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Balkrishna Industries Ltd.

BSE: 502355 Sector: Auto
NSE: BALKRISIND ISIN Code: INE787D01026
BSE 14:36 | 13 Apr 1662.00 57.10
(3.56%)
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NSE 14:29 | 13 Apr 1664.10 57.90
(3.60%)
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OPEN 1586.30
PREVIOUS CLOSE 1604.90
VOLUME 17581
52-Week high 1885.00
52-Week low 792.00
P/E 30.88
Mkt Cap.(Rs cr) 32,126
Buy Price 1662.90
Buy Qty 49.00
Sell Price 1664.60
Sell Qty 24.00
OPEN 1586.30
CLOSE 1604.90
VOLUME 17581
52-Week high 1885.00
52-Week low 792.00
P/E 30.88
Mkt Cap.(Rs cr) 32,126
Buy Price 1662.90
Buy Qty 49.00
Sell Price 1664.60
Sell Qty 24.00

Balkrishna Industries Ltd. (BALKRISIND) - Auditors Report

Company auditors report

To the Members of BALKRISHNA INDUSTRIES LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Balkrishna Industries Limited("the Company") which comprise the Balance Sheet as at 31st March2020 and the Statement of Profit and Loss (including other comprehensive income)Statement of Changes in Equity and Statement of Cash Flows for the year then ended andnotes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").

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 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31st March 2020 and profit(including other comprehensive income) changes in equity and its cash flows for the yearended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Emphasis of Matter

We draw attention to Note no.44 of the accompanying standalone financial results whichdescribes the management's evaluation of impact of uncertainties related to COVID-I9 andits consequential effects on the operations of the Company.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters ('KAM') are those matters that in our professional judgment were ofmost significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Description of Key Audit Matters

The key audit matters How our audit addressed the matter
Claims against the company not acknowledged as debts Principal Audit Procedures
As at 31st March 2020 the Company has exposures to litigation relating to various matters as set out in Note No. 47(i)(a). Significant management judgement is required to assess such matters to determine the probability of occurrence of material outflow of economic resources and whether a provision should be recognised or a disclosure should be made. The management judgement is supported with legal advice in certain cases as considered appropriate. As the ultimate outcomes of the matters are uncertain and the positions taken by the management are based on application of their best judgement related legal advice including those relating to interpretation of laws/regulations it is considered to be a Key Audit Matter. Our audit procedures included the following substantive procedures:
• We understood assessed and tested the design and operating effectiveness of key controls surrounding assessment of litigations relating to relevant laws and regulations.
• Obtained details of all the claims against the Company for the year ended 31st March 2020 from the management.
• Read and analysed selected key correspondences legal opinions and consultations by the management.
• Discussed with the appropriate senior management and evaluated management's estimate of the possible outcome of the disputed cases.
Based on the above procedures management's assessment in respect of litigations and related disclosures relating to contingent liabilities/ other significant litigations in the Standalone Financial Statements are considered to be reasonable.
Guarantees Principal Audit Procedures
Guarantees given by company's bankers various types of Corporate Guarantees and Standby Letters of Credit issued by the company to its bankers on behalf of the company against company's indemnity which are not acknowledged as debts as set out in Note No. 47(i)(b)(c) &(d). Our audit procedures included the following substantive procedures:
• Obtained details of all the guarantees issued by the company's bankers as on 31st March 2020 from the management.
• Discussed with the appropriate senior management and evaluated management's estimate of the possible outcome of the disputed cases
Based on the above procedures management's assessment related to disclosures of guarantees in the Standalone Financial Statements are considered to be reasonable.
Capitalisation of property plant and equipment Principal Audit Procedures
During the year ended 31st March2020 the Company has incurred significant capital expenditure. Further the total additions to property plant and equipment at various factories of the Company was Rs. 85075 Lakhs in the current year as set out in Note No.2. Significant level of judgement is involved to ensure that the aforesaid capital expenditure/additions meet the recognition criteria of Ind AS 16 - Property Plant and Equipment. As a result the aforesaid matter was determined to be a key audit matter. • We assessed the capitalisation process and tested the design and operating effectiveness of the controls in the process.
• Assessed the nature of the additions made to property plant and equipment and capital work-in-progress on a test check basis to test that they meet the recognition criteria as set out in para 16 to 22 of Ind AS 16.
• Reviewed the project completion details provided by the management to determine whether the asset is in the location and condition necessary for it to be capable of operating in the manner intended by the management.
Based on the above procedures management's assessment in respect of Capitalisation of property plant and equipment in the Standalone Financial Statements are considered to be adequate.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the 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.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss (includingother comprehensive income) changes in equity and cash flows 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. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible 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.

Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's 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 auditor's 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 sufficient 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 with reference to standalone financial statements inplace and the operating effectiveness of such 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 auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a 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 themall relationships and other matters that may reasonably be thought to bear on ourindependence and 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 statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest 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 Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.

(A) 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 other comprehensiveincome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in termsof Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(g) In our opinion the managerial remuneration for the year ended 31stMarch 2020 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 the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31stMarch 2020 on its financial position in its standalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For N.G.THAKRAR & CO.
CHARTERED ACCOUNTANTS
(FIRM REG. NO. 110907W)
NATWAR THAKRAR
PARTNER
PLACE: Mumbai MEMBERSHIP NO. 036213
DATE: 20th June 2020 UDIN: 20036213AAAAAZ6206

Annexure - A to the Independent Auditors' Report

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31st March 2020 wereport that:

(i) (a) In our opinion the Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) As explained to us physical verification of these fixed assets is being conductedin a phased programme by the management designed to cover all the assets over a period ofthree to four years which in our opinion is reasonable having regard to the size of theCompany and the nature of assets. According to the information and explanations given tous no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) As explained to us physical verification of inventory has been conducted atreasonable intervals by the management and discrepancies noticed on such physicalverification between physical stocks and book records were not material considering theoperations of the Company and the same have been properly dealt with in the books ofaccount.

(iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to any companies firms LimitedLiability Partnerships or other parties as covered in the register maintained underSection 189 of the Act. Accordingly the provisions of clause 3(iii) (a) (b) and (c) ofthe order are not applicable.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto loans investments and guarantees made.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit within the meaning of Section 73 to 76 of the Actand the rules framed thereunder.

(vi) We have broadly reviewed the books of account maintained by the Company in respectof products where pursuant to the Rules made by the Central Government the maintenanceof cost records have been prescribed under Section 148 (1) of the Act and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed examination of the records with a viewto determining whether they are accurate or complete.

(vii) (a) According to the records of the Company and the information and explanationsgiven to us the Company has generally been regularly depositing with the appropriateauthorities undisputed statutory dues including Provident Fund Employees' StateInsurance Income tax Sales-Tax Service tax Duty of Customs Duty of Excise Valueadded Tax Goods and Service Tax Cess and any other statutory dues applicable to it.There are no undisputed statutory dues as referred to above as at 31st March2020 outstanding for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us the dues in respect ofIncome Tax Sales Tax Duty of Customs Excise Duty and Service Tax that have not beendeposited with the appropriate authorities on account of dispute and the forum where thedisputes are pending are given below :-

Name of Statute Nature of Dues Amount (Rs. in Lakhs) Period to which the Amount Relates Forum where dispute is pending
Income Tax Act Income Tax 207 2004-05 Supreme Court
3790 2012-16 CIT Appeals
Sales Tax Act Sales Tax (Including Interest and Penalty) 3 2004-05 High Court
61 2011-12 Tribunal
201 1996-97 & 2012-2018 Commissioner (Appeals)
6 2013-14 Assessing Authority
Customs Act Custom Duty (Including Interest and Penalty) 5596 2012-2014 Supreme Court
2420 2012-2016 CESTAT
500 2012-2013 Assessing Authority
Central Excise And Service Tax Act Excise Duty/ Service tax (Including Interest and Penalty) 73 2002-2005 Supreme Court
3370 2007-2013 High Court
128 2006-2009 & 2012-17 Tribunal
253 2003-2009 & 2014-2019 Assessing Authority

(viii) Based on our audit procedures and according to the information and explanationsgiven by the management the Company has not defaulted in repayment of loans from bank.Further as per the records of the Company during the year there were no loans orborrowings from any financial institution government or debenture holders.

(ix) In our opinion and according to the information and the explanations given to usthe term loans have been applied for the purposes for which they were obtained. Further asper the records the Company did not raise any money by way of initial public offer orfurther public offer (including debt instruments).

(x) Based upon the audit procedures performed and to the best of our knowledge andbelief and according to the information and explanations given to us no fraud by thecompany or any fraud on the Company by its officers or employees has been noticed orreported during the year.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableIndian Accounting Standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For N.G.THAKRAR & CO.
CHARTERED ACCOUNTANTS
(FIRM REG. NO. 110907W)
NATWAR THAKRAR
PARTNER
PLACE: Mumbai MEMBERSHIP NO. 036213
DATE: 20th June 2020 UDIN: 20036213AAAAAZ6206

Annexure - B to the Independent Auditors' Report

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 BalkrishnaIndustries Limited ("the Company") as of 31st March 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting 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 system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an internal financial controls withreference to financial statements as at 31st March 2020 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For N.G. THAKRAR & CO.
CHARTERED ACCOUNTANTS
(FIRM REG. NO. 110907W)
NATWAR THAKRAR
PARTNER
PLACE: Mumbai MEMBERSHIP NO. 036213
DATE: 20th June 2020 UDIN: 20036213AAAAAZ6206

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