To The Members of Berger Paints India Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements ofBerger Paints India Limited ("the Company") which comprise the Balance sheet asat March 31 2021 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the standalone financial statements including a summaryof significant accounting policies and other explanatory information.
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 March31 2021 its profit including other comprehensive income its cash flows and the changesin 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 theAuditor's Responsibilities for the Audit of the Standalone FinancialStatements' 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 March 31 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 Auditor's responsibilities for the audit of the standalone financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Recognition of revenue (as described in Note 3.4 and 32 of the standalone financial statements) || |
|The Company recognizes revenues when the control of goods and/or services are transferred to the customer at an amount that reflects the net consideration which the Company expects to receive for those goods and/or services from customers in accordance with the terms of the contracts. In determining the sales price the Company considers the effects of applicable rebates and discounts (variable consideration). ||Our audit procedures included the following: |
|The terms of sales arrangements including the timing of transfer of control based on the terms of relevant contract and nature of discount and rebates arrangements create complexities that require judgment in determining sales revenues. ||We read and evaluated the Company's revenue recognition policy and assessed its compliance in terms of Ind AS 115 Revenue from contracts with customers'. |
|Considering the above factors and the risk associated with revenue recognition we have determined the same to be a key audit matter. ||We assessed the design and tested the operating effectiveness of internal controls related to sales and applicable rebates/discounts. |
| ||We performed test for a sample of individual sales transaction by comparing the underlying sales invoices sales orders and other related documents to assess that revenue is recognized on transfer of control to the customer in accordance with the terms of the contract. |
| ||We tested on a sample basis rebates and discount schemes as approved by the management to assess its accounting. For the samples selected we also compared that the actual rebates and discounts recognized in respect of particular schemes do not exceed their approved amounts. |
| ||We tested on a sample basis that revenue has been recognized in the proper period with reference to the supporting documents including confirmations from customers. |
| ||We read and assessed the relevant disclosures made in the standalone Ind AS financial statements. |
|Impairment Assessment of Investments in subsidiaries and joint ventures (as described in Note 41 of the standalone financial statements) || |
|The carrying values of the Company's investments in subsidiaries and joint ventures are assessed annually by management for potential indicators of impairment by reference to the requirements under Ind AS 36 "Impairment of Assets". Accordingly management has identified impairment indicators in respect of one joint venture and certain subsidiaries. As a result an impairment assessment was required to be performed by the Company by comparing the carrying value of these investments to their recoverable amount to determine whether an impairment was required to be recognised. ||Our audit procedures included the following: |
|For the purpose of the above impairment testing management has determined the value in use and the fair value less costs to sell as applicable. Value in use has been determined by forecasting and discounting future cash flows. Furthermore the value in use is sensitive to changes in some of the inputs used for forecasting the future cash flows. ||We have obtained and discussed with management and evaluated the key judgements/assumptions underlying management's assessment of potential indicators of impairment. |
|Accordingly we identified the assessment of potential impairment of investments in subsidiaries and joint ventures as a key audit matter because impairment assessment involves significant degree of management judgement in determining the key assumptions. ||Where potential indicators of impairment identified we were evaluated management's impairment assessments and assumptions around the key drivers of the cash flow forecasts discount rates expected growth rates and terminal growth rates used by comparison with available financial information including considerations of the audited consolidated financial statements of the subsidiary. |
| ||We evaluated management estimates used in determination of fair value less costs to sell by consideration of available market and financial information. |
| ||We also performed sensitivity analysis to determine the impact of changes in the key assumptions both individually and in aggregate. |
| ||We involved valuation specialists where considered necessary to independently assess the assumptions and methodologies used by the Company in computing the recoverable amount. In making this assessment we also assessed the objectivity independence and competency of the valuation specialists. |
| ||We read and assessed the relevant disclosures made in the standalone Ind AS financial statements. |
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Informationbut does not include the standalone financial statements and our auditor's reportthereon. Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon. In connectionwith our audit of the standalone financial statements our responsibility is to read theother information and in doing so consider whether such other information is materiallyinconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated. If based on the work we have performed weconclude that there is a material misstatement of this other information we are requiredto report that fact. We have nothing to report in this regard.
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.
Auditor's 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 auditor's 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 professional judgment and maintainprofessional scepticism 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 the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace 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 the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany 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 March 31 2021 and are therefore the keyaudit matters. We describe these matters in our auditor's 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 (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters 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 March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 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 endedMarch 31 2021 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according 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 45 to thestandalone financial statements;
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 OF THE SECTION ON "REPORT ONOTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF BERGER PAINTS INDIA LIMITED
To The Members of Berger Paints India Limited (The Company')
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.
(b) All property plant and equipment were physically verified by themanagement during the year in accordance with a planned programme of verifying all itemsonce in three years which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed on suchverification.
(c) According to the information and explanations given by themanagement and audit procedures performed by us the title deeds of immovable propertiesincluded in property plant and equipment/right of use assets are held in the name of theCompany except for certain immovable properties aggregating Rs. 1.80 crores as at March31 2021 acquired through schemes of amalgamation/arrangements as set out in note 4(a)(v)and Note 44(a)(i) to the standalone financial statements.
(ii) The inventory has been physically verified by the managementduring the year. 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 the year end and no material discrepancies werenoticed in respect of such confirmations.
(iii) 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. 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.
(iv) In our opinion and according to the information and explanationsgiven to us and audit procedures performed by us the Company has not advanced loans todirectors/a company in which a Director is interested to which provisions of section 185of the Companies Act 2013 apply. Hence we are not required to comment upon compliancewith the provisions of section 185 of the Companies Act 2013. Provisions of section 186 ofthe Companies Act 2013 in respect of loans and advances given investments made andguarantees and securities given have been complied with by the Company.
(v) 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 andhence not commented upon.
(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Companies Act 2013 related to the manufacture ofCompany's products and are of the opinion that prima facie the specified accountsand records have been made and maintained. We have not however made a detailedexamination of the same.
(vii) (a) During the year the Company has generally been regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income-tax duty of custom goods and service tax cessand other material statutory dues applicable to the Company though there have been aslight delay in a few cases.
(b) According to the information and explanations given to us and auditprocedures performed by us no undisputed amounts payable in respect of provident fundemployees' state insurance income-tax duty of custom duty of excise value addedtax goods and service tax cess and other material statutory dues applicable to theCompany were outstanding at the year end for a period of more than six months from thedate they became payable.
(c) According to the records of the Company dues of income taxsales-tax service tax duty of custom duty of excise value added tax and cess that havenot been deposited till the year end on account of any dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. in Crores) ||Period to which the amount relates (Financial Year) ||Forum where dispute is pending |
|The Central Excise Act 1944 Finance Act 1994 and Customs Act 1962 ||Excise Duty/ Service Tax/Customs ||0.46 ||April 2003 to Dec 2004 2008-09 2012-13 March 2013 to Feb 2014 & April 2015 to June 2017 ||Adjudicating Authority |
| || ||0.09 ||March 2016 to June 2017 ||Commissioner (Appeals) |
| || ||16.95 ||April 2003 to January 2010 April 2011 to Dec 2014 & 2006-07 to 2015-16 ||Customs Excise Service Tax Appellate Tribunal (CESTAT) |
|The Central Sales Tax Act 1956 and The Value Added Tax Act 2005 ||Sales Tax/Value added Tax ||11.98 ||1996-97 1999-00 to 2001-02 2003-04 to 2005-06 and 2017-18 ||Appellate and Revisional Board |
| || ||26.66 ||1983-84 1984-85 1988-89 1989-90 1991-92 to 1993-94 1995-96 1996-97 1999-00 2000-01 & 2002-03 to 2017-18 ||Appellate Authority |
| || ||2.06 ||1998-99 1999-00 2001-02 2003-04 2007-08 & 2011-12 ||Taxation Tribunal |
| || ||1.01 ||1994-95 1996-97 1997-98 2003-04 2005-06 to 2007-08 2009-10 2012-13 & 2013-14 ||High Court |
|Income Tax Act 1961 ||Income Tax ||3.49 ||2015-16 ||Commissioner of Income Tax (Appeals) |
(viii) In our opinion and according to the information and explanationsgiven by the management the Company has not defaulted in repayment of loans or borrowingsto a financial institution or bank. The Company did not have any dues to government ordebenture holders during the year.
(ix) According to the information and explanations given by themanagement and audit procedures performed by us the Company has not raised any money byway of initial public offer/further public offer / debt instruments and term loans duringthe year. Therefore the provisions of clause (ix) of the Order are not applicable andhence not commented upon.
(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the standalone financial statements and according tothe information and explanations given by the management we report that no fraud by theCompany or no material fraud on the Company by the officers and employees of the Companyhas been noticed or reported during the year.
(xi) According to the information and explanations given by themanagement managerial remuneration has been paid/provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.
(xii) In our opinion the Company is not a nidhi company. Thereforethe provisions of clause 3(xii) of the Order are not applicable to the Company and hencenot commented upon.
(xiii) According to the information and explanations given by themanagement and audit procedures performed by us transactions with the related parties arein compliance with section 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the notes to the standalone financial statements asrequired by the applicable accounting standards.
(xiv) According to the information and explanations given to us and onan overall 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. Therefore reporting requirements under clause 3(xiv) are notapplicable to the Company and hence not commented upon.
(xv) According to the information and explanations given by themanagement and audit procedures performed by us the Company has not entered intoany non-cash transactions with directors or persons connected with them as referred to insection 192 of Companies Act 2013.
(xvi) According to the information and explanations given to us theprovisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF BERGER PAINTS INDIA LIMITED
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 Berger Paints India Limited ("the Company")as of March 31 2021 in conjunction with our audit of the standalone financial statementsof the Company 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's internalfinancial controls with reference to these standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards 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 auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.
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 to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial controls with reference to standalone financial statements includesthose 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 assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with Reference tothese Standalone 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 March 31 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. Batliboi & Co. LLP |
|Chartered Accountants |
|ICAI Firm Registration Number: 301003E/E300005 |
|per Bhaswar Sarkar |
|Membership Number: 055596 |
|UDIN: 21055596AAAABO5762 |
|Place: Kolkata |
|Date: May 26 2021 |