Standalone Indian Accounting Standards (Ind AS) Financial Statements
To the Members of Bajaj Auto Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Bajaj AutoLimited (the Company') which comprise the Balance Sheet as at 31 March 2019 theStatement of Profit and Loss including the statement of Other Comprehensive Income theCash Flow Statement and the Statement of Changes in Equity for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as standalone financialstatements').
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 as amended (the Act') in the manner so required and givea true and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2019 its profit includingother comprehensive income its cash flows and the changes in equity for the year ended onthat date.
Basis for opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditors'responsibilities for the audit of the standalone financial statements' section of ourreport. We are independent of the Company in accordance with the Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.
Key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements for the financial yearended 31 March 2019. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone financial statements'section of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying standalone financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Accounting for investments (as described in note 5 of the standalone financial statements) || |
|The Company has investments aggregating Rs. 17936.64 crore in equity shares bonds liquid mutual funds short term funds fixed maturity plans (FMPs') and commercial papers as at 31 March 2019. These investments are measured either at amortised cost Fair Value through Profit and Loss (FVTPL') or Fair Value through Other Comprehensive Income (FVTOCI') based on fulfilment of required criteria which involve management judgment. Of the above total investments the Company's investments in FMPs as at 31 March 2019 amounted to Rs. 12338.10 crore (63% of total investments). ||Our audit procedures included the following: |
| || Read the minutes of the meetings of the Investment Committee. |
| || Performed test of controls on a sample basis on the operating effectiveness of internal controls on investments. |
| || Tested on a sample basis the investments underlying the FMPs to ascertain whether those investments would satisfy the conditions of Ind AS. |
|These investments were measured at FVTPL till 31 March 2018. || Compared on a sample basis the indicative yields used by the Company for accounting for interest income on amortised cost basis with the actual yields earned by the Company on those FMPs at the time of redemption. |
|Accounting for investments (as described in note 5 of the standalone financial statements) || |
|The Company applies amortised cost where it has ability to demonstrate that the underlying instruments in the portfolio fulfill the solely payments of principal and interest (SPPI') test and the churn in the portfolio is negligible. As these conditions have been fulfilled effective from 1 April 2018 the Company has classified FMPs as subsequently measured at amortised cost. || Tested on a sample basis the portfolio churn in case of FMPs to ascertain whether majority of the instruments in the FMP are held till maturity. |
| || Obtained management representations on the judgments exercised including indicative yields and maturity periods considered for amortised cost workings. |
| || Tested the disclosures made by the Company. |
Information other than the financial statements and auditors' report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Chairman's Letter ManagementDiscussion and Analysis Corporate Governance and Directors' Report but does not includethe standalone financial statements and our auditors' report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation 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 matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating 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 is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessManagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditors' responsibilities for the audit of the standalone financial statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is suficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign 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 hasadequate internal financial controls system in place and the operating eectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by Management.
Conclude on the appropriateness of Management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained upto the date of our auditors'report. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on our independenceand where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsfor the financial year ended 31 March 2019 and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 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 explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) The Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of section164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these standalone financial statements and theoperating eectiveness of such controls refer to our separate Report in Annexure2' to this report;
(g) In our opinion the managerial remuneration for the year ended 31 March 2019 hasbeen paid/provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note 34 to the standalonefinancial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts Refer Note 32(c) to the standalone financial statements;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure 1 to Independent Auditors' Report
Referred to in paragrapRs. 1 under the heading Report on other legal andregulatory requirements' of our report of even date to the members of Bajaj Auto Limited
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) All property plant and equipment have not been physically verified by themanagement during the year but there is a regular programme of verification designed tocover all items in a phased manner over a period of three years which in our opinion isreasonable 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 the Management the titledeeds of immovable properties included in property plant and equipment; and investmentproperty are held in the name of the Company except for buildings acquired in the prioryears having a gross block of Rs. 15.02 crore and a net block of Rs. 12.16 crore whosefinal registration is pending as disclosed in Note 2 to the standalone financialstatements of the Company.
2. The inventory has been physically verified by the Management during the year. In ouropinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification. Inventories lying with third parties have beenconfirmed by them as at 31 March 2019 and no material discrepancies were noticed inrespect of such confirmations.
3. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 (the Act'). Accordingly the provisions of clause 3(iii) (a)(b) and (c) of the Order are not applicable to the Company and hence not commented upon.
4. In our opinion and according to the information and explanations given to us thereare no loans guarantees and securities given in respect of which provisions of section185 and 186 of the Act are applicable and hence not commented upon. In our opinion andaccording to the information and explanations given to us provisions of section 186 ofthe Act in respect of investments made have been complied with by the Company.
5. The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3 (v) of the Order are not applicable to the Company and hencenot commented upon.
6. To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under section 148(1) of the Act for the productsof the Company.
7. (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees' state insurance income-tax customsduty goods and service tax cess and other statutory dues applicable to it.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax customsduty goods and service tax cess and other statutory dues were outstanding at the yearend for a period of more than six months from the date they became payable.
(c) According to the records of the Company the dues of income-tax sales-tax servicetax customs duty excise duty value added tax goods and service tax and cess on accountof any dispute are as follows:
| || || || ||( Rs. In Crore) |
|Name of the statute ||Nature of dues ||Amount ||Period to which the amount relates ||Forum where the dispute is pending |
| ||Excise Duty ||333.61 ||Various years from 1992-93 to 2016-17 ||Supreme Court |
| ||Excise Duty ||1.42 ||Various years from 1985-86 to 2007-08 ||High Court |
|The Central Excise Act 1944 ||Excise Duty ||1.34 ||Various years from 1983-84 to 2006-07 ||Custom Excise and Service Tax Appellate Tribunal |
| ||Excise Duty ||1.48 ||Various years from 1990-91 to 2015-16 ||Commissioner Appeals |
| ||Sales Tax ||0.99 ||Various years from 1996-97 to 2001-02 ||High Court |
|Central Sales || || || || |
|Tax Act 1956 and Sales Tax Act of various States ||Sales Tax ||39.51 ||Various Years from 2001-02 to 2010-11 ||Appellate Tribunal |
| ||Sales Tax ||0.25 ||Financial year 2009-10 ||Appellate Authority |
| ||Sales Tax ||98.76 ||Various Years from 1999-00 to 2013-14 ||Appellate Authority |
| ||Income Tax ||58.50 ||Financial year 2007-08 and 2008-09 ||Income Tax Appellate Tribunal |
|The Income Tax Act 1961 ||Income Tax ||528.27 ||Various years from 2009-10 to 2014-15 ||Commissioner of Income-Tax (Appeals) |
| ||Service Tax ||3.78 ||Various years from 1997-98 to 1999-00 ||High Court |
|The Finance Act 1994 ||Service Tax ||21.45 ||Various years from 2005-06 to 2011-12 ||Custom Excise and Service Tax |
|The Customs Act 1962 ||Customs Duty ||3.85 ||Financial year 1984-85 and 1985-86 ||Appellate Tribunal High Court |
| ||Customs Duty ||0.07 ||Financial year 2017-18 ||Commissioner Appeals |
| ||Customs Duty ||5.50 ||Various years from 1977-78 to 2006-07 ||Assistant Commissioner of Customs |
|Octroi ||Octroi ||4.23 ||Various years from 1981-82 to 1988-89 ||High Court |
Note: The amounts disclosed above are net of the payments made to the respectiveauthorities where the dispute is pending.
8. In our opinion and according to the information and explanations given by theManagement the Company has not defaulted in repayment of sales tax deferral loans to theGovernment. The Company did not have any outstanding loans or borrowing dues in respect ofa financial institution or bank or dues to debenture holders during the year.
9. According to the information and explanations given by the Management the Companyhas not raised any money by way of initial public oer or further public oer (includingdebt instruments) and term loans. Accordingly the provisions of clause 3 (ix) of theOrder are not applicable to the Company and hence not commented upon.
10. Based on the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the Management we report that no fraud by the Company or material fraud on theCompany by the ocers and employees of the Company has been noticed or reportedduring the year.
11. According to the information and explanations given by the Management themanagerial remuneration has been paid/provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Act.
12. In our opinion the Company is not a Nidhi Company. Accordingly the provisions ofclause 3(xii) of the Order are not applicable to the Company and hence not commented upon.13. According to the information and explanations given by the Management transactionswith the related parties are in compliance with sections 177 and 188 of the Act whereapplicable and the details have been disclosed in the notes to the financial statementsas required by the applicable accounting standards.
14. According to the information and explanations given to us and on an overallexamination of the Balance Sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review. Accordingly the provisions of clause 3(xiv) of the Order are not applicableto the Company and hence not commented upon.
15. According to the information and explanations given by the Management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of the Act.
16. According to the information and explanations given by the Management theprovisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.
Annexure 2 to Independent Auditors' Report
Referred to in paragraph 2(f) under the heading Report on other legal andregulatory requirements' of our report of even date to the members of Bajaj Auto Limited
Report on the internal financial controls under clause (i) of sub-section 3 of section143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls over financial reporting of Bajaj AutoLimited (the Company') as of 31 March 2019 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.
Management's responsibility for internal financial controls
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these standalone financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note on Auditof Internal Financial Controls Over Financial Reporting (the Guidance Note') and theStandards on Auditing as specified under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to these standalone financial statements was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to thesestandalone financial statements and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting with reference to these standalonefinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls over financialreporting with reference to these standalone financial statements.
Meaning of internal financial controls over financial reporting with reference to thesefinancial statements
A company's internal financial control over financial reporting with reference to thesestandalone 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 control over financial reporting with referenceto these standalone financial statements includes those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial eect on the financial statements.
Inherent limitations of internal financial controls over financial reporting withreference to these standalone financial statements
Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these standalone financial statementsand such internal financial controls over financial reporting with reference to thesestandalone financial statements were operating effectively as at 31 March 2019 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onaudit of internal financial controls over financial reporting issued by the Institute ofChartered Accountants of India.
For S R B C & CO LLP
ICAI Firm Registration Number: 324982E/E300003
per Arvind Sethi
Membership Number: 89802
Pune: 17 May 2019