To the Members of Lumax Industries Limited Report on the Audit of the StandaloneFinancial Statements
We have audited the standalone financial statements of Lumax Industries Limited("the Company") which comprise the standalone balance sheet as at 31 March2019 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements" or"financial statements").
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 ("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 31 March 2019 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) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone 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 together with theethical requirements that are relevant to our audit of the standalone 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.
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.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
|Key Audit matter Revenue recognition ||How the matter was addressed in our audit Our audit procedures included: |
|As disclosed in Note 23 the Company's revenue from operations for the year ended 31 March 2019 was INR 184859.04 Lakhs. Revenue is measured at fair value of the consideration received or receivable after deduction of any discounts/ rebates and any taxes or duties collected on behalf of the government such as goods and services tax etc. Revenue is only recognised to the extent that is highly probable a significant reversal will not occur. The timing of revenue recognition is relevant to the reported performance of the Company. The management considers revenue as a key measure for evaluation of performance. The Company considers certain variable considerations such as price adjustment and discounts to be passed to customers on the basis of agreed terms negotiations with customers/ commercial considerations which involves significant judgement and estimates to arrive at the amount of price adjustments to be accrued for adjustment to revenue We have considered revenue recognition as a key audit matter on account of the qualitative and quantitative factors as mentioned above. ||- Assessing the appropriateness of the revenue recognition accounting policies including those relating to price increase/decrease and discounts by comparing with applicable accounting standards. - Evaluating relevant General Information Technology Control environment and testing the design and operating effectiveness of key IT application controls supporting revenue recognition. - Testing of certain manual key controls (both design and operating effectiveness) in respect of revenue recognition. - Inspecting on a sample basis key customer contracts/ purchase order to identify terms and conditions relating to goods acceptance price adjustments and discount and assessing the Company's revenue recognition policies with reference to the requirements of the applicable accounting standards. - Inspecting samples identified by applying statistical sampling from the underlying documents that revenue has been booked correctly and in the correct period with reference to supporting invoices terms and conditions with customers and receipts from customers. - Testing on a sample basis the supporting documents for sales transactions recorded during the period closer to the year end to determine whether revenue was recognised in the correct period. - Performing analytical procedures on current year revenue based on trends and where appropriate conducting further enquiries and testing. - Evaluated management's methodology and assumptions used in the calculations of price adjustments. Tested on sample basis credit notes issued/ payment made as per approved customer contracts/ agreed price adjustments passed on to the customers and tested completeness arithmetical accuracy and validity of the data used in the of price adjustments. - Assessing manual journals posted to revenue to identify unusual items. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. 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 designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
Inpreparingthestandalonefinancialstatementsmanagement and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone 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 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 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
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) ofthe Act 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 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 auditors' 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
(A) As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account;
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act;
e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B"; and
B) With respect to the other matters to be included in the Auditors' 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 31 March 2019 onits financial position in its standalone financial statements - Refer Note 40 to thestandalone 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; and
iv) The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2019.
C) With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate A3airs has not prescribed other details under Section 197(16) which are requiredto be commented upon by us.
For B S R & Associates LLP
Firm Registration No. 116231W /W-100024
Membership No.: 095037
Place: Gurugram Date: 14 May 2019
Annexure A to the Independent Auditor's report to the members of the Company on theStandalone financial statements for the year ended 31 March 2019 we report that:
(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 inwhich all fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were physically verified by themanagement in the current year. In our opinion the periodicity of physical verificationis reasonable having regard to the size of the Company and the nature of its assets. Nodiscrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company inventory except stock lying with third partiesand goods in transit has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable. Confirmations have beenobtained for stock lying with third parties at the year-end. According to the informationand explanations given to us the discrepancies noticed on physical verification ofinventory as compared to book records were not material and have been properly dealt within the books of account.
(iii) The company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013.
(iv) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not entered into anytransactions in respect of loans investments guarantees and security which are coveredunder section 185 and 186 of the Companies Act 2013. Accordingly provisions of paragraph3(iv) of the Order are not applicable to the Company. (v) The Company has not accepted anydeposits covered under Section 73 to 76 or any other provisions of the Act and the rulesframed thereunder.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules prescribed by the Central Government for maintenance of cost records undersub-section (1) of section 148 of the Companies Act 2013 in respect of its products andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. However we have not made a detailed examination of such records with aview to determine whether they are accurate or complete.
(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 Employees StateInsurance Income-tax Sales tax Service tax Duty of customs Duty of excise Valueadded tax Goods and Service tax Cess and other statutory dues as applicable havegenerally been regularly deposited with the appropriate authorities though there has beenslight delays in few cases related to payment of Goods and Service tax professional taxand labour welfare fund.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees State Insurance Income-tax Sales taxService tax Duty of customs Duty of excise Value added tax Goods and Service tax Cessand other statutory dues were in arrears as at 31 March 2019 for a period of more than sixmonths from the date they became due for payment.
(b) According to the information and explanations given to us except as stated belowthere are no dues of Income tax Sales tax Service tax Goods and Service tax Duty ofcustoms Duty of excise and Value added tax that have not been deposited with theappropriate authorities on account of any dispute:
|Name of the Statute ||Nature of the dues ||Amount (Rs. in lakhs) ||Amount paid (Rs. in lakhs) ||Period to which amount relates ||Forum where dispute is pending |
|Finance Act 1994 ||Demand for disallowance of Cenvat credit in respect of service tax paid on catering and CHA (export) services ||9.26 ||- ||2010-11 and 2012-13 ||Assistant Commissioner of Excise |
|Finance Act 1994 ||Demand for disallowance of Cenvat credit in respect of outward transportation ||12.84 ||4.9 ||2013-14 ||Commissioner of Excise (Appeals) |
|Finance Act 1994 ||Demand for disallowance of Cenvat credit in respect of outward transportation ||2.83 ||- ||2014-15 and 2015-16 ||Commissioner of Excise (Appeals) |
|Customs Act 1962 ||Demand on account of classification of certain imported goods ||6.51 ||- ||2016-17 ||Commissioner of customs (Appeals) |
|Customs Act 1962 ||Demand for wrongful availment of duty drawback. ||1.16 ||- ||2015-16 ||Commissioner of customs (Appeals) |
|Customs Act 1962 ||Demand for wrongful availment of duty drawback. || || ||2003-04 to 2014-15 ||Assistant commissioner of customs |
|Central Excise Act 1956 ||Demand for short payment of excise duty for non-inclusion of designs/ drawings provided by the Customer. ||518.66 ||- ||2013-14 to 2017- 18 ||Director General of GST Intellegence |
|Income tax Act 1961 ||Demand for disallowance of loyalty incentives ||8.47 ||- ||Assessment year 2011-12 ||Commissioner of Income-tax (Appeals) |
|Central Sales Tax Act 1961 ||Demand against non-submission of various Forms ||4.97 ||0.5 ||2007-08 ||Commissioner of Sales tax (Appeals) |
|Haryana Vat Act 2003 ||Demand against non-submission of various Forms ||0.5 ||- ||2014-15 ||Assessing officer |
|Central Sales Tax Act 1961 ||Demand against non-submission of various Forms ||60.81 ||- ||2014-15 and 2015-16 ||Assessing officer |
|Central Sales Tax Act 1961 ||Demand against non-submission of various Forms ||20.23 ||- ||2001-02 ||Joint Commissioner of Sales tax (Appeals) |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to banks or financial institutions. TheCompany did not have any loans or borrowings from government or any dues to debentureholders.
(ix) The Company did not raise any money by way of initial public o3er or furtherpublic o3er (including debt instruments). Further in our opinion and according to theinformation and explanations given to us the term loans taken by the company have beenapplied for the purpose for which they were raised.
(x) According to the information and explanations given to us no material fraud by thecompany or on the Company by its officers or employees has been noticed or reported duringthe year.
(xI) According to the information and explanations given to us and based on ourexamination of the records the Company has paid/provided for managerial remuneration inaccordance with the provisions of section 197 read 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.
(xiii) According to 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. The details of suchrelated party transactions have been disclosed in the standalone financial statements asrequired by applicable accounting standards.
(xiv) According to the information and explanations give 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.
(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 directors. Accordingly paragraph3(xv) of the Order is not applicable.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.
For B S R & Associates LLP
Firm Registration No. 116231W /W-100024
Membership No.: 095037
Place: Gurugram Date: 14 May 2019
Annexure B to the Independent Auditors' report on the standalone financial statementsof Lumax Industries Limited for the period ended 31 March 2019
The Annexure referred to in our Independent Auditor's Report to the members of theCompany on the Standalone financial statements for the year ended 31 March 2019 we reportthat:
Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013
(Referred to in paragraph (f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls with reference to financial statementsof Lumax Industries Limited ("the Company") as of 31 March 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and e3cientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.
Meaning of Internal Financial controls with Reference to Financial Statements
A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial controls with Reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
For B S R & Associates LLP
Firm Registration No. 116231W /W-100024
Membership No.: 095037
Place: Gurugram Date: 14 May 2019