to the MeMbers of GrIndwell norton lIMIted
Report on the audit of the Standalone financial statements
1. We have audited the accompanying standalone financial statements of Grindwell NortonLimited ("the Company") which comprise the balance sheet as at March 31 2021and the statement of Profit and Loss (including Other Comprehensive Income) statement ofchanges in equity and statement of cash flows for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policiesand other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 and total comprehensive income(comprising of profit and other comprehensive income) changes in equity and its cashflows for the year then ended.
Basis for opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key audit matters
4. 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.
|Key Audit Matters ||How our audit addressed the key audit matter |
|1) Assessment of valuation of Unquoted Equity Investment || |
|(Refer to Notes 5 and 40 to the standalone financial statements) ||Our procedures to test the valuation of investment in the unquoted equity instruments include the following: |
|The Company has investments amounting to ` 17360 lakhs in equity interest of two unquoted companies valued on Fair Value through Other Comprehensive Income' in accordance with related Accounting Standard. ||? Understanding and evaluation of design and testing of operating effectiveness of the controls over determination of fair value (including valuation model and assumptions/ judgements) of unquoted equity instruments. |
|In measuring these investments valuation methods are used based on inputs that are not directly observable from market information and certain other unobservable inputs. The Management has also used the services of an independent professional valuation expert in this regard. ||? Assessing the accuracy and reasonableness of the input data provided by the Management by agreeing with approved budgets. |
|Key inputs used in the valuation of above investments are cash flow projections growth rate terminal value discount rate etc. ||? Comparing recent historical results vis-a-vis corresponding budgets. |
|The valuation of these assets is important to our audit as it is highly dependent on estimates (various assumptions and techniques used) which contain assumptions that are not observable in the market. ||? Evaluation of competence capabilities and objectivity of the valuation expert engaged by the Management. |
|Given the inherent subjectivity in the valuation of the above investments relative significance of these investments to the standalone financial statements and the nature and extent of audit procedures involved we determined this to be a key audit matter. ||? Assessment of reasonableness of cash flow projections and performed audit procedures on management's assumptions such as earnings growth rate cost escalation/ savings etc. and also along with the auditor's expert assessed valuation methodology discount rate terminal growth rate etc. |
| ||? Testing the mathematical accuracy of the discounted cash flow projections. |
| ||? Assessed adequacy of relevant disclosures in the standalone financial statements. Based on the above audit procedures performed the Management's assessment of valuation of investment in the unquoted equity instruments was considered to be reasonable. |
|2) Migration of financial system to SAP during the year ||? We performed the following procedures with respect to the migration and the new system: |
|The Company's financial reporting process significantly relies on the design and operating effectiveness of its IT systems. ||? Obtained an understanding and evaluated the project governance and the management oversight of the migration and tested the relevant controls over data migration. |
|The Company used IIS (Legacy system) as its key financial application for the period from April 1 2020 to December 31 2020; It migrated to SAP ECC 6.0 with effect from January 01 2021. ||? Tested a sample of the migrated balances of general ledgers sub-ledgers and open items for completeness and accuracy as of 1st January 2021. |
|This is a key audit matter because migration to SAP ECC 6.0 involved migration of financially significant data from the legacy system to SAP ECC 6.0 and changes in automated controls and key reports. ||? Evaluated the design and tested the operating effectiveness of the relevant IT General Controls (ITGC) business process controls (both automated and manual) and tested the completeness and accuracy of key reports on a sample basis in SAP ECC 6.0 for the period from January 1 2021 to March 31 2021. |
| ||Based on the above procedures we did not find any significant exceptions in the data migration ITGC business process controls and key reports in SAP ECC 6.0 |
5. 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 standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of management and those chargedwithgovernanceforthestandalonefinancialstatements
6. 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 standalone financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under section133 of the Act. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
7. In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. Those Board of Directors are also responsible foroverseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the standalone financial statements
8. 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.
9. 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 standalone 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 to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct 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 reasonableness ofaccounting estimates and related disclosures made by management.
? Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
? Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
10. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. 11. Wealso provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
12. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on other legal and regulatory requirements
13. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure B a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
14. As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and Statement of Cash Flow dealt with by thisReport are in agreement with the books of account. d. In our opinion the aforesaidstandalone financial statements comply with the Accounting Standards specified underSection 133 of the Act.
e. On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board disqualified of Directors none of thedirectors as on March 31 2021 from being appointed as a director in terms of Section 164(2) of the Act.
f. With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure A".
g. 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 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 on its financialposition in its standalone financial statements Refer Note 43 to the standalone financialstatements;
ii. The Company has long-term contracts as at March 31 2021 for which there were nomaterial foreseeable losses. The Company did not have long term derivative contracts as atMarch 31 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 March 312021.
iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2021.
15. The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
annexure a to Independent audItors' report
Referred to in paragraph 15(f) of the Independent Auditors' Report of even date to themembers of Grindwell Norton Limited on the standalone financial statements for the yearended March 31 2020
Report on Internal Financial Controls with reference to financial statements underclause (i) of Sub-Section 3 of Section 143 of the Act
1. We have audited the internal financial controls with reference to financialstatements of Grindwell Norton Limited ("the Company") as of March 31 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
3. 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 on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
5. 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 systemwith reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
6. A Company's internal financial controls with reference to financial statements is aprocess 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 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 with reference to financialstatements
7. 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 financial statements to future periods are subject to the risk that theinternal financial control controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
8. In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2021 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.
Annexure B to Independent Auditors' Report
i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.
(c) The title deeds of immovable properties as disclosed in Note 3 Property Plant andEquipment to the standalone financial statements are held in the name of the Company.
ii. The physical of inventory (excluding stocks with third parties) have been conductedat reasonable intervals by the Management during the year. In respect of inventory lyingwith third parties these have substantially been confirmed by them. verification Thediscrepancies noticed physical of inventory as compared to book records were not material.
iii. (a) The Company had granted unsecured loans to a party covered in the registermaintained under Section 189 of the Act. The Company has not granted any other loanssecured or unsecured to companies firms or LLPs covered in the register maintained underSection 189 of the Act.
(b) In respect of the aforesaid loans the terms and conditions under which such loanswere granted was not prejudicial to the Company's interest.
(c) In respect of the aforesaid loans the schedule of repayment of principal andpayment of interest was stipulated and the party has repaid the principal amount duringthe year and was also regular in payment of interest as applicable.
(d) In respect of the aforesaid loans there was no amount which is overdue for morethan ninety days.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofthe loans or investments made or guarantees or security provided by it.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.
vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositingundisputed statutory dues including provident fund employees' state insurance incometax service tax duty of customs duty of excise sales tax value added tax cess goodsand service tax and other material statutory dues as applicable with the appropriateauthorities.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of service tax and goods and service tax whichhave not been deposited on account of any dispute. The particulars of dues of income taxsales tax value added tax duty of customs and duty of excise as at March 31 2021 whichhave not been deposited on account of a dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (` in lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|The Central Excise Act 1944 ||Excise Duty ||50.52 ||Financial year 2005-2006 to 2011-12 ||Customs Excise and Service Tax Appellate Tribunal |
|The Customs Act 1962 ||Customs Duty ||247.24 ||Financial Years 2006-07 to 2012-13 ||Customs Excise and Service Tax Appellate Tribunal |
|The Karnataka Value Added Tax 2003 ||Value Added Tax ||18.85 ||Financial year 2009-2010 ||Karnataka Appellate Tribunal Bangalore |
| || ||62.88 ||Financial years 2010-2011 to 2012-2013 ||Joint Commissioner of Commercial Taxes |
|The Central Sales Tax Act 1956 ||Central Sales Tax ||2.39 ||Financial year 2010-2011 ||Assistant Commissioner |
|The Gujarat Value Added Tax Act 2003 ||Value Added Tax ||36.44 ||Financial year 2009-2010 ||Gujarat Value Added Tax Tribunal |
|The Income Tax Act 1961 ||Income Tax ||186.04 ||Assessment Year 2008-2009 ||Honorable High Court of Bombay |
| || ||20.34 ||Assessment Year 2016-2017 ||Commissioner of Income Tax Appeal |
viii. As the Company does not have any loans or borrowings from any financialinstitution or bank or Government nor has it issued any debentures as at the balancesheet date the provisions of Clause 3(viii) of the Order are not applicable to theCompany.
ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company. x. During the course of ourexamination of the books and records of the Company carried out in accordance with thegenerally accepted auditing practices in India and according to the information andexplanations given to us we have neither come across any instance of material fraud bythe Company or on the Company by its officers or employees noticed or reported during theyear nor have we been informed of any such case by the Management.
xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct. Also refer paragraph 15 of our main report.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Accordingly the provisions ofClause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any non cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Membership Number - 107038
Place - Mumbai
Date - May 7 2021