To The Members of Rane Holdings Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Rane HoldingsLimited ("the Company") which comprise the Balance Sheet as at 31st March 2020and the Statement of Profit and Loss (including Other Comprehensive ncome) theI Statementof Cash Flows and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information.Inouropinionandtothebestofourinformationandaccording to the explanations given to us theaforesaid standalone financial statements give the information required by the CompaniesAct 2013 ("the Act") in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2020 and its profit total comprehensive incomeits cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
Weconductedourauditofthestandalonefinancialstatements in accordance with the Standardson Auditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibility for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidenceobtained by us is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.
Emphasis of Matter
We draw attention to Note 6.3 to the standalone financial statements which fullydescribes the management's assessment of impairment of the investment loans and otherfinancial assets in an operating step down subsidiary by one of the Company's subsidiarywhich has taken into consideration the adverse business impact and uncertainties arisingfrom the COVID 19 pandemic. As stated in the said note such estimates are based oncurrent facts and circumstances and may not necessarily reflect the future uncertaintiesand events arising from the full impact of the COVID 19 pandemic.
Our opinion is not modified in respect 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 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. we have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr. No Key Audit Matter ||Auditor Response |
|1 mpairment I Assessment of investments of the Company in two of its subsidiaries and investments loans and other financial assets in one of its step down subsidiary (either directly or through intermediate subsidiary) ||Principal audit procedures performed: |
|a. The total carrying value of investments of the Company in two of its subsidiaries aggregated to Rs. 12392 Lakhs as at March 31 2020. Refer Note 6.4 to the Standalone Financial Statements. ||a. a. Evaluated the design and implementation of the relevant controls and the operating effectiveness of such internal controls which inter-alia includes the completeness and accuracy of the input data considered reasonableness of the assumptions considered in determining the present value of future cash flows. |
|Due to the significant losses incurred by the said subsidiaries the management has carried out an impairment assessment of these investments. ||b. Obtained the business projections of the subsidiaries/step down subsidiaries (prepared by the Management) and performed the following procedures: |
|b. The total financial exposure of one of the Company's subsidiary included its investment in an operating step down subsidiary represented by investments in equity shares loans and other financial assets (either directly or through intermediate subsidiary) aggregating to Rs. 15566 lakhs as at March 31 2020. Refer Note 6.3 to the Standalone Financial Statements. ||i. Conducted inquiries with the Company/ Subsidiary personnel to identify if factors that in our professional judgement should be taken into account in the impairment analysis were considered by the Management. |
| ||ii. Compared the actual revenues and cash flows generated by the said subsidiaries/step-down subsidiaries during the year with the plan and estimates considered in the previous year |
|Due to the significant losses incurred by the said step down subsidiary the management has carried out an impairment assessment of these assets. ||iii. Verified if the cash flow projections of the subsidiaries considered for the assessment of impairment were as per cash flow projections reviewed and approved by the Board of Directors of the Company. |
|I mpairment of investment in the said subsidiaries/step-down subsidiaries have been identified as a key audit matter due to: ||iv. Evaluated the Management's future cash flow projections with regard to the appropriateness of key assumptions considered including discount rate growth rate sensitivity analysis of the key assumptions etc. duly considering the impact of the COVID-19 pandemic. This included involvement of internal fair valuation specialists to review discount rate and model etc. for two of the subsidiary/step-down subsidiary. |
|The significance of the carrying value of the investments being assessed; and || |
The assessment of the carrying value of the Investments involves assumptions and exercising significant judgements in estimating the recoverable value of the investment in step down subsidiary including taking into account the possible effect of the pandemic relating to COVID-19. Any adverse changes to these assumptions could result in lower recoverable value than the carrying amount.
v. Inquired the auditors of the subsidiaries and step down subsidiary with respect to the appropriateness of the cash flow projections considered and impact of COVID-19 pandemic thereon.
InformationI Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Director's report and Annexures to the Directors report butdoes not include the consolidated financial statements standalone financial statementsand our auditor's report thereon.
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 during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed on the other information that we obtained priorto the date of this auditor's report we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(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 includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the standalone financial statements management isresponsible 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. Those Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditor's Responsibility 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 inaccordance with SAs we exercise professional judgment and maintain professionalskepticism 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 financial control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the 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.
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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report to theextent applicable that: a) We have sought and obtained all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof our audit. b) In our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books. c) The BalanceSheet the Statement of Profit and Loss including Other Comprehensive Income theStatement of Cash Flows and Statement of Changes in Equity dealt with by this Report arein agreement with the relevant books of account. d) In our opinion the aforesaidstandalone financial statements comply with the Ind AS specified under Section 133 of theAct. e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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 overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal g) Withrespect to the other matters to be included in the Auditor's Report in accordance with therequirements of section 197(16) of the Act as amended In our opinion and to the best ofour information and according to the explanations given to us the remuneration paid bythe Company to its directors during the year is in accordance with the provisions ofsection 197 of the Act. h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 as amended in our opinion and to the best of our information and according to theexplanations given to us: i. The Company has disclosed the impact of pending litigationson its financial position in its standalone financial statements -; ii. The Company didnot have any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses. iii. There has been no delay in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
ANNEXURE AT O THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of RaneHoldings Limited ("the Company") as of March 31 2020 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat 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 internalcontrolstatedintheGuidanceNoteonAuditof InternalFinancial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.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 was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing 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 financial statements whether due 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 Company's internal financial controls systemover 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.
Opinion n our opinion to the best of our information and according toI theexplanations given to us 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 31 2020 based on thecriteria for internal financial control over financial reporting 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 thenstituteI of Chartered Accountants of India.
For Deloitte Haskins & Sells
Chartered Accountants (Firm's Registration No. 008072S)
(Partner) Place: Chennai (Membership No. 209252) Date: June 24 2020 (UDIN:20209252AAAAGA1876)
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph (2) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the property plant and equipment.
(b) The company has a program of verification of property plant and equipment to coverall the items in a phased manner over a period of two years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program certain property plant and equipment were physically verified by theManagement during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification.
(c) With respect to immovable properties of acquired land and buildings that arefreehold according to the information and explanations given to us and the recordsexamined by us and based on the examination of the registered sale deeds / court orderapproving scheme of arrangement / amalgamation provided to us we report that the titledeeds of such immovable properties are held in the name of the Company as at the balancesheet date. Immovable properties of land whose title deed have been pledged with thelender as security for term loan are held in the name of the Company based on theMortgage deed executed between the lender and the Company for which confirmations havebeen obtained from the lender.
In respect of immovable properties of land and building that have been taken on leaseand disclosed as right of use assets in the standalone financial statements the leaseagreements are in the name of the Company.
(ii) The company does not have inventory and hence reporting under clause (ii) of theCARO 2016 is not applicable.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year.
(vi) Having regard to the nature of the Company's business/ activities reporting underclause (vi) CARO 2016 is not applicable.
(vii) According to the information and explanations given to us in respect ofstatutory dues: (a) The Company has been regular in depositing undisputed statutory duesincluding Provident Fund Employees State nsuranceI Income-tax
Goods and Services Tax Customs Duty cess and other material statutory dues applicableto it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund EmployeesState nsuranceI Income-tax Goods and Services Tax
Customs Duty cess and other material statutory dues in arrears as at March 31 2020for a period of more than six months from the date they became payable.
(c) Details of dues of Income tax Service Tax and Customs Duty which have not beendeposited as on March 31 2020 on account of disputes are given below.
|Name of the Statute ||Nature of Dues ||Forum where dispute is pending ||Period to which amount relates ||Amount involved (Rs. Lakhs) ||Amount unpaid (Rs. Lakhs) |
|I ncome Tax Act ||ncome I Tax ||Various forums -A.O ||2005-06 ||1088 ||794 |
|1961 || ||CIT (A) ITAT || || || |
| || || ||2008-09 || || |
| || || ||2009-10 || || |
| || || ||2011-12 to || || |
| || || ||2015-16 || || |
|Customs Act ||Custom ||Customs Excise & ||2012-13 ||6 ||6 |
|1962 ||Duty ||Service Tax Appellate || || || |
| || ||Tribunal || || || |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions and banks. The Company has not issued any debentures and has not taken anyloans from government.
(ix) In our opinion and according to the information and explanations given to us theterm loans have been applied by the Company during the year for the purposes for whichthey were obtained. The Company has not raised moneys by way of initial public offer orfurther public offer.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 is not applicable.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Sections 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the CARO 2016 is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding or associate company or persons connected with themand hence provisions of Section 192 of the Companies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For Deloitte Haskins & Sells
Chartered Accountants (Firm's Registration No. 008072S)
(Partner) Place: Chennai (Membership No. 209252) Date: June 24 2020 (UDIN:20209252AAAAGA1876)