To the Members of Colgate-Palmolive (India) Limited
Report on the Audit of the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Colgate-Palmolive(India) Limited ("the Company") which comprise the Balance sheet as at March31 2020 the Statement of Profit and Loss including Other Comprehensive Income the CashFlow Statement and the Statement of Changes in Equity for the year then ended and notesto the Ind AS financial statements including a summary of significant accounting policiesand other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2020 its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.
Basis for Opinion
We conducted our audit of the Ind AS 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 Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements' section of our report.We are independent of the Company in accordance with the Code of Ethics' issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is a basis for our audit opinion on the Ind AS financialstatements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements for the financial year endedMarch 31 2020. These matters were addressed in the context of our audit of the Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. For each matter below our description of how ouraudit addressed the matter is provided in that context. We have determined the mattersdescribed below to be the key audit matters to be communicated in our report. We havefulfilled the responsibilities described in the Auditor's responsibilities for the auditof the Ind AS financial statements section of our report including in relation to thesematters. Accordingly our audit included the performance of procedures designed to respondto our assessment of the risks of material misstatement of the Ind AS financialstatements. The results of our audit procedures including the procedures performed toaddress the matters below provide the basis for our audit opinion on the accompanying IndAS financial statements.
(as described in note 27 of the IND AS financial statements)
|Revenue from the sale of goods is measured net off discounts and rebates that are given to the customers (i.e. to the Wholesale traders and Retail traders) as a part of sales promotion comprising of primary and secondary schemes. Of the total discounts and rebates passed on to the customers certain discounts and rebates are passed on to the customers only on secondary sale made by wholesale trader to retail trader i.e. secondary schemes. is required in estimating Significant accruals relating to secondary schemes recognized based on sales made during the year. ||We have performed the following audit procedures: |
| || Our audit procedures included amongst others assessing the appropriateness of the Company's revenue recognition accounting policies including those relating to discounts and rebates for primary and secondary sales. |
| || Obtained an understanding assessed and tested the operating effectiveness of internal control relating to the identification recognition and measurement of discounts and rebates for secondary schemes. |
| || Tested on sample basis the underlying documentation and assumptions for discount and rebate provisions accrued during the year in relation to secondary sales. |
| || Tested on sample basis the subsequent claims accounted by the company to assess the adequacy of accruals outstanding as at year end. |
| || Performed an analysis between historical accrual and actual expenses incurred for the previous periods. |
| || Obtained reasons from management to ascertain reasonableness in relation to ageing of outstanding accruals and verified subsequent settlement of provisions. |
| || We assessed the adequacy of the disclosures in respect of revenue as per Ind AS 115. |
(b) Contingent liabilities / provisions in relation to tax Litigations
(as described in note 34 of IND AS financial statements)
|The Company has received various demand orders and notices under various tax laws. The Company is contesting these demands and has made provision where the outflow of resources embodying economic benefits is probable. and estimates are required Significant to assess impact of these litigations on the financial position results of operations and cash flows. ||We have performed the following audit procedures: |
| || Obtained an understanding assessed and tested the internal control environment relating to the identification recognition and measurement of provisions for disputes and disclosures of contingent liabilities in relation to tax litigations. |
| || Obtained details of completed tax assessments and demands issued by tax authorities from the management. |
| || Held discussion with management to understand management's assessment of the quantification and likelihood of significant exposures and the provision required for specific cases. We engaged tax specialists to evaluate the current status of tax assessments and management's position in relation to on-going disputes with regard to likelihood assessment of exposure done by the management. |
| || Analysed the management's estimates related to the recognized provisions for disputes and disclosures of contingent liabilities in the financial statements in relation to tax litigations and uncertain tax positions in the financial statements. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe Ind AS financial statements and our auditor's report thereon.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon. In connection with our auditof the Ind AS financial statements our responsibility is to read the other informationand in doing so consider whether such other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Responsibilities of Management for the Ind AS 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 Ind AS 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error. In preparing the Ind AS financial statements management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable doubt on the assurance about whether the Ind ASfinancial 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 Ind AS 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 Ind AS 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 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 financial statements in place andthe 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 Company's ability to significantcontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent 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 significantaudit findingsandincludinganysignificant 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 Ind AS financial statements forthe financial year ended March 31 2020 and are therefore the key audit matters. Wedescribe these matters in our auditor's 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 subsection (11) of section 143 ofthe Act we give in the "Annexure 1" a statement on the matters specified inparagraphs 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 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 Loss the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account
(d) In our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended by the Companies (Indian AccountingStandards) Amendment Rules 2018;
(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct; (f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these Ind AS financial statements and theoperating effectiveness of such controls refer to our separate Report in "Annexure2" to this report;
(g) In our opinion the managerial remuneration for the year ended March 31 2020 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 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 Ind AS financial statements Refer Note 34 to the Ind AS financialstatements;
ii. The Company did not have any long- term contracts including derivative contractsfor which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE I TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF COLGATE PALMOLIVE (INDIA) LIMTED
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.
(b) The property plant and equipment are physically verified by the Managementaccording to a phased programme designed to cover all the items over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Pursuant to the programme a portion of the fixed assets hasbeen physically verified by the Management during the year and no material discrepancieshave been 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 are held in thename of the company.
(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification.
(iii) 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. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities given in respect of whichprovisions of section 185 of the Companies Act 2013 are applicable and hence not commentedupon.
In respect of loans and advances given provisions of section 186 of the Companies Act2013 have been complied with by the Company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) 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 Companies Act 2013for the products/services of the Company.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax duty of custom goods and service tax cess and other statutorydues have generally been regularly deposited with the appropriate authorities though therehas been a slight delay in a few cases of professional tax provident fund and customduty.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax duty ofcustom 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 duty of excise value added tax and cess on account of any dispute are as follows:
|Income Tax || || || |
|Sr. Name of the Statute No. ||Period to which the amount relates ||Forum where dispute is pending ||Amount (Rs.Lakhs) |
|1 Income Tax Act 1961 ||2011-2012 to 2015-2016 ||Income Tax Appellate tribunal ||36713.25 |
| ||2006-07 and 2007-08 ||First Appellate Authority ||42.75 |
| ||1996-1997 to 2000-2001 ||High Court ||1100.21 |
|Total || || ||37856.22 |
|Sr. No. Name of the Statute ||Period to which the amount relates ||Forum where dispute is pending ||Amount (Rs.Lakhs) |
|1) Statute applicable in Maharashtra UP ||1993-1994 and 2004-2005 ||High court ||51.86 |
|2) Statute applicable in Uttar Pradesh Andhra Pradesh Madhya Pradesh Kerala Rajasthan Uttaranchal Delhi Tripura West Bengal Bihar Odisha Assam Maharashtra Gujrat Karnataka Jharkhand Goa Chandigarh and Haryana ||1988-89 1995-1996 1996- 1997 1998-99 2000-2001 2001-2002 and 2003-2004 to 2016-2017 ||Assessing authorities and First Appellate Authorities of various states ||1215.95 |
|3) Statute applicable in Maharashtra Uttar Pradesh Andhra Pradesh Kerala Bihar Odisha and Karnataka ||1987-19881990-1991 1995-19981999-2002 2003-2004 and 2013-2014 ||Sales Tax Appellate Tribunal of various States ||183.18 |
|Total || || ||1451.00 |
|Sr. No. Name of the Statute ||Period to which the amount relates ||Forum where dispute is pending ||Amount (Rs.Lakhs) |
|1 Service Tax (Finance Act 1994) ||July 2007 to October 2008 ||Customs Excise and Service Tax Appellate Tribunal ||15.20 |
| ||2003-2004 to 2009-2010 ||First appellate authorities ||7.51 |
|Total || || ||22.71 |
|Sr. Name of the Statute No. ||Period to which the amount relates ||Forum where dispute is pending ||Amount (Rs. Lakhs) |
|1 The Central Excise Act 1944 ||1994-95 2005-06 to 2010- ||Customs Excise and ||1680.59 |
| ||11 and 2014 - 2017 ||Service Tax Appellate Tribunal || |
| ||1998-1999 to 2004-2005 and 2006-2007 to 2016- 2017 ||First appellate authorities ||1077.12 |
|Total || || ||2757.71 |
viii) The Company did not have any outstanding loans or borrowing dues in respect of afinancial institution or bank or to government or dues to debenture holders during theyear. Thus reporting under clause
(viii) is not applicable to the Company and hence not commented upon.
(ix) According to the information and explanations given by the management the Companyhas not raised any money by way of further public offer / debt instruments and term loans.Therefore reporting under clause
(ix) is not applicable to the Company and hence not commented upon.
(x) Based upon 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 no fraud on the companyby the officers and employees of the Company been noticed or reported during the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.
(xii) In our opinion the Company is not a nidhi Company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section March 31 2020 177and 188 of Companies Act 2013 where applicable and the details have been disclosed in thenotes to the financial statements as required by the applicable accounting standards.
(xiv) 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 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 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 Companies Act 2013.
(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company andhence not commented upon.
ANNEXURE II TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE IND AS FINANCIALSTATEMENTS OF COLGATE-PALMOLIVE (INDIA) LIMTED
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 ofColgate-Palmolive (India) Limited ("the Company") as of March 31 2020 inconjunction with our audit of the Ind AS financial statements of the Company for the yearended 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 ensuring the orderly and operating effectively 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 Ind AS 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 the Standards on Auditing as specified under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls and both issuedby the Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that 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 Ind AS financial statements was established andmaintained and if such controlsoperatedeffectivelyin 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 these Ind ASfinancial statements and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of internalfinancial controls over financial reporting with reference to these Ind AS 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 of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient audit opinion on theinternal financial controls over financial reporting with reference to these Ind ASfinancial 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 theseIND AS 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 Ind AS financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting WithReference to these Ind AS financial statements
Because of the inherent limitations of internal financial controls over financialreporting with reference to these financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls over financial reporting with reference to these Ind ASfinancial statements to future periods are subject to the risk that the internal financialcontrol over financial reporting with reference to these Ind AS financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe 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 financial statements and suchinternal financial controls over financial reporting with reference to these Ind ASfinancial statements were effectivelyas operating at March 31 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 S R B C & CO LLP |
|Chartered Accountants |
|ICAI Firm Registration Number: 324982E/E300003 |
|per Jayesh Gandhi |
|Membership Number: 037924 |
|UDIN: 20037924AAAACP4193 |
|Place of Signature: Mumbai |
|Date: May 21 2020 |