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DCM Shriram Industries Ltd.

BSE: 523369 Sector: Agri and agri inputs
NSE: DCMSRMIND ISIN Code: INE843D01027
BSE 00:00 | 09 Dec 86.90 1.45
(1.70%)
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NSE 05:30 | 01 Jan DCM Shriram Industries Ltd
OPEN 85.00
PREVIOUS CLOSE 85.45
VOLUME 67120
52-Week high 131.40
52-Week low 34.10
P/E 12.21
Mkt Cap.(Rs cr) 756
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 85.00
CLOSE 85.45
VOLUME 67120
52-Week high 131.40
52-Week low 34.10
P/E 12.21
Mkt Cap.(Rs cr) 756
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

DCM Shriram Industries Ltd. (DCMSRMIND) - Auditors Report

Company auditors report

TO THE MEMBERS OF

DCM SHRIRAM INDUSTRIES LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of DCM Shriram Industries Limited("the Company") which comprise the standalone balance sheet as at 31 March2021 and the standalone statement of profit and loss (including other comprehensiveincome) the standalone statement of changes in equity and the standalone statement ofcash flows for the year then ended and notes to the standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation.

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 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2021 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended 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 on the Standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Description of Key Audit Matters

(a) Determination of carrying value of inventory of sugar and the related products asat 31 March 2021 See note 2A(d) and 10 to the standalone financial statements

The key audit matter How the matter was addressed in our audit
As on March 31 2021 the Company had an inventory of sugar and related products i.e. molasses ethanol etc. with a carrying value of INR 52512.21 lakhs. The Company produces ethanol at its Distillery unit using a particular type of molasses (B-heavy a product generated along with sugar). We understood and tested controls as established by the management in determination of valuation of closing inventory including for determination of estimated net realizable value of inventory of sugar and allocation of cost between joint products.
Sugar and B-heavy molasses have been recognised as joint products and the cost of production has been allocated appropriately between these joint products. We considered various factors including technical assessment of the management significance of the products manufacturing objective in determination of classification of the products as 'joint products'; the relative net realisable value of sugar and B- heavy molasses based alcohol in determination of a basis for allocation of cost between the joint products.
We considered the determination of carrying value of the inventory (i.e. lower of cost and NRV) of joint products sugar and B-heavy molasses as a Key Audit Matter given the relative size in the standalone financial statements and judgement involved in analysing the relevant factors such as basis for classification of B-heavy molasses as a joint product determination of a reasonable basis for allocation of cost between the joint products in arriving at the cost of inventories and determination of estimated net realizable value basis minimum sale price regulatory intervention in determining periodical restrictions on quantity of sales and frequent fluctuations in selling prices etc. In respect of estimated net realizable value we have considered factors of actual selling price prevailing during the year and subsequent to the year-end minimum selling price and other measures taken by the Government with respect to sugar industry as a whole.
Based on the above procedures performed the carrying value of inventory of sugar and related products as determined by the management is considered reasonable.

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 financial statements and audit report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance 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.

Responsibility of the Management and Board of Director for the Standalone FinancialStatements

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 and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. 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 designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Management and Board of Directorsare responsible 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors is 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 the one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrols.

• 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 in the standalone financial statementsmade by the Management and Board of Directors.

• Conclude on the appropriateness of the going concern basis of accounting by theManagement and Board of Directors and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our audit report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our audit report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and contents 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 controls 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 audit report unless law or regulation precludes public disclosure about the matteror 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 in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. (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 standalone balance sheet the standalone statement of profit and loss (includingothercomprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) 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 31 March 2021 onits financial position in its standalone financial statements - Refer Note 41 and 52 tothe standalone financial statements;.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses during the year ended 31 March 2021.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2021; and.

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2021.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limits laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

Annexure A referred to in our Independent Auditor's Report to the members of DCMShriram Industries Limited on the Standalone Financial Statements for the year ended 31March 2021.

(i) (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of property plant and equipment.

(b) According to the information and explanations given to us the Company has aregular programme of physical verification of its property plant and equipment by whichall property plant and equipment are verified in a phased manner over a period of threeyears. In our opinion this periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. In accordance with thisprogramme certain assets have been physically verified by the management during thecurrent year. As informed to us no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company and based on the confirmations obtained by theCompany from the custodian of the title deeds with whom the title deeds are deposited assecurity for loans and the examination of the registered sale deed/ transfer deed/conveyance deed provided to us we report that the title deeds of the immovable propertyare held in the name of the Company except for:

Situated at Whether leasehold / freehold Gross block as at March 312021 (Rs. in lakhs) Net block as at March 312021 (Rs. in lakhs)
Daurala Uttar Pradesh* Freehold 379.04 379.04
Daurala Uttar Pradesh** Freehold 44.95 44.95
Kota Rajasthan* Leasehold 465.00 465.00

* Vested in the year ended 31 March 1991 pursuant to a Scheme of Arrangement oferstwhile DCM Limited and yet to be endorsed in the name of the Company.

** The title deeds are in the name of Daurala Organics Limited an erstwhile Companythat was merged in the year ended 31 March 2005 with the Company under sections 391 to 394of the Companies Act 1956 in terms of the approval of the Honourable High court ofjudicature.

(ii) According to the information and explanations given to us the inventories exceptgood-in-transit have been physically verified by the management at the year end. In ouropinion the frequency of such verification is reasonable having regard to the size of theCompany and nature of its business. In our opinion and as per the information andexplanations received by us the discrepancies noticed on comparison of physicalverification of inventories with book records were not material and have been properlydealt with in the books of account. According to the information and explanations given tous goods-in-transit have been verified from the underlying documents.

(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 theAct. Accordingly paragraph 3(iii) of the Order is not applicable.

(iv) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not entered into anytransactions during the year related to loans investment guarantees and securities towhich the provisions of Sections 185 and 186 of the Act are applicable.

(v) According to the information and explanations given to us the Company has compliedwith the provisions of Sections 73 to 76 or any other relevant provisions of the CompaniesAct 2013 and the Companies (Acceptance of Deposits) Rules 2014 as amended with regardsto the deposits accepted. According to the information and explanations given to us noorder has been passed by the Company Law Board or the National Company Law Tribunal or theReserve Bank of India or any Court or any other Tribunal with regard to acceptance ofdeposits by the Company.

(vi) The Central Government has prescribed the maintenance of cost records undersub-section (1) of section 148 of the Act for activities carried out by the Company. Wehave broadly reviewed the books of account maintained by the Company pursuant to the Rulesmade by the Central Government for the maintenance of cost records under Section 148 ofthe Act and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. However we have not made a detailed examination of thecost records.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted or accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees' StateInsurance Income-tax Goods and Services Tax (‘GST') Duty of customs Cess andother material statutory dues have been regularly deposited during the year by the Companywith the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund. Employees' State Insurance Income-tax GST Duty ofcustoms. Cess and other material statutory dues were in arrears as at 31 March 2021 for aperiod of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues inrespect of Income- tax Sales-tax Service tax Duty of customs Duty of excise GST andValue added tax which have not been deposited with the appropriate authorities on accountof any dispute except for the following:

Name of the Statute Nature of dues Forum where dispute is pending Period to which the amount related (Various years covering the period) Amount involved* (Rs. lakhs) Amount paid under protest (Rs. lakhs)
Income Tax Act 1961 Income Tax Income Tax Appellate T ribunal** 2003-2006 1708.75 1708.75
Income Tax Act 1961 Income Tax Income Tax Appellate Tribunal 2016-17 3631.97 -
Central Excise Act 1944 Excise Duty Commissioner (Appeals) 2004 -05 12.08 10.03
High Court June 1998 to February 1999 3.54 -
CESTAT Delhi 1995- 96 3.22 -
Assistant Commissioner (Appeals) June 2017 20.36 -
Sales Tax Laws Sales Tax High Court 1989-1990 1992-1993 1995-1996 1997-1998 2008-2009 2009-2010 2010-2011 2013-2014 115.42
Additional Commissioner (Appeals) 2004-2005 2.21 0.88
GST Act 2017 GST Additional Commissioner 2017-18 1.78 1.78
Sales Tax Laws # UP VAT and CST Additional Commissioner (Appeals) April 2019 to March 2020 and April 2020 to October 2020 7415.03 3000.00

* amount as per demand orders including interest and penalty wherever indicated inthe demand orders

** Order passed by ITAT in favour of the Company though may be subject to appeal bythe department within the prescribed time.

# Also refer note 52 of the standalone financial statements for disputed amount of Rs.6911.32 lakhs.

(viii) According to the information and explanations given to us there is no defaultexisting at the balance sheet date in repayment of loans or borrowings to banksgovernment or a financial institution. The Company has not issued any debentures duringthe year.

(ix) In our opinion and according to the information and explanations given to us andon the basis of our examination of the records the Company has utilized the money raisedduring the year by way of term loans for the purposes for which they were raised. TheCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) during the year.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.

(xi) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the managerial remuneration has been paid orprovided by the Company in accordance with the provisions of Section 197 read withSchedule V of the Act.

(xii) According to the information and explanations given to us the Company is not aNidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the transactions with related parties arein compliance with the provisions of Sections 177 and 188 of the Act where applicableand details of such transactions have been disclosed in the Financial Statements asrequired by the applicable accounting standards.

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

(xv) According to the information and explanations given to us the Company has notentered into any non- cash transactions with directors or persons connected with them.Accordingly paragraph 3(xv) of the Order and provisions of section 192 of the CompaniesAct 2013 are not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal controls stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. 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 with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal controls based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud 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 withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A company's internal financial controls with reference to financial statements comprisea process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include 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 standalonefinancial statements.

Inherent Limitations of Internal Financial controls with Reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to Standalone financial statements to future periods are subject to the riskthat the internal financial controls with reference to standalone financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No. 1012482W/W-100022
Kaushal Kishore
Partner
Place : New Delhi (Membership No. 090075)
Date : June 29 2021 UDIN: 21090075AAAAAN8922

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