To the Members of KDDL Limited
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of KDDL Limited("the Company") which comprise the Balance sheet as at March 31 2020 theStatement of Pro t and Loss including the statement of Other Comprehensive Income theCash Flow Statement and the Statement of Changes in Equity for the year then ended andnotes to the standalone Ind AS financial statements including a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the 'Code of Ethics'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 audit opinion on the standalone Ind AS financial statements.
Emphasis of Matter
We draw attention to Note 47 to the Standalone Ind AS Financial Statements whichdescribes the uncertainties and the impact of Covid-19 pandemic on the Company'soperations and results as assessed by the management. Our opinion is not modified inrespect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended March 31 2020. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context.
We have determined the matter described below to be the key audit matter to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone Ind AS financial statementssection of our report including in relation to this matter. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matter below providethe basis for our audit opinion on the accompanying standaloneInd AS financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Impairment of Investments in Kamla International Holdings SA (a subsidiary of the Company) || |
|(as described in Note 46 of the standalone Ind AS financial statements) || |
|During the current year impairment indicators were identified by the management on the investments in Kamla International Holdings SA of Rs 1097.66 lakhs. As a result an impairment assessment was required to be performed by the Company by comparing the carrying value of these investments to their recoverable amount to determine whether an impairment was required to be recognised. ||Our audit procedures amongst others included the following: |
|For the purpose of the above impairment testing value in use has been determined by forecasting and discounting future cash flows. Furthermore the value in use is highly sensitive to changes in some of the inputs used for forecasting the future cash flows. ||We assessed and tested management's controls over the assessment of the carrying value of Investment property plant and equipment and other non-current assets to assess whether any asset impairment was required. |
|Further the determination of the recoverable amount of the investments in Kamla International Holdings SA involved judgment due to inherent uncertainty in the assumptions supporting the recoverable amount of these investments. ||We evaluated the Company's valuation methodology applied in determining the recoverable amount. In making this assessment we also assessed the objectivity and independence of Company's specialists involved in the process. |
|Accordingly the impairment of investments in Kamla International Holdings SA was determined to be a key audit matter in our audit of the standalone Ind AS financial statements ||We evaluated the assumptions around the key drivers of the cash flow forecasts including estimated reserve discount rates expected growth rates and terminal growth rates used. |
| ||We also assessed the recoverable value headroom by performing sensitivity testing of key assumptions used with particular focus on drivers of the growth rates margins and discount rate used in the impairment models. |
| ||We tested the arithmetical accuracy of the models. |
| ||We assessed the adequacy of the disclosures included at Note 46 and other relevant disclosures including significant accounting judgements estimates and assumptions made in the standalone Ind As financial statements. |
The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe standalone Ind AS financial statements and our auditor's report thereon.
Our opinion on the standalone Ind AS 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 standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the Standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of Management for the Standalone Ind AS Financial Statements
The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone Ind AS 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 for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 Ind AS 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 standalone Ind ASfinancial 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 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 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 standalone Ind ASfinancial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves 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 standalone Ind AS financialstatements for the financial year ended March 31 2020 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
(a) The Ind AS financial statements of the Company for the year ended March 31 2019included in these standalone Ind AS financial statements have been audited by thepredecessor auditor who expressed an unmodi ed opinion on those statements on May 282019.
(b) The information for the comparative year presented has been restated to reflectrecti cation of segment information and reclassi cations in the standalone financialstatements previously presented to conform to the presentation of the standalone financialstatements for the current year. Refer to Note 45 to standalone Ind AS financialstatements which describes the nature and impact of such adjustments/ reclassi cation.
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 Actwe give in the "Annexure 1"a statement on the matters specified inparagraphs 3 and 4 of the Order.
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 Pro t and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of accounts;
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;
(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 over financialreporting of the Company with reference to these standalone Ind AS financial statementsand the operating effectiveness of such controls refer to our separate Report in"Annexure 2" to this report;
(g) In our opinion the managerial remuneration for the year ended March 31 2020 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofSection
197 read with Schedule V to 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements Refer Note 36(ia) to the standaloneInd As financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe
Investor Education and Protection Fund by the Company.
ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING OF "REPORT ON OTHER LEGALAND REGULATORY REQUIREMENTS" OF OUR AUDIT REPORT OF EVEN DATE
Re: KDDL Limited ('the Company')
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(i) (b) Property plant and equipment have been physically veri ed by the managementduring the year under a regular programme of veri cation in a phased manner over a periodof three years which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed on such verication.
(i) (c) According to the information and explanations given by the management thetitle deeds of immovable properties included in property plant and equipment are held inthe name of the Company.
(ii) The inventory has been physically veri ed by the management during the year. Inour opinion the frequency of veri cation is reasonable. No material discrepancies werenoticed on such physical veri cation. Inventories lying with third parties have been conrmed by them as at year end and no material discrepancies were noticed in respect of suchconfirmations.
(iii) (a) The Company has granted loans(including brought forward balance of loans ason April 01 2019) to one company and one person covered in the register maintained underSection 189 of the Companies Act 2013. In our opinion and according to the informationand explanations given to us the terms and conditions of the grant of such loans are notprejudicial to the Company's interest.
(iii) (b) The Company has granted loans that are re-payable on demand to a company anda person covered in the register maintained under Section 189 of the Companies Act 2013.We are informed that the Company has not demanded repayment of such loans during the yearand thus there has been no default on the part of the parties to whom the money has beenlent. The payment of interest has been regular.
(iii) (c) There are no amounts of loans granted to companies or other parties listed inthe register maintained under Section 189 of the Companies Act 2013 which are overdue formore than ninety days.
(iv) In our opinion and according to the information and explanations given to usprovisions of Section 185 and 186 of the Companies Act 2013 in respect of loans (includingbrought forward balance of loans as on April 01 2019) to directors including entities inwhich they are interested and in respect of loans and advances given investments madeand guarantees and securities given have been complied with by the Company.
(v) In respect of deposits accepted in our opinion and according to the informationand explanations given to us directives issued by the Reserve Bank of India and theprovisions of Section 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under to the extent applicable have been complied with.We are informed by the management that no order has been passed by the Company Law BoardNational Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.
(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 underSection 148(1) of the Companies Act 2013 related to the manufacture of Precisioncomponents and are of the opinion that prima facie the specified accounts and recordshave been made and maintained. We have not however made a detailed examination of thesame. Further the Central Government has not specified the maintenance of cost recordsunder Section 148(1) of the Companies Act 2013 for other products of the Company.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax goods and service tax cess and other statutory dues have generally been regularlydeposited with the appropriate authorities with a slight delay in a few cases during theyear. However for certain statutory payments due for the month of March' 2020 on accountof COVID-19 the Company has decided to pay these by June 30 2020 as per applicable notication.
(vii) (b) According to the information and explanations given to us no undisputed duesin respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax goods and service tax cessand other statutory dues which were outstanding at the year end for a period of morethan six months from the date they became payable.
(vii) (c) According to the records of the Company the dues of income-tax and servicetax on account of any dispute are as follows:
|Name of the statute ||Nature of the dues ||Unpaid amount (INR in lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|Income Tax 1961 ||Disallowance u/s 14 A ||1.43 ||AY 2009 2010 ||ITAT New Delhi |
(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowings to afinancial institution or banks. The Company did not have any loans or borrowings fromgovernment and has not issued any debentures during the year.
(ix) In our opinion and according to information and explanations given by themanagement monies raised by the Company by way of term loans were applied for the purposefor which they were raised. According to information and explanations given by themanagement the Company has not raised any money way of initial public offer / furtherpublic offer / debt instruments and hence not commented upon.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no fraud /materialfraud on the Company by the of cers and employees of the Company has been noticed orreported during the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause
3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with Section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in Section 192 of Companies Act 2013.
(xvi) According to the information and explanations given to us the provisions ofSection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE IND ASFINANCIAL STATEMENTS OF KDDL LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-Section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of KDDLLimited ("the Company") as of March 31 2020 in conjunction with our audit ofthe standalone Ind AS financial statements of the Company for the year ended on that date
Management's Responsibility for Internal Financial Controls
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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements based on our audit. We conducted our audit in accordance with the Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting (the "GuidanceNote") and the Standards on Auditing as specified under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to thesestandalone Ind AS financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standaloneInd AS financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls over financialreporting with reference to these standalone Ind AS financial statements.
Meaning of Internal Financial Controls Over Financial Reporting With Reference to theseStandalone Ind AS Financial Statements
A company's internal financial control over financial reportingwith reference to thesestandalone Ind AS financial statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingwith reference to these standalone Ind AS financial statements includes those policies andprocedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting WithReference to these Standalone Ind AS Financial Statements
Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone Ind AS financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone Ind AS financial statements to future periods are subject to the riskthat the internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements and such internal financial controls over financial reporting with reference tothese standalone Ind AS financial statements were operating effectively as at March 312020 based on the internal control over financial reporting 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.