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Castrol India Ltd.

BSE: 500870 Sector: Industrials
NSE: CASTROLIND ISIN Code: INE172A01027
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OPEN 0.00
PREVIOUS CLOSE 128.20
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52-Week high 157.45
52-Week low 0.00
P/E 21.71
Mkt Cap.(Rs cr) 12,651
Buy Price 130.80
Buy Qty 2.00
Sell Price 127.20
Sell Qty 48.00
OPEN 0.00
CLOSE 128.20
VOLUME 0
52-Week high 157.45
52-Week low 0.00
P/E 21.71
Mkt Cap.(Rs cr) 12,651
Buy Price 130.80
Buy Qty 2.00
Sell Price 127.20
Sell Qty 48.00

Castrol India Ltd. (CASTROLIND) - Auditors Report

Company auditors report

To

The Members of Castrol India Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Castrol India Limited("the Company") which comprise the Balance Sheet as at 31 December 2019 andthe Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofCash Flows and the Statement of Changes in Equity for the year then ended and a summaryof significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31 December 2019 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibility for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the financialstatements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Key Audit Matter Auditor's Response
The Company has material indirect tax litigations mainly relating to erstwhile Maharashtra Value Added Tax (MVAT) which involve significant judgment to determine the outcome of the matters into probable possible and remote. Refer note 12 25(i)(a)(1) & 25(ii) to the financial statements Principal audit procedures:
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as under:
• Obtained a detailed understanding of the Company's process and controls with respect to assessment of possible outcome of indirect tax litigations.
• Evaluated the design of the controls relating to assessment of probability of outcome estimates of the timing and the amount of the outflows and appropriate reporting by the management and testing implementation and operating effectiveness of the key controls.
• Performed following procedures on samples selected
> Understood the matters by reading the correspondence/communications and made corroborative enquiries with appropriate level of management personnel including status update expectation of outcomes with the basis and the future course of action contemplated by the Company and perusing legal opinions if any obtained by management.
> Evaluated the evidences supporting the judgement of the management about possible outcome and the reasonableness of the estimates. We involved our internal tax experts in assessing the nature and amount of the tax exposures and assessed management's conclusions on whether exposures are probable possible or remote.
Evaluated appropriateness of adequate provisions or disclosures in accordance with applicable accounting standards.

Information Other than the Financial Statements and Auditor's Report Thereon

• The Company's Board of Directors is responsible for the other information. Theother information comprises the Management Discussion and Analysis Director's Reportincluding Annexures to Directors Report Business Responsibility Report CorporateGovernance and Information for Shareholders but does not include the financial statementsand our auditor's report thereon.

• Our opinion on the financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.

• In connection with our audit of the financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.

• If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the 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 financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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; anddesign implementation 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

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

Auditor's Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand 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 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 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial 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 system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 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 Cash

Flows and Statement of Changes in Equity dealt with by this Report are in agreementwith the relevant books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31December 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 December 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 and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditor's 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 financial statements.

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

iii. The Company has transferred the amounts required to be transferred to the InvestorEducation and Protection Fund within due date except for an instance of Rs 0.65 crorestransferred within 45 days from the due date and for cases where disputes relating toownership of the underlying shares have remained unresolved (refer note no. 11 to the IndAS financial statements).

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 1 17366W/W-100018)

Samir R. Shah

(Partner)

(Membership No. 101708)

UDIN: 20101708AAAAAR6205

Place : Mumbai

Date : 31 January 2020

Report on Internal Financial Controls Over Financial Reporting ANNEXURE “A"TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (“the Act")

We have audited the internal financial controls over financial reporting of CastrolIndia Limited ("the Company") as of 31 December 2019 in conjunction with ouraudit of the Ind AS 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 company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to 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 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 adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 December 2019 based on the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 1 17366W/W-100018)

Samir R. Shah

(Partner)

(Membership No. 101708)

UDIN: 20101708AAAAAR6205

Place : Mumbai

Date : 31 January 2020

ANNEXURE “B" TO THE INDEPENDENT AUDITORS' REPORT

[Referred to in paragraph 2 under “Report on Other Legal and RegulatoryRequirements" section of our report of even date]

1. In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a program of verification of fixed assets to cover all the itemsexcept dealer boards installed at customer premises in a phased manner over a period oftwo years which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. Pursuant to the program fixed assets were physicallyverified by the Management during the year. According to the information and explanationsgiven to us by the Management no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of registered sale deed / transfer deed/ conveyancedeed provided to us we report that the title deeds comprising all the immovableproperties of land and acquired buildings which are freehold are held in the name of theCompany as at the balance sheet date except as follows:

Rs. in Crore

No. of Cases Asset Category Gross Block as at 31st December 2019 Net Block as at 31st December 2019 Remarks
1 Freehold Land located at Mehsana 0.01 0.01 The deed of conveyance is in the erstwhile name of the Company and the mutation of the name is pending.

In respect of land taken on lease the lease agreements are in the name of the Companyexcept as follows:

Rs. in Crore

No. of Cases Asset Category Gross Block as at 31st December 2019 Net Block as at 31st December 2019 Remarks
2 Leasehold Land located at Patalganga 0.29 0.28 The lease deed is in the erstwhile name of the Company.

2. As explained to us the inventories (other than Goods in Transit) were physicallyverified during the year by the Management at reasonable intervals and no materialdiscrepancies were noticed on such physical verification.

3. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act.

4. The Company has not granted any loans made investments or provided guarantees andhence reporting under clause (iv) of the Order is not applicable.

5. According to the information and explanations given to us the Company has notaccepted any public deposits. Accordingly the provisions of clause (v) of the Order arenot applicable to the Company.

6. The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Act. We have broadly reviewed the cost records maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as amendedprescribed by the Central Government under sub-section (1) of Section 148 of the Act inrespect of manufacture of lubricants and are of the opinion that prima facie theprescribed cost records have been made and maintained. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.

7. According to the information and explanations given to us in respect of statutorydues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employee State Insurance Income Tax Sales Tax Service TaxCustoms Duty Excise Duty Value Added Tax Goods and Services Tax Cess and othermaterial statutory dues as applicable with the appropriate authorities except in case oftax deducted at source reported in clause (b) below.

(b) There are no undisputed amounts payable in respect of the above statutory duesoutstanding as at 31 December 2019 for a period of more than six months from the date theybecame payable except as follows.

Rs. in Crore

Name of Statute Nature of Dues Amount (Rs.) Period to which the Amount Relates Due date Date of Payment
The Income Tax Act 1961 Tax deducted at source 0.66 @ Accrued as on 31 March 2019 30 April 2019 Unpaid

@ Not deducted pending receipt of invoice from vendors.

(c) Details of Income tax Sales tax Service tax Customs Duty Excise Duty and ValueAdded Tax which have not been deposited as on 31 December 2019 on account of disputes aregiven below:

Rs. in Crore

Name of Statute Nature of Dues Forum where dispute is pending Period to which the Amount Relates Total disputed dues Amount paid Amount unpaid
Central Excise Act 1944 Disputes relating to Excise Duty & Service Tax. Commissioner 1996-2015 24.46 0.54 23.92
Commissioner (A) 2006-2008 2.82 0.03 2.79
Tribunal 1996-2009 78.59 2.77 75.82
High Court 1999-2002 7.72 - 7.72
Supreme Court 1998-1999 0.40 0.20 0.20
Local Sales Tax Act VAT Act and Central Sales Tax Act Disputes relating to Local Sales Tax VAT Act and CST Act. Commissioner 2000-2016 42.37 13.59 28.78
Appellate Authority 1994-2017 14.49 7.28 7.20
Tribunal@ 1999-2013 516.38 3.29 513.09
High Court 1999-2000 0.23 - 0.23
Central Sales Tax Appellate Authority (CSTAA)# 1994-2016 2892.05 2892.05
The Income Tax Act. 1961 IT matters under dispute Income Tax Appellate Tribunal 2003-04 and 2005-2006 2.64 - 2.64

@The Company is in process of filing an appeal against the order for the financial year2015-16 amounting to Rs. 510.69 crore.

#We have been informed by the Company that the department is yet to file an appealagainst the order for the financial year 2012-13 to 2014-15 amounting to Rs 1591.61crore.

8. The Company has not taken any loans or borrowings from financial institutions banksand government or has not issued any debentures. Hence reporting under clause (viii) ofthe Order is not applicable to the Company.

9. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans. Hence reporting under clause (ix) ofthe Order is not applicable to the Company.

10. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no fraud on the Company by its officers oremployees has been noticed or reported during the year.

11. In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

12. The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable to the Company.

13. In our opinion and according to the information and explanations given to us theCompany is in compliance with Sections 177 and 188 of the Act where applicable for alltransactions with the related parties and the details of related party transactions havebeen disclosed in the financial statements etc. as required by the applicable accountingstandards.

14. During the year the Company has not made any preferential allotment or privateplacement of the shares or fully or partly convertible debentures. Hence reporting underclause (xiv) of the Order is not applicable to the Company.

15. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with them and hence provisions of section 192 of theCompanies Act 2013 are not applicable.

16. The Company is not required to be registered under Section 45 - IA of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 1 17366W/W-100018)

Samir R. Shah

(Partner)

(Membership No. 101708)

UDIN: 20101708AAAAAR6205

Place : Mumbai

Date : 31 January 2020

.