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Igarashi Motors India Ltd.

BSE: 517380 Sector: Auto
NSE: IGARASHI ISIN Code: INE188B01013
BSE 00:00 | 20 Sep 195.65 9.30
(4.99%)
OPEN

186.95

HIGH

195.65

LOW

186.05

NSE 00:00 | 20 Sep 195.40 9.30
(5.00%)
OPEN

188.30

HIGH

195.40

LOW

186.30

OPEN 186.95
PREVIOUS CLOSE 186.35
VOLUME 9925
52-Week high 764.61
52-Week low 171.10
P/E 14.48
Mkt Cap.(Rs cr) 616
Buy Price 195.65
Buy Qty 5094.00
Sell Price 195.35
Sell Qty 104.00
OPEN 186.95
CLOSE 186.35
VOLUME 9925
52-Week high 764.61
52-Week low 171.10
P/E 14.48
Mkt Cap.(Rs cr) 616
Buy Price 195.65
Buy Qty 5094.00
Sell Price 195.35
Sell Qty 104.00

Igarashi Motors India Ltd. (IGARASHI) - Auditors Report

Company auditors report

To

The Members of Igarashi Motors India Limited

Report on the Audit of the Financial Statements Opinion

We have Audited the financial statements of Igarashi Motors IndiaLimited ("the Company") which comprise the Balance Sheet as at March 31 2019and 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 thefinancial statements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid 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 March 31 2019 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) specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the financial statements underthe 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.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

Independent Auditor's Report to the members of Igarashi MotorsIndia Limited (continued) Revenue recognition and Related party transactions

Description of Key Audit Matter How the matter was addressed in our audit
Revenue is a key performance indicator for the external stakeholders and majority of the revenues in the Company is derived from related parties. The Company has adopted Ind AS 115) Revenue from Contracts with Customers (Ind AS 115) which is the new revenue accounting standard and is effective for the year beginning April 1 2018 (Refer note 3.9 to the financial statements). In view of the significance of the matter we performed amongst others the following procedures:
- We assessed the appropriateness of the revenue recognition accounting policies by comparing with the new accounting standard IND AS 115.
- We evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions.
Related party transactions require various approvals under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 Companies Act 2013 etc. and disclosures in accordance with the accounting standards in the financial statements. (Refer note 38 to the financial statements). related party transactions (RPT) and significant - We performed substantive testing by selecting samples of revenue transactions recorded during the year by testing the underlying documents using statistical sampling.
We identified these as our area of audit focus due to the significance of the amounts the frequency of such transactions focus of external stakeholders and compliance with various regulations. - Obtained a list of related party relationships carried out an assessment on the key controls to identify and disclose such relationships and relevant transactions in accordance with the accounting standard.
- Evaluated compliance for such related party transactions including approvals with applicable laws and regulations.
- Tested whether the pricing of RPT's is at arm's length with the help of our internal specialists.
- Evaluated the appropriateness of disclosures in the financial statements.
Business combination
Description of Key Audit Matter How the matter was addressed in our audit
The Company has acquired exports division of Agile Electric Sub-Assembly Private Limited (Holding Company) w.e.f. October 1 2018 for a purchase consideration of Rs. 13562.82 lakhs. The acquisition was considered as a business combination involving entities under common control and pooling of interests method was adopted by the Company to account for the business acquisition. In view of the significance of the matter we performed amongst others the following procedures:
- Obtained and reviewed the Business Transfer Agreement and examined management's analysis of business common control and terms of the transfer in accordance with Ind AS 103.
This is a significant focus area in our audit of the financial in respect of business acquisition and the statements of the current period due to the significance of the amounts. (Refer note 43 to the financial statements). - Also performed procedures to evaluate the appropriateness of the amounts recognised consequential restatement of comparative figures.
- Evaluated the appropriateness of disclosures in the financial statements.

Fair value of company's investment in equity shares of BoschElectrical Drives India Private Limited

Description of Key Audit Matter How the matter was addressed in our audit
Company has investment in equity shares of Bosch Electrical Drives India Private Limited ("Bosch") which is required to be measured at fair values at each reporting date in accordance with Ind AS 109. This investment is not publicly traded and hence its fair valuation involves techniques which uses unobservable inputs. In view of the significance of the matter we performed amongst others the following procedures:
- Understood the valuation technique and assumptions used by the independent valuation expert appointed by the management to carry out the fair valuation.
This is a significant focus area in our audit of the financial statements of the current period due to the judgements / estimates involved in the fair valuation and the impact of the fair valuation on the financial statements. (Refer note 35 to the financial statements) - Tested the reasonableness of valuation technique and key assumptions including comparable companies comparable transactions multiples etc. with the help of our internal valuations specialists.
- Verified the arithmetical accuracy of the valuation workings and evaluated the appropriateness of disclosures in the financial statements.

Information Other than the Financial Statements and Auditor'sReport Thereon

The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and ourauditor's report thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Financial Statements

The Company's Management and Board of Directors are responsiblefor the matters stated in Section 134(5) of the Act with respect to the preparation ofthese financial statements that give a true and fair view of the state of affairsprofit/loss and other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the FinancialStatements

Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thefinancial 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 for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting 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 auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained upto the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' 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 (Auditors' Report) Order 2016("the Order") issued by the Central Government in terms of Section 143 (11) 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.

(A) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The balance sheet the statement of profit and loss (including othercomprehensive income) the statement of changes in equity and the statement of cash flowsdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with theInd AS specified under Section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us: i. The Company has disclosed the impact of pending litigationsas at March 31 2019 on its financial position in its financial statements - Refer Note 37to the financial statements. ii. The Company does not have any long-term contracts otherthan derivative contracts. The Company has made provision as required under any law oraccounting standards for material foreseeable losses on derivative contracts. iii. Therehas been no delay in transferring amounts required to be transferred to the InvestorEducation and Protection Fund by the Company. iv. The disclosures in the financialstatements regarding holdings as well as dealings in specified bank notes during theperiod from November 8 2016 to December 30 2016 have not been made in these financialstatements since they do not pertain to the financial year ended March 31 2019.

(C) With respect to the matter to be included in the Auditor'sReport under Section 197(16):

In our opinion and according to the information and explanations givento us the remuneration 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 limit 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.

for B S R & Co. LLP
Chartered Accountants
Firm Registration Number: 101248W/W-100022
S Sethuraman
Partner
Membership No. 203491
Place: Chennai
Date: May 16 2019

Annexure A to the Independent Auditor's Report on the financialstatements of Igarashi Motors India Limited(referred to in our report of even date)

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of itsfixed assets by which all fixed assets are verified in a phased manner. In our opinionthis periodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the programme certain fixed assets werephysically verified during the year and no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and basedon the examination of records produced by the Company the title deeds of the immoveableproperties included in fixed assets is in the name of the Company.

(ii) Inventories apart from goods in transit have been physicallyverified by the Management during the year and the discrepancies noticed on suchverification between the physical stock and book records were not material. In ouropinion the frequency of such verification is reasonable.

(iii) According to the information and explanations given to us theCompany has not granted any loan secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register required under Section 189of the Act. Accordingly paragraph 3(iii) of the Order is not applicable.

(iv) According to the information and explanations given to us theCompany has complied with the provisions of Section 186 of the Act with respect to theinvestments made. The Company has not granted any loans or provided any guarantee orsecurity to the parties covered under Section 185 and 186 of the Act. Accordingly to thatextent paragraph 3(iv) of the Order is not applicable.

(v) According to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of the directivesissued by the Reserve Bank of India provisions of Section 73 to 76 of the Act any otherrelevant provisions of the Act and the relevant rules framed thereunder. Accordinglyparagraph 3(v) of the Order is not applicable.

(vi) We have broadly reviewed the books of accounts maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as amendedprescribed by the Central Government under Section 148 of the Act 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 such records.

(vii) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company amounts deducted/accrued inthe books of account in respect of undisputed statutory dues including provident fundincome-tax duty of customs goods and services tax employees' state insurance cessand other material statutory dues have generally been regularly deposited during the yearby the Company with the appropriate authorities. As explained to us the Company did nothave any dues on account of sales tax service tax value added tax duty of excise.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund income-tax duty of customsgoods and services tax employees' state insurance and other material statutory dueswere in arrears as at March 31 2019 for a period of more than six months from the datethey became payable.

(b) According to the information and explanations given to us thereare no dues of income tax sales tax value added tax duty of excise duty of customs andservice tax which have not been deposited with the appropriate authorities on account ofany disputes other than the following dues:

Name of the Statute Nature of the Dues Amount ( in lakhs) Amount paid under protest ( in lakhs) Financial year to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 16.61 10.00 2011-12 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 12.18 - 2012-13 Commissioner of Income Tax (Appeals)

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of loans or borrowings tobanks/financial institutions. The Company did not have any dues to debenture holders orloans or borrowings from the Government.

(ix) According to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) during the year. The term loans raised by the Company havebeen applied for the purpose for which they were raised.

(x) According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has paid / providedfor managerial remuneration in accordance with the requisite approvals as per provisionSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicable.(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

(xvi) According to the information and explanations given to us andbased on our examination of the records of the Company the Company is not requiredto be registered under section 45-IA of the Reserve Bank of India Act 1934.

for B S R & Co. LLP
Chartered Accountants
Firm Registration Number: 101248W/W-100022
S Sethuraman
Place: Chennai Partner
Date: May 16 2019 Membership No. 203491

Annexure B to the Independent Auditor's Report on the financialstatements of Igarashi Motors India Limited (referred to in our report of even date)Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct") Opinion

We have audited the internal financial controls with reference tofinancial statements of Igarashi Motors India Limited ("the Company") as ofMarch 31 2019 in conjunction with our audit of the financial statements of the Companyfor the year ended on that date.

In our opinion the Company has in all material respects an adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at March 31 2019 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting (the "GuidanceNote") issued by the Institute of Chartered Accountants of India (‘ICAI').

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by ICAI. 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 safeguardingof its 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 Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the standards on auditingissued by ICAI and deemed to be prescribed under section 143(10) the Act to the extentapplicable to an audit of internal financial controls both issued by the Institute ofChartered Accountants of India. Those standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to financialstatements was established and maintained and if such controls operated effectively in allmaterial respects. Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system with reference to financial statements.

Meaning of Internal Financial Controls with reference to financialstatements

A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control with reference to financial statements includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a materialeffect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference tofinancial statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

for B S R & Co. LLP
Chartered Accountants
Firm Registration Number: 101248W/W-100022
S Sethuraman
Partner
Membership No. 203491
Place: Chennai
Date: May 16 2019