To the Members of Kirloskar Industries Limited
We have audited the accompanying Standalone Financial Statements of KirloskarIndustries Limited ("the Company") which comprise the Balance Sheet as at March31 2020 the Statement of Profi t and Loss Statement of Changes in Equity and Statementof Cash Flows for the year then ended and notes to the Financial Statements including asummary of signifi cant accounting policies and other explanatory information. In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid Standalone Financial Statements give the information required by theCompanies Act 2013 (the Act') in the manner so required and give a true and fairview in conformity with Indian Accounting Standards prescribed under Section 133 of theAct read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020 the profi t total comprehensiveloss changes in equity and its cash fl ows for the year ended on that date.
2. Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifi edunder Section 143 (10) of the Act. Our responsibilities under those Standards are furtherdescribed 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(the ICAI') together with the ethical requirements that are relevant to our audit ofthe Financial Statements under the provisions of the Act and the Rules thereunder and wehave fulfi lled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is suffi cientand appropriate to provide a basis for our opinion.
3. Key Audit Matters
Key Audit Matters are those matters that in our professional judgment were of mostsignifi cance in our audit of the Standalone Financial Statements of the current period.We report that there were no Key Audit Matters in our audit of the Standalone FinancialStatements.
4. Information Other than the Standalone Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Report of the Board of Directors andthe Report on the Corporate Governance but does not include the Standalone FinancialStatements and our auditor's report thereon. The above reports were made available to usbefore the date of this auditor's report.
Our opinion on the Financial Statements does not cover the other information and wewill not express any form of assurance conclusion thereon. In connection with our audit ofthe Financial Statements our responsibility is to read the other information identifi edabove and in doing so consider whether the other information is materially inconsistentwith the Financial Statements or our knowledge obtained in the audit or otherwise appearsto be materially misstated. If based on the work we have performed we conclude thatthere is a material misstatement of this other information we are required to report thatfact. We have nothing to report in this regard.
5. Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the fi nancial position fi nancial performance changesin equity and cash fl ows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards specifi ed underSection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal fi nancial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Financial Statements that give a true and fair view and are free frommaterial misstatements whether due to fraud or error. In preparing the FinancialStatements management is responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so. The Board ofDirectors is also responsible for overseeing the Company's fi nancial reporting process.
6. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith Standards on Auditing 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 infl uence the economicdecisions of users taken on the basis of these Standalone Financial Statements. As part ofan audit in accordance with Standards on Auditing we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the StandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is suffi cient and appropriateto provide 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 fi nancial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143 (3) (i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal fi nancial controls system in place and the operatingeffectiveness of such 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 signifi cant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Standalone Financial Statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.MaterialityisthemagnitudeofmisstatementsintheStandaloneFinancialStatementsthatindividuallyor in aggregate makes it probable that the economic decisions of a reasonablyknowledgeable user of the Financial Statements may be infl uenced. We considerquantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identifi ed misstatements in the FinancialStatements. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and signifi cant audit fi ndingsincluding any signifi cant defi ciencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards. From the matters communicatedwith those charged with governance we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefi ts of such communication.
7. 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 1" a statement on the matters specifi ed inparagraphs 3 and 4 of the said 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 Sheetthe Statement of Profi t and Loss the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid Standalone Financial Statements comply with theIndian Accounting Standards specifi ed under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014. (e) On the basis of the written representationsreceived from the directors as on March 31 2020 and taken on record by the Board ofDirectors none of the directors is disqualifi ed as on March 31 2020 from beingappointed as a director in terms of Section 164 (2) of the Act. (f) With respect to theadequacy of the internal fi nancial controls over fi nancial reporting of the Company andthe operating effectiveness of such controls refer to our separate Report in"Annexure 2" to this report.
(g) As per the information and explanations given to us we report that the managerialremuneration has been paid and provided in accordance with Section 197 of the Act andrecommendations of the Nomination and Remuneration Committee and the Board of Directors ofthe Company. (h) With respect to the other matters to be included in the Auditor's Reportin accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amendedin our opinion and to the best of our information and according to the explanations givento us: i. The Company has disclosed the impact of pending litigations on its fi nancialposition in its Financial Statements Refer Note 39 to the Financial Statements; ii.The Company did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses. iii. There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theCompany.
For G. D. Apte & Co
Firm Registration Number: 100515W UDIN: 20113053AAAABX5920
Umesh S. Abhyankar
Membership Number: 113053 Pune: 22 June 2020
Annexure 1 referred to in Paragraph 1 under the heading Report on Other Legal andRegulatory Requirements' of our report of even date to the members of the Company for theyear ended March 31 2020 of Kirloskar Industries Limited i. (a) The Company ismaintaining proper records showing full particulars including quantitative details andsituation of property plant and equipments.
(b) The Company has a regular programme of physical verifi cation of its propertyplant and equipments according to which property plant and equipments are verifi ed in aphased manner over a period of three years. In accordance with this programme certainproperty plant and equipments were verifi ed during the year and no materialsdiscrepancies were noticed on such verifi cation. In our opinion this periodicity ofphysical verifi cation is reasonable having regard to the size of the Company and natureof its assets.
(c) The title deeds of immovable properties are held in the name of the Company.
ii. Considering the nature of the Inventories of the Company [Renewable Energy Certificates (RECs)] provisions of paragraph 3
(ii) (a) of the order are not applicable to the Company.
iii. Based on the audit procedures conducted by us and according to the information andexplanations given to us no loans secured or unsecured have been granted to companiesfi rms limited liability partnerships or other parties covered in the register maintainedunder Section 189 of the Act.
iv. Based on the audit procedures conducted by us and according to the information andexplanations given to us in our opinion the Company has not given any loans orsecurities to any of its directors or to any other person in whom director is interestedunder Section 185 of the Act. The Company has complied with provisions of Section 186 ofthe Act.
v. The Company has not accepted any deposits from the public to which the provisions ofSection 73 to 76 or any other relevant provisions of the Act and the Rules framed thereunder apply. According to the information and explanations given to us no order has beenpassed by Company Law Board or National Company Law Tribunal or Reserve Bank of India orany court or any other tribunal. vi. The maintenance of cost records is not applicable tothe Company pursuant to the provisions of subSection (1) of Section 148 of the Act.
vii. (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund income-tax goods and services tax cess andother material statutory dues applicable to it. According to the information andexplanations given to us and from the records of the Company there were no undisputedstatutory dues as at the last day of the fi nancial year which were outstanding for aperiod of more than six months from the date they became payable. We have been explainedthat dues in respect of Employee State Insurance and Custom Duty were not applicableduring the year.
(b) According to the information and explanations given to us and on the basis ofexamination of books of account and records of the Company we report that there are nodues in respect of Income Tax Sales Tax Service Tax Customs Duty Excise Duty ValueAdded Tax Goods and Service Tax or Cess which have not been deposited on account of anydispute except for following cases:
|Sr. No. Name of the Statute ||Nature of dues ||Amount in Rs. (Lakhs) ||Period to which amount relates ||Forum where dispute is pending |
|1 Finance Act 1994 (Service Tax) ||Denial of service tax credit taken and penalty thereon ||0.52 ||2006-07 ||CESTAT- Mumbai |
|2 Income Tax Act 1961 ||Disallowance of certain expenses ||219.81 (Net of Rs. 63 lakhs paid under protest) ||AY 2015-16 ||CIT(A) |
|3 Income Tax Act 1961 ||Disallowance of certain expenses ||290 (Net of Rs. 70 lakhs paid under protest) ||AY 2016-17 ||CIT(A) |
|4 Income Tax Act 1961 ||Disallowance of certain expenses ||374.93 (Net of Rs. 94 lakhs paid under protest) ||AY 2017-18 ||CIT(A) |
viii. The Company has not availed any loan from any fi nancial institution bankgovernment or by way of issue of debentures. Accordingly reporting under this paragraphregarding default of the Company in repayment of dues to fi nancial institution bankgovernment or debenture holders is not required. ix. During the year the Company has notraised any money by way of initial public offer or further public offer (including debtinstruments) and term loans.
x. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the Financial Statements and as per the information and explanations given bythe management we report that no fraud by the Company or any fraud on the Company by itsoffi cers or employees has been noticed or reported during the year.
xi. As per the information and explanationsgiven to us we report that the managerialremuneration has been paid and provided in accordance with Section 197 of the Act andrecommendations of the Nomination and Remuneration Committee and the Board of Directors ofthe Company. xii. According to the explanations given to us the Company is not a NidhiCompany within the meaning of Section 406 of the Act.
xiii. Based upon the audit procedures performed and as per the information andexplanations given to us we report that the transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and the details asrequired by the applicable Indian Accounting Standards have been disclosed in theFinancial Statements.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year.
xv. Based upon the audit procedures performed and as per the information andexplanations given to us we report that the Company has not entered into any non-cashtransactions of the nature as described in Section 192 (1) of the Act.
xvi. The Company was exempt from registration with Reserve Bank of India (RBI) u/s45-IA of the Reserve Bank of India Act 1934 (RBI Act) since it was a Core InvestmentCompany (CIC) during the year 2019-20. As at March 31 2020 the Company's holding in itsgroup companies was marginally less than 90% of its net assets in stipulated investmentswhich is one of the criteria of a CIC though it continued to meet the asset incomepattern prescribed by RBI for registration u/s 45-IA of the RBI Act. However during theyear the Company has not disposed off any of its shareholdings in the group companies.According to the information and explanations given to us the decrease in the net assetvalue of its stipulated investments in equity shares of the group companies has occurredas a result of fall in the share prices due to stock market volatility mainly after theCOVID-19 pandemic. The matter is being examined by the Company and future course of actionwould be decided accordingly.
For G. D. Apte & Co
Firm Registration Number: 100515W UDIN: 20113053AAAABX5920
Umesh S. Abhyankar
Membership Number: 113053 Pune: 22 June 2020
Annexure 2 referred to in paragraph 7(2)(f) under the heading Report on OtherLegal and Regulatory Requirements' of our report on even date on the Internal FinancialControls under Clause (i) of Sub-Section 3 of Section 143 of the Companies Act 2013("the Act")
To the Members of Kirloskar Industries Limited
We have audited the internal fi nancial controls over fi nancial reporting of KirloskarIndustries Limited ("the Company") as of March 31 2020 in conjunction with ouraudit of the Standalone Financial Statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internal financial controls based on the internal control over fi nancial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal fi nancialcontrols that were operating effectively for ensuring the orderly and effi cient conductof its business including adherence to the Company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable fi nancial informationas required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal fi nancialcontrols over fi nancial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing as specifi edunder Section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal fi nancial controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal fi nancial controls over fi nancial reporting were established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfi nancial controls system over fi nancial reporting and their operating effectiveness.Our audit of internal fi nancial controls over fi nancial reporting included obtaining anunderstanding of internal fi nancial controls over fi nancial reporting assessing therisk that a material 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 judgement including the assessment of the risks of materialmisstatement of the Financial Statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is suffi cient and appropriate to provide a basis forour audit opinion on the internal fi nancial controls system over fi nancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Company's internal fi nancial control over fi nancial reporting is a process designedto provide reasonable assurance regarding the reliability of fi nancial reporting and thepreparation of Financial Statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal fi nancial control over fi nancialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly refl ect 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
Because of the inherent limitations of internal fi nancial controls over fi nancialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal fi nancial controls over fi nancialreporting to future periods are subject to the risk that the internal fi nancial controlover fi nancial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internal financial controls system over fi nancial reporting and such internal fi nancial controlsover fi nancial reporting were operating effectively as at March 31 2020 based on theinternal control over fi nancial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For G. D. Apte & Co.
Firm Registration number: 100515W UDIN: 20113053AAAABX5920
Umesh S. Abhyankar
Membership Number: 113053 Pune: 22 June 2020