To the Members of Kirloskar Industries Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of KirloskarIndustries Limited ("the Company") which comprise the Balance Sheet as at March312021 the Statement of Profit and Loss Statement of Changes in Equity and Statement ofCash Flows for the year then ended and notes to the Financial Statements including asummary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia including the Indian Accounting Standards ("Ind AS") prescribed underSection 133 of the Act of the state of affairs of the Company as at March 31 2021 itsprofit (including other comprehensive income) changes in equity and its cash flows forthe year ended on that date.
2. Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143 (10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics' issued by the Institute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the Financial Statementsunder the 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.
3. Key Audit Matters
Key Audit Matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current period. Wereport that there were no Key Audit Matters in our audit of the Standalone FinancialStatements.
4. Information Other than the Standalone Financial Statements and Auditor's ReportThereon
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 us before 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 identifiedabove 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 that there is a materialmisstatement of this other information we are required to report that fact. We havenothing 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 financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards specified 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 financial 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 Financial Statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
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 influence the economic decisionsof users taken on the basis of these Standalone 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 StandaloneFinancial 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 financial 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 financial 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 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 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.
Materiality is the magnitude of misstatements in the Standalone Financial Statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Financial Statements.
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 Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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 specified 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 Sheet the Statement of Profit and Loss the Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account;
(d) In our opinion the aforesaid Standalone Financial Statements comply with the IndAS prescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March31 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312021 from being appointed as a director in terms of Section164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;
(g) As per the information and explanations given to us in our opinion 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 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 Financial Statements - Refer Note No.40 to the Financial Statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For G. D. Apte & Co Chartered Accountants Firm
Registration Number: 100515W
Partner Membership Number: 113053
Pune: 15 May 2021
Annexure 1 referred to in Paragraph 7 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 2021 of Kirloskar Industries Limited.
i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of property plant and equipments.
(b) The Company has a regular programme of physical verification of its property plantand equipments according to which property plant and equipments are verified in a phasedmanner over a period of three years. In accordance with this programme certain propertyplant and equipments were verified during the year and no material discrepancies werenoticed on such verification. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and nature of 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 EnergyCertificates (RECs)] provisions of paragraph 3(ii) (a) of the order are not applicable tothe 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 companiesfirms 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 ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under apply. According to the information and explanations given to usno order has been passed by Company Law Board or National Company Law Tribunal or ReserveBank of India or any court or any other tribunal.
vi. The maintenance of cost records is not applicable to the Company pursuant to theprovisions of Subsection (1) of Section 148 of the companies Act 2013.
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 as 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 financial 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 Services 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 ||93.76 (Net of Rs 63 lakhs paid under protest) ||AY 2015-16 ||Income Tax Appellate Tribunal |
|3 ||Income Tax Act 1961 ||Disallowance of Certain expenses ||97.45 (Net of Rs 70 Lakhs paid under protest) ||AY 2016-17 ||Income Tax Appellate Tribunal |
|4 ||Income Tax Act 1961 ||Disallowance of Certain expenses ||374.93 (Net of Rs 94 Lakhs paid under protest) ||AY 2017-18 ||Commissioner of Income Tax (Appeals) |
|5 ||Income Tax Act 1961 ||Disallowance of certain expenses ||130.97 ||AY 2018-19 ||Commissioner of Income Tax (Appeals) |
viii. The Company has not availed any loan from any financial institution bankgovernment or by way of issue of debentures. Accordingly reporting under this paragraphregarding default of the Company in repayment of dues to financial institution bankgovernment or debenture holders is not required.
ix. During the year the Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments) 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 itsofficers or employees has been noticed or reported during the year.
xi. 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.
xii. According to the explanations given to us the Company is not a Nidhi Companywithin 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. Based on the audit procedures performed by us and as per the information andexplanations given to us we report that the Company is not required to be registeredunder Section 45-IA of the Reserve Bank of India Act 1934 since it is a Core InvestmentCompany (CIC) as at March 312021 which is exempted from registration.
As at March 31 2020 the Company's investments in its group companies was marginallyless than 90% of its net assets in stipulated investments which is one of the criteria ofa CIC. However since the Company had not disposed-off any such investments during thatyear and the decrease had occurred as a result of stock market volatility mainly due toCOVID-19 pandemic the management is of the view that registration with the Reserve Bankof India was not required during the year 2020-21. The stipulated investments exceed 90%of its net assets as at March 312021.
For G. D. Apte & Co
Chartered Accountants Firm
Registration Number: 100515W
sd/- Umesh S. Abhyankar
Partner Membership Number: 113053
Pune: 15 May 2021
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 SubSection 3 of Section 143 of the Companies Act 2013("the Act")
To the Members of Kirloskar Industries Limited
We have audited the internal financial controls over financial reporting of KirloskarIndustries Limited ("the Company") as of March 312021 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 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 (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to the Company's policies the safeguarding of its assetsthe prevention 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 based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under Section143 (10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting were established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of theFinancial Statements whether due to fraud or error. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Financial Statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of Financial Statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material effect on the Financial Statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting 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 financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial 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 internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312021 based on theinternal control over financial 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 Chartered Accountants Firm
Registration Number: 100515W
Partner Membership Number: 113053
Pune: 15 May 2021.