To the Members of Bajaj Auto Ltd.
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements ofBajaj Auto Ltd. (the Company') which comprise the Balance Sheet as at 31 March2021 the Statement of Profit and Loss including the Statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas standalone financial statements').
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 as amended (the Act') in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2021 its profit including other comprehensive income its cash flows and thechanges in equity for the year ended on that date.
Basis for opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in theAuditors' responsibilities for the audit of the standalone financialstatement' section of our report. We are independent of the Company in accordancewith the Code of Ethics' issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.
Key audit matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thefinancial year ended 31 March 2021. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditors' responsibilities for the audit of the standalone financialstatements' section of our report including in relation to these matters.Accordingly our audit included the performance of procedures designed to respond to ourassessment of the risks of material misstatement of the standalone financial statements.The results of our audit procedures including the procedures performed to address thematters below provide the basis for our audit opinion on the accompanying standalonefinancial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Accounting for investments in open ended target maturity funds (Funds') || |
|(as described in Note 5B of the standalone financial statements) ||Our audit procedures included the following: |
|The Company has investments aggregating RS. 2320.75 crore in open ended target maturity funds as at 31 March 2021. || Read the minutes of the Investment Committee meetings. |
|These investments are subsequently measured at amortised cost' based on fulfilment of Solely Payments of Principal and Interest (SPPI') test and business model requirement as per Ind AS 109 Financial instruments'. || Perform test of controls on a sample basis on the operating effectiveness of internal controls related to accounting of investments. |
|These types of investments being significant during the year were an area of significant audit attention and hence has been considered as a key audit matter. || Read the terms and conditions of scheme information document/key information memorandum of the funds invested by the Company. |
| || Tested on a sample basis the investments underlying the funds to assess whether those investments would satisfy the conditions of amortised cost accounting as per Ind AS 109. |
| || Read and assessed the related disclosures included in the standalone financial statements. |
| || Obtained Management representations relating to accounting for the investments in the funds. |
We have determined that there are no other key audit matters tocommunicate in our report.
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in theChairman's Letter Management Discussion and Analysis Corporate Governance andDirectors' Report but does not include the standalone financial statements and ourauditors' report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whethersuch other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management for the standalone financial statements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements Management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless Management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditors' responsibilities for the audit of the standalonefinancial statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditors' report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by Management.
Conclude on the appropriateness of Management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditors'report to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors' report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended 31 March 2021 and are therefore the keyaudit matters. We describe these matters in our auditors' report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditors' Report) Order 2016(the Order') issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act based on our audit we give in the Annexure 1 a statementon the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet the Statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from thedirectors as on 31 March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2021 from being appointed as a director in termsof Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controlswith reference to these standalone financial statements and the operating effectiveness ofsuch controls refer to our separate Report in Annexure 2 to this report;
(g) In our opinion the managerial remuneration for the year ended 31March 2021 has been paid/provided by the Company to its directors in accordance with theprovisions of section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in theAuditors' 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 tothe explanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements refer note 34 to thestandalone financial statements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts refer note 32(C) to the standalonefinancial statements;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
Annexure 1 to Independent Auditors' Report
Referred to in paragraph 1 under the heading Report on otherlegal and regulatory requirements' of our report of even date to the members of BajajAuto Ltd.
1. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.
(b) All property plant and equipment have not been physically verifiedby the Management during the year but there is a regular program of verification designedto cover all items in a phased manner over a period of three years which in our opinionis reasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies were noticed on such verification.
(c) According to the information and explanations given by theManagement the title deeds of immovable properties included in property plant andequipment; and investment property are held in the name of the Company except forbuildings acquired in the prior years having a gross block of RS. 15.02 crore and a netblock of RS. 11.68 crore whose final registration is pending as disclosed in note 2 to thestandalone financial statements of the Company.
2. The inventory has been physically verified by Management during theyear. In our opinion the frequency of verification is reasonable. No materialdiscrepancies were noticed on such physical verification. Inventories lying with thirdparties have been confirmed by them as at 31 March 2021 and no material discrepancies werenoticed in respect of such confirmations.
3. According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013 (the Act'). Accordingly the provisions ofclause 3(iii) (a) (b) and (c) of the Order are not applicable to the Company and hencenot commented upon.
4. In our opinion and according to the information and explanationsgiven to us there are no loans guarantees and securities given in respect of whichprovisions of section 185 and 186 of the Act are applicable and hence not commented upon.In our opinion and according to the information and explanations given to us provisionsof section 186 of the Act in respect of investments made have been complied with by theCompany.
5. The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3 (v) of the Order are not applicable tothe Company and hence not commented upon.
6. To the best of our knowledge and as explained the CentralGovernment has not specified the maintenance of cost records under Section 148(1) of theAct for the products of the Company.
7. (a) The Company is regular in depositing with appropriateauthorities undisputed statutory dues including provident fund employees' stateinsurance income tax customs duty goods and service tax cess and other statutory duesapplicable to the Company.
(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome tax customs duty goods and service tax cess and other statutory dues applicableto the Company were outstanding at the year end for a period of more than six monthsfrom the date they became payable.
(c) According to the records of the Company the dues of income taxsales tax service tax customs duty excise duty value added tax goods and service taxand cess on account of any dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. In Crore) ||Period to which the amount relates ||Forum where the dispute is pending |
| ||Excise Duty ||327.48 ||Various years from 2010-11 to 2016-17 ||Supreme Court |
|The Central ||Excise Duty ||1.43 ||Various years from 1985-86 to 2001-02 ||High Court |
|Excise Act 1944 ||Excise Duty ||1.37 ||Various years from 1983-84 to 2014-15 ||Custom Excise and Service Tax |
| ||Excise Duty ||0.60 ||Various years from 1991-92 to 2017-18 ||Appellate Tribunal Commissioner Appeals |
|Finance Act 2001 ||National Calamity Contingent Duty ||342.00 ||Various years from 2007-08 to 2014-15 ||Supreme Court |
|Central Sales ||Sales Tax ||0.99 ||Various years from 1996-97 to 2001-02 ||High Court |
|Tax Act 1956 and Sales Tax ||Sales Tax ||80.96 ||Various years from 2001-02 to 2010-11 ||Appellate Tribunal |
|Act of various ||Sales Tax ||0.25 ||Financial year 2009-10 ||Appellate Authority |
|States ||Sales Tax ||53.04 ||Various years from 1999-00 to 2016-17 ||Appellate Authority |
|The Income Tax Act 1961 ||Income Tax ||502.01 ||Various years from 2007-08 to 2011-12 ||Income Tax Appellate Tribunal |
| ||Income Tax ||87.32 ||Various years from 2012-13 to 2018-19 ||Commissioner of Income-Tax (Appeals) |
|The Finance Act 1994 ||Service Tax ||20.99 ||Various years from 2007-08 to 2011-12 ||Custom Excise and Service Tax Appellate Tribunal |
|The Customs Act 1962 ||Customs Duty ||3.85 ||Financial year 1984-85 and 1985-86 ||High Court |
| ||Customs Duty ||5.50 ||Various years from 1977-78 to 2013-14 ||Assistant Commissioner of Customs |
|Octroi ||Octroi Duty ||8.44 ||Various years from 1988-89 to 2004-05 and from 2012-13 to 2016-17 ||High Court |
| ||Octroi Duty ||4.23 ||Various years from 1981-82 to 1988-89 ||District Court |
Note: The amounts disclosed above are net of the payments made to therespective authorities where the dispute is pending.
8. In our opinion and according to the information and explanationsgiven by Management the Company has not defaulted in repayment of sales tax deferralloans to the Government. The Company did not have any outstanding loans or borrowing duespayable to a financial institution or bank or dues to debenture holders during the year.
9. According to the information and explanations given by Managementthe Company has not raised any money by way of initial public offer or further publicoffer (including debt instruments) and term loans. Accordingly the provisions of clause 3(ix) of the Order are not applicable to the Company and hence not commented upon.
10. Based on the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by Management we report that no fraud by the Companyor no fraud on the Company by the officers and employees of the Company has been noticedor reported during the year.
11. According to the information and explanations given by Managementthe managerial remuneration has been paid/provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
12. In our opinion the Company is not a Nidhi Company. Accordinglythe provisions of clause 3(xii) of the Order are not applicable to the Company and hencenot commented upon.
13. According to the information and explanations given by Managementtransactions with related parties are in compliance with sections 177 and 188 of the Actwhere applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.
14. According to the information and explanations given to us and on anoverall examination of the Balance Sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review. Accordingly the provisions of clause 3(xiv) of the Order are notapplicable to the Company and hence not commented upon.
15. According to the information and explanations given by Managementthe Company has not entered into any non-cash transactions with directors or personsconnected with him as referred to in section 192 of the Act.
16. According to the information and explanations given by Managementthe provisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicableto the Company and hence not commented upon.
Annexure 2 to Independent Auditors' Report
Referred to in paragraph 2(f) under the heading Report on otherlegal and regulatory requirements' of our report of even date to the members of BajajAuto Ltd.
Report on the internal financial controls under clause (i) ofsub-section 3 of section 143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls with reference tostandalone financial statements of Bajaj Auto Ltd. (the Company') as of 31March 2021 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
Management's responsibility for internal financial controls
The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to these standalone financial statements basedon our audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the Guidance Note') andthe Standards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both issued by ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to these standalone financial statements was establishedand maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding of internal financial controls with reference to these standalone financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditors' judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to these standalone financial statements.
Meaning of internal financial controls with reference to thesestandalone financial statements
A company's internal financial controls with reference tostandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial controls with reference to standalonefinancial statements includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.
Inherent limitations of internal financial controls with reference tostandalone financial statements
Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as at 31 March 2021 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI.
|For S R B C & CO LLP |
|Chartered Accountants |
|ICAI Firm Registration Number: 324982E/E300003 |
|per Arvind Sethi |
|Membership Number: 89802 |
|UDIN: 21089802AAAAAX8997 |
|Pune: 29 April 2021 |