Shyam). For the Year ended 31.03.2025, remuneration paid to Ms. Raspreet Kaur, Mrs. Rubeena Rani and Mr. Jaspal Julka is 418 lakhs and remuneration to Mr. Asa Ram, Mr. Hem Shankar, and Mr. Radhey Shyam in the form of Stock Options totaling to 36.50 lakhs. Besides this, Mr. Asa Ram, Mr. Hem Shankar, and Mr. Radhey Shyam also received remuneration off - 5.00 lakhs each in their respective bank accounts in the form of fee. The Board has maintained a robust internal audit function outsourced to M/s XYZ Professionals, ensuring that internal control system compliance aligns with statutory requirements. Given the current scale and financial figures, QBL is required to appoint an internal auditor. In line with its strategic objective to establish a worldwide food chain, QBL decided in April 2024 to establish a fully owned subsidiary in Germany, NIWALA GMBH. This subsidiary is crucial for penetrating the European market. The initial project cost for NIWALA GMBH is estimated at USD 15 million (Current exchange rate:88/USD). QBL Limited plans to infuse this capital through Foreign Direct Investment (FDI). Key Expenditure Components for NIWALA GMBH (F.Y. 2024-25): Specialized Kitchen Equipment (Imported from UK): USD 5 million.Land Acquisition (Leased/Capitalized in Germany): USD 4 million.Marketing and Brand Promotion (Global Ad Campaign): USD 1.5 million. This includes payment to "Global Reach Inc.," a US-based entity, for online advertising services provided globally.Operational Working Capital and Contingency: USD 4.5 million. Simultaneously, QBL decided to expand its Agra central preparation facility to support growing domestic demand and cater to the supply needs of NIWALA GMBH (specialized spice blends, prefabricated frozen items). For this Capital Expenditure (CapEx) project, QBL incurred the following costs during F.Y. 2024-25, with assets being put to use on 15.03.2025: Acquisition of new industrial building/structure for the facility (Ready-to-use factory) costing - 10.50 Crores.Purchase and installation of new specialized machinery (M 1) as per details: List Price:6.50 Crores, five year maintenance contract - 10.00 lakhs, Operating losses before commercial production:15.00 lakhs and Architect Fee for site preparation - 5.00 lakhs and machine servicing equipment (MSE) ₹ 25.00 lakhs (it is not probable that future benefits of this will flow to the entity). {Fair value of M 1 is 7.05 Crores}Acquisition of industrial land adjacent to the facility costing - 4.00 Crores. QBL funded this CapEx by securing a fresh, term loan of 15 Crores from a Nationalized Bank on 1st October 2024. The interest rate is 10.5% p.a. Disbursement occurred on 15th October 2024. The project construction/ installation commenced on 1st November 2024, and the asset was ready for intended use on 15th March 2025. QBL established a detailed Strategic Cost & Performance Management (SCPM) system for its central Agra kitchen (Division-A) supplying specialized raw materials and ingredients to its domestic (Division-D) and international (NIWALA GMBH - Division-G) outlets. Division-A (Agra) Data (Projected for F.Y. 2024-25): Capacity: 5,00,000 units (spice blends/pre-mixes).Variable Cost of Production per unit:450.Expected Demand from Division-D (Domestic): 3,00,000 units.Expected Demand from Division-G (Germany): 1,00,000 units. The total expected demand is 4,00,000 units, which is within current capacity. The MD, Ms. Raspreet Kaur, suggested setting the internal transfer price (TP) at Full Cost ("₹ 650) for efficiency reporting, arguing that this policy maximizes overall company profit after considering international taxation differences. QBL is assessing whether it qualifies for the special investment-linked deduction under Section 35AD for its Agra expansion project as the company is not opting for concessional tax regime under Section 115 BAA. The relevant assets were put to use on 15.03.2025. QBL's management is making sincere efforts to ensure adherence to ethical labour practices among its food ingredient vendors and reduce energy consumption. Keeping this energy consumption in mind, QBL procured specialized food processing machinery from TechFab Limited (a registered supplier in UP). The machine costing - 8,85,000 (inclusive of 18% GST), which also happens to be the open market value, is purchased. As part of the negotiation, QBL also provided 100 kilograms of specialized, high-grade spices (manufactured internally, valued at 40,000, exclusive of GST) as consideration to TechFab. Mr. Vivek, the accountant, is unsure how to determine the correct transaction value for GST purposes. Further, QBL regularly uses road transport (Goods Transport Agency - GTA) for moving inventory between its Agra central kitchen and various outlets. The freight charged by the GTA (FPL Logistics, registered under GST) for F.Y. 2024-25 totalled 10 lakhs (exclusive of GST). FPL Logistics has opted to pay GST at 12% on forward charge, allowing QBL to potentially claim ITC. QBL while depositing GST dues for the concerned month sent the challan to the bank and the bank while transferring the GST to department deducted the transfer charges and remitted the net amount only. QBL thinks that bank correctly transferred the GST amount after deducting the transfer charges. M/s RSA & Co., Chartered Accountants, is the statutory auditor of QBL, CA. Lalit Bansal is the Engagement Partner. In December 2024, seeking enhanced credibility for the large nationalized Bank term loan of 15 Crores, QBL's CFO requested CA. Lalit to issue a compilation report on the prospective financial information (PFI) related to the projected returns from the new Agra facility. CA. Lalit is aware that prospective financial information is inherently based on management's assumptions and future contingencies. Post-sanction of the Nationalized Bank loan, a consortium of other banks expressed interest in funding QBL's future working capital requirements. During their due diligence process in February 2025, they formally requested CA. Lalit to provide detailed extracts from his audit working papers relating to the valuation of the fixed assets of QBL, specifically the breakup of the cost of the new specialized kitchen equipment and its expected useful life (USD 5 million import for NIWALA GMBH). Multiple Choice Questions: [Provide the correct option to the following questions]