To the Members of HeidelbergCement India Limited
Report on the Audit of the Financial Statements
We have audited the financial statements of HeidelbergCement India Limited (theCompany) which comprise the balance sheet as at 31 March 2020 and the statement ofProfit and Loss including other comprehensive income statement of changes in equity andstatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of 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 amendedand other accounting principles generally accepted in India of the state of affairs ofthe Company as at 31 March 2020 and profit and total comprehensive income changes inequity 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 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 (the ICAI)together with the ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
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 matter described below to be the key audit matter to be communicatedin our report.
Provisions and contingencies with respect to litigations Description of the Key auditmatter
The Company has been operating in multiple locations over the years and thus has beensubject to variety of laws regulations and interpretations. There are litigations whichhave been pending for long and the outcome of which is not certain. In the normal courseof business provisions and contingent liabilities may arise from legal proceedingsincluding regulatory and other governmental proceedings as well as audit by authoritiesand commercial claims. At 31 March 2020 the company held provision for litigations of MINR2548.0 against which a sum of MINR 1946.6 has been deposited under protest. Given thehighly complex nature of regulatory and legal cases management applies judgement whenconsidering whether and how much to provide for the potential exposure of each matter.These estimates could change over time as new facts emerge and each legal case progresses.Given the complexity and magnitude of potential exposures across the company and thejudgement necessary to determine required disclosures this is a key audit matter.
Description of the Auditor's response
We assessed and tested the design and operating effectiveness of the controls set up toprevent or detect and correct errors relating to the recognition and measurement ofprovisions involving the use of judgment. We also discussed the status of significantknown actual and potential litigation with the Head of Legal and Compliance and othersenior management personnel who have knowledge of these matters. We challenged thedecisions and rationale for provisions held or for decisions not to record provisions ormake disclosures. For the most significant of the matters we assessed relevant historicaland recent judgments passed by the court authorities and considered legal opinion whereverobtained by management from external lawyers to validate the basis used for the provisionsrecorded and the disclosures made by the company. We also involved internal tax expertsbecause of the knowledge required for the respective tax regulations. We reviewed internalaudit reports and met with Internal Audit team to identify actual and potentialnoncompliance with laws and regulations both those specific to the company's business andthose relating to the conduct of business generally and corrective action taken by themanagement in this regard. For those matters where management concluded that no provisionsshould be recorded we also considered the adequacy and completeness of the company'sdisclosures made in relation to contingent liabilities. Based on the procedures performedabove we obtained sufficient audit evidence to corroborate management's estimates forprovisions and disclosures in Note 32 relating to contingencies.
Information Other than the Financial Statements and Auditor's Report thereon
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 our auditors' reportthereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing 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 total comprehensiveincome changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standardsspecified under Section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
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.
The Board of Directors is also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities 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 highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis 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 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 system in place and the operating effectiveness ofsuch 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 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.
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 the Companies (Auditor's Report) Order 2016 (the Order)issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Act we give in the Annexure A a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
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 Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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.
(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 opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the 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 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 financial statements - Refer Note 32 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
For S.N. Dhawan & Co LLP
Firm Registration No.: 000050N/N500045
Rajeev K Saxena
Membership No.: 077974
UDIN No.: 20077974AAAABK6030
Date: 28 May 2020
Annexure A to the Independent Auditor's Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of the Independent Auditor's Report of even date to the members ofHeidelbergCement India Limited on the financial statements as of and for the year ended 31March 2020)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment and other intangibleassets.
(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and according to the information and explanation given to us no materialdiscrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds of all the freeholdimmovable properties (which are included under the head Property plant andequipment') are held in the name of the Company.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and according to the information and explanations given to usno material discrepancies between physical inventory and book records were noticed onphysical verification. Inventory lying with third parties have been confirmed by them asat 31 March 2020 and no material discrepancies were noticed in respect of suchconfirmations.
(iii) According to the information and explanations given to us the Company has notgranted any loan secured or unsecured to companies firms Limited Liability Partnerships(LLPs) or other parties covered in the register maintained under Section 189 of the Act.Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Order arenot applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany has not entered into any transaction covered under Sections 185 and 186 of theAct. Accordingly the provisions of clause 3(iv) of the Order are not applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year and had no unclaimed deposits at thebeginning of the year within the meaning of Sections 73 to 76 of the Act and the Companies(Acceptance of Deposits) Rules 2014 (as amended). Accordingly the provisions of clause3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us the Company isregular in depositing undisputed statutory dues including provident fund income-tax dutyof customs cess goods and services tax (GST) and other material statutory dues asapplicable to the appropriate authorities. Further no undisputed amounts payable inrespect thereof were outstanding at the year-end for a period of more than six months fromthe date they become payable.
(b) According to the information and explanations given to us the dues outstanding inrespect of income-tax sales-tax service tax duty of excise value added tax and otherstatutory dues on account of any dispute are as follows:
|Name of statue ||Nature of dues ||Amount (Rs. in million) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Sales tax act and various state Sales tax act ||Sales tax ||40.4 ||2000-01 to 2004-05 and 2009-2010 ||High Court |
| || ||25.8 ||2007-08 to 2013-14 ||Appellate Tribunal |
| || ||3.2 ||2005-06 and 2006-07 ||Assistant Commissioner |
| || ||0.9 ||2011-12 and 2012-13 ||Additional Commissioner |
| || ||0.1 ||2000-01 to 2002-03 ||Assessing Officer Sales Tax |
|Various State ||Entry Tax ||373.4 ||2003-04 to till date ||High Court |
|Entry Tax Act || ||145.1 ||1999-2000 to 2007-08 2009- || 10 Appellate Tribunal |
|Income Tax Act 1961 ||Income Tax ||22.4 ||2011-12 to 2014-15 ||Income tax appellate tribunal (ITAT) |
|Central Excise Act 1944 ||Excise Duty and Cenvat ||11.5 ||2000-01 ||High court |
|2.1 ||2003-04 to 2008-09 ||Central Excise and Service Tax Appellate Tribunal (CESTAT) |
|Finance Act 1994 ||Service Tax ||10.8 ||2008-10 to 2011-13 ||Commissioner of Central |
|(Amended 2009) || || || ||Excise (Appeals) |
|Madhya Pradesh ||Rural ||20.4 ||2005-06 till date ||Supreme court |
|Rural Road Development Authority ||Infrastructure and Road development tax || || |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to any financialinstitutions or any dues to debenture-holders during the year. The company has nooutstanding dues in respect of bank or government.
(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion and according to the information andexplanations given to us the term loans were applied for the purposes for which the loanswere obtained.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or on the company by its officers or employees hasbeen noticed or reported during the period covered by our audit.
(xi) In our opinion and according to the information and explanations given to usmanagerial remuneration has been paid / provided by the company in accordance with therequisite approvals mandated by the provisions of Section 197 of the Act read withSchedule V to the Act.
(xii) The Company is not a Nidhi Company. Accordingly provisions of clause 3(xii) ofthe Order are not applicable.
(xiii) In our opinion and according to the information and explanations given to usall transactions with the related parties are in compliance with Sections 177 and 188 ofAct where applicable and the requisite details have been disclosed in the financialstatements etc. as required by the applicable accounting standards.
(xiv) During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Accordingly provisions ofclause 3 (xiv) of the order are not applicable.
(xv) In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transactions with the directors or personsconnected with them covered under Section 192 of the Act. Accordingly provisions ofclause3 (xv) of the order are not applicable.
(xvi) The company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly provisions of clause 3 (xvi) of the order are notapplicable.
|For S.N. Dhawan & Co LLP |
|Chartered Accountants |
|Firm Registration No.: 000050N/N500045 |
|Rajeev K Saxena |
|Membership No.: 077974 |
|UDIN No.: 20077974AAAABK6030 |
|Place: Noida |
|Date: 28 May 2020 |
Annexure B to the Independent Auditor's Report of even date on the financial statementsof HeidelbergCement India Limited
Independent Auditor's report on the Internal Financial Controls with reference tofinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 (the Act)
1. We have audited the internal financial controls with reference to financialstatements of HeidelbergCement India Limited (the Company) as of 31 March 2020in conjunction with our audit of the financial statements of the Company for the yearended 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of the company's business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required 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 issuedby the Institute of Chartered Accountants of India (ICAI) and deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wereestablished 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 anunderstanding 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 controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31 March 2020 based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India.
|For S. N. Dhawan & Co LLP |
|Chartered Accountants |
|Firm's Registration No.:000050N/N500045 |
|Rajeev K Saxena |
|Membership No.: 077974 |
|UDIN No.: 20077974AAAABK6030 |
|Place: Noida |
|Date: 28 May 2020 |