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Igarashi Motors India Ltd.

BSE: 517380 Sector: Auto
NSE: IGARASHI ISIN Code: INE188B01013
BSE 12:44 | 20 Oct 283.55 -4.90
(-1.70%)
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286.65

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286.65

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282.25

NSE 12:39 | 20 Oct 283.45 -4.30
(-1.49%)
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285.75

HIGH

287.75

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OPEN 286.65
PREVIOUS CLOSE 288.45
VOLUME 766
52-Week high 415.70
52-Week low 150.65
P/E 67.19
Mkt Cap.(Rs cr) 893
Buy Price 283.00
Buy Qty 47.00
Sell Price 283.95
Sell Qty 3.00
OPEN 286.65
CLOSE 288.45
VOLUME 766
52-Week high 415.70
52-Week low 150.65
P/E 67.19
Mkt Cap.(Rs cr) 893
Buy Price 283.00
Buy Qty 47.00
Sell Price 283.95
Sell Qty 3.00

Igarashi Motors India Ltd. (IGARASHI) - Auditors Report

Company auditors report

To

The Members of Igarashi Motors India Limited Report on the Audit of theFinancial Statements Opinion

We have audited the financial statements of Igarashi Motors IndiaLimited ("the Company") which comprise the Balance Sheet as at March 31 2020and 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 2020 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) 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 on the financial statements.

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.

The key audit matter How the matter was addressed in our audit
Related party transactions In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
(Refer note 38 to the financial statements)
Related party transactions are regulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as well as Companies Act 2013. In addition the relevant accounting standards require specific disclosures of related parties and transactions with them to be made in the financial statements. - To obtain an understanding of the Company's Related Party relationships and transactions we obtained a list of Related Party relationships and significant Related Party Transactions (RPT) from the management. We also made inquiries of management regarding the identity of the related parties including changes from the prior year and the nature of relationships and of the transactions with them. We also maintained alertness regarding related party information when examining records or documents regarding undisclosed related party relationships or transactions.
Majority of the revenues of the Company is derived from related parties. We identified related party transactions as a key audit matter due to the significance of the amounts the frequency of such transactions and risk of non- compliance with various regulations.
- We evaluated the design implementation and operating effectiveness of key internal controls over identification and authorisation of significant related party transactions.
- Evaluated compliance of such related party transactions with applicable laws and regulations. Tested whether the pricing of related party transaction's is at arm's length with the help of our transfer pricing specialists.
- Evaluated the rights and obligations as per the terms and conditions of the agreements.
- Assessed the adequacy and appropriateness of the disclosures made in accordance with the relevant accounting standard and applicable laws and regulations.
Fair value of company's investment in equity shares of Bosch Electrical Drives India Private Limited In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
(Refer note 8 and note 36 to the financial statements) - Understood the valuation technique and assumptions used by the independent valuation expert appointed by the management to carry out the fair valuation and evaluated whether the same was in accordance with the relevant accounting standard relating to the fair valuation.
The Company's investment in equity shares of Bosch Electrical Drives India Private Limited ("Bosch") is required to be measured at fair value at each reporting date in accordance with relevant accounting standard. This investment is not publicly traded and hence its fair valuation involves techniques which uses significant unobservable inputs. - With the help of our valuation specialists evaluated the reasonableness of key assumptions specifically those relating to revenue multiples discount factors and their comparison with revenue multiples of comparable companies and evaluated the final computation of the fair valuation as per the aforesaid assumptions.
We identified this as a key audit matter due to the judgements / estimates involved in establishing the relevant valuation technique and the relevant inputs thereof and because the impact of the fair valuation on the financial statements is material. - Considered the adequacy and appropriateness of the disclosures made in accordance with the relevant accounting standard.

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 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 the 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 up to 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 ("theOrder") issued by the Central Government in terms of Section 143 (11) of the Act wegive in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order 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 balance sheet the statement of profit and loss (including other comprehensiveincome) the statement of changes in equity and the statement of cash flows dealt with bythis Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct.

f) With respect to the adequacy of the internal financial controls with reference tofinancial 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 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 as at March 31 2020 onits financial position in its financial statements - Refer Note 37 to the financialstatements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts. - Refer Note 24 to the financial statements.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The disclosures in the financial statements regarding holdings as well as dealingsin specified bank notes during the period from November 8 2016 to December 30 2016 havenot been made in these financial statements since they do not pertain to the financialyear ended March 31 2020.

(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's Registration Number: 101248W/W-100022
Harsh Vardhan Lakhotia
Partner
Place: Chennai Membership No. 222432
Date: June 4 2020 ICAI UDIN: 20222432AAAAAN9109

Annexure A to the Independent Auditor's Report on the financial statements ofIgarashi Motors India Limited (Referred to in paragraph 1 under ‘Report on OtherLegal and Regulatory Requirements' section of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to the programme certain fixedassets were physically verified during the year and no material discrepancies were noticedon such verification.

(c) According to the information and explanations given to us and based on theexamination 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 physically verified by theManagement during the year and the discrepancies noticed on such verification between thephysical stock and book records were not material. In our opinion the frequency of suchverification is reasonable. In respect of inventory lying with third parties these havesubstantially been confirmed by them.

(iii) According to the information and explanations given to us the Company has notgranted any loan secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register required under Section 189 of theAct. Accordingly paragraph 3(iii) of the Order is not applicable to the Company.

(iv) According to the information and explanations given to us the Company hascomplied with the provisions of Section 186 of the Act with respect to the investmentsmade. The Company has not granted any loans or provided any guarantee or security to theparties covered under Section 185 and 186 of the Act. Accordingly to that extentparagraph 3(iv) of the Order is not applicable to the Company.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public within the meaning of the directives issued by theReserve Bank of India provisions of Section 73 to 76 of the Act any other relevantprovisions of the Act and the relevant rules framed thereunder. Accordingly paragraph3(v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the Companies (Cost Records and Audit) Rules 2014 as amended prescribed by theCentral Government under Section 148 of the Act and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. However we have notmade a detailed examination of such 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/accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-tax dutyof customs goods and services tax employees' state insurance cess and othermaterial statutory dues have generally been regularly deposited during the year by theCompany with the appropriate authorities. As explained to us the Company did not have anydues 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 2020 for a period of more than six months from the datethey became payable other than the following dues:

Name of the Statute Nature of the Dues Amount (in lakhs) Financial year to which the amount relates Due date
The Employees' Provident Funds and Miscellaneous Provisions Act 1952 Provident fund 24.95 2018-19 April 15 2019

(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 explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to banks / financialinstitutions. The Company did not have any dues to debenture holders or loans orborrowings from the Government.

(ix) According to the information and explanations given to us the Company has notraised any money by way of initial public offer or further public offer (including debtinstruments) during the year. The term loans raised by the Company have been applied forthe purpose for which they were raised.

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

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid / provided for managerialremuneration in accordance with the requisite approvals as per provision of Section 197read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(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 to the Company.

(xvi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to beregistered under section 45-IA of the Reserve Bank of India Act 1934.

for B S R & Co. LLP
Chartered Accountants
Firm's Registration Number: 101248W/W-100022
Harsh Vardhan Lakhotia
Partner
Place: Chennai Membership No. 222432
Date: June 4 2020 ICAI UDIN: 20222432AAAAAN9109

Annexure B to the Independent Auditor's Report on the financialstatements of Igarashi Motors India Limited Report on the internal financial controls withreference to the aforesaid financial statements under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 (Referred to in paragraph (f) under ‘Report onOther Legal and Regulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference tofinancial statements of Igarashi Motors India Limited ("the Company") as ofMarch 31 2020 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 adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at March 31 2020 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 issued by theInstitute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information 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 internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to financial statements. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

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 with reference to financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

A company's internal financial controls 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 controls with reference to financial statements include 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 asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect 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 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.

for B S R & Co. LLP
Chartered Accountants
Firm's Registration Number: 101248W/W-100022
Harsh Vardhan Lakhotia
Partner
Place: Chennai Membership No. 222432
Date: June 4 2020 ICAI UDIN: 20222432AAAAAN9109

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