Report on the Audit of the Standalone FinancialStatements
We have audited the standalone financial statements of Siemens Limited("the Company") which comprise the standalone balance sheet as at 30 September2020 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.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 30 September2020 and profit and other comprehensive income changes in equity and its cash flows forthe year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the Standalonefinancial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
|The key audit matters ||How the matter was addressed in our audit |
|Revenue recognition on construction contracts || |
|A significant portion of the Company's business is from construction contracts where revenue is recognized under the percentage-of-completion method based on the percentage of costs incurred to date compared to the total estimated contract costs. (Refer note 32 and 41 to the standalone financial statements). ||As part of our audit we obtained an understanding of the Company's systems processes policies and controls for construction contracts. |
| ||Obtained an understanding of business processes specific to construction contracts from its initiation through presentation in the standalone financial statements and tested the operating effectiveness of key controls over these processes. |
|We identified revenue recognition on construction contracts as a key audit matter since: - ||As part of our substantive audit procedures we evaluated Company's estimates and assumptions based on risk-based selection of sample contracts. Our audit procedures included among others test of the contracts including terms and conditions termination rights penalties for delay and breach of contract as well as liquidated damages. |
| There is an inherent risk and presumed risk of fraud around the accuracy of revenues recognised considering the customized and complex nature of these contracts and significant inputs of IT systems. ||Evaluated revenues recognized for the selected projects analyzed billable revenues and cost of sales to be recognized in the statement of profit and loss to the extent of progress towards completion. |
| || |
| Application of Ind AS 115 Revenue from Contracts with customers is complex and involves a number of significant judgements and estimates. These relate to identifying performance obligations transaction price estimating the balance cost-to-complete the contract and determining the percentage of completion of the relevant performance obligation. ||Performed inquiries with respect to the development of the budgeted project costs deviations between planned and actual costs the estimated costs to complete and Company's assessments on probabilities related to contract risks. |
| ||Performed a retrospective analysis of costs incurred with planned costs to identify significant variations and if these are considered in estimating the planned cost and balance costs to complete. |
| These contracts may involve onerous obligations which require critical assessment of provision for foreseeable losses to be made by the Company. ||We have involved our Information Technology (IT) specialists to assess the design and operating effectiveness of key IT controls over: |
| || |
| At year-end a significant amount of work- in-progress (contract assets) related to these contracts is recognised on the balance sheet. || IT environment in which the business systems operate including access controls program change controls program development controls and IT operation controls over computation of revenue recognised. |
| || Tested the IT controls for mathematical accuracy of cost and revenue reports generated by the system. |
| || Tested the access and application controls on allocation of resources and budgeting systems. |
|Litigations and claims || |
|The Company operates in various States within India exposing it to a variety of different Central and State laws regulations and interpretations thereof. In this regulatory environment there is an inherent risk of litigations and claims. Consequently provisions and contingent liability disclosures may arise from direct and indirect tax proceedings legal proceedings including regulatory and other government/ department proceedings as well as investigations by authorities and commercial claims. (Refer note 38 (b) and 40 for details of Company's contingent liabilities as at 30 September 2020). ||Our procedures included the following substantive procedures: - |
| || Obtained an understanding of key litigations and claims during the year. |
| || Analysed status of litigations and claims based on correspondence between the Company and the various tax/ legal authorities and legal opinions obtained by the Company. |
| || Tested completeness of litigations and claims recorded by examining the Company's legal expenses circulating legal confirmations and minutes of board meetings. |
| || With respect to tax matters involved internal tax specialists to assess the Company's assumptions in estimating the possible outcome of the disputed cases by considering legal precedence and other judicial rulings. |
| || |
|The Company applies significant judgment in estimating the likelihood of the future outcome in each case when considering how much to provide or in determining the required disclosure for the potential exposure of each matter. This is due to the highly complex nature and magnitude of the legal matters involved and resolution of litigation and claims proceedings may span over multiple years and may involve protracted negotiation or litigation. || Assessed and tested the presentation and disclosures relating to these litigations. |
|Given the inherent complexity and magnitude of potential exposures across the Company and the judgment necessary to estimate the amount of provisions required or to determine required disclosures this is a key audit matter. || |
The Company's management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the standalone financial statements and ourauditors' report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed 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 and Board of Directors'Responsibility for the Standalone Financial Statements
The Company's Management and Board of Directors are responsible for thematters stated in section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the state of affairsprofit/loss and other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements the Management andBoard of Directors are 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 the Board of Directors either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.
The Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibilities for the Audit of theStandalone Financial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3) (i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to standalonefinancial statements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the standalone financialstatements made by the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the standalone financial statements or ifsuch disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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) ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. (A) As required by section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) the standalone statement of changes in equityand the standalone statement of cash flows dealt with by this Report are in agreement withthe books of account.
d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under section 133 of the Act.
e) On the basis of the written representations received from thedirectors as on 30 September 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 30 September 2020 from being appointed as a director interms of section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls withreference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors'Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 as at 30September 2020 on its financial position in its standalone financial statements - referNote 38(b) to the standalone financial statements;
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts- refer Note 40 and 49 to the standalone financialstatements;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
iv. The disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these standalone financial statements sincethey do not pertain to the financial year ended 30 September 2020.
(C) With respect to the matter to be included in the Auditors' Reportunder section 197(16) of the Act:
In our opinion and according to the information and explanations givento us the remuneration paid by the company to its directors during the current year is inaccordance with the provisions of section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under section 197(16) ofthe Act which are required to be commented upon by us.
For B S R & Co. LLP
Firm's Registration No. 101248W/W-100022
Membership No. 105234
ICAI UDIN: 20105234AAAACG7815
Place of Signature: Mumbai
Date: 25 November 2020
Annexure A to the Independent Auditors'report on the standalone financial statements of Siemens Limited for the year ended 30September 2020.
With reference to the Annexure A referred to in the IndependentAuditors' Report to the members of the Company on the standalone financial statements forthe year ended 30 September 2020 we report the following:
i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of itsfixed assets by which its fixed assets are verified in a phased manner over a period ofthree years. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the company and nature of its assets. However as representedby the management the Company has not carried out the activity of physical verificationof fixed assets planned for the current year due to COVID-19 pandemic. Accordingly we arenot able to comment upon discrepancies noted if any.
(c) According to the information and explanations given to us thetitle deeds of immovable properties of land and buildings as disclosed in Note 3 and 4 tothe Standalone Financial Statements are held in the name of the Company.
ii. The inventory except for goods-in-transit and with third partyhas been physically verified by the management at reasonable intervals during the year. Inour opinion the frequency of such verification is reasonable. In respect of inventorylying with third parties these have been substantially confirmed by them.
iii. In our opinion and according to the information and explanationsgiven to us the Company has not granted any loans secured or unsecured to companiesfirms limited liability partnerships or other parties covered in the register maintainedunder Section 189 of the Companies Act 2013 ('the Act'). Accordingly paragraph 3 (iii)of the Order is not applicable to the Company.
iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 and Section 186of the Companies Act 2013 in respect of loans given investments made guarantees andsecurities given.
v. In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public during the year interms of the provisions of Section 73 to 76 or any other relevant provisions of the Actand the rules framed there under. Accordingly paragraph 3 (v) of the Order is notapplicable to the Company.
vi. We have broadly reviewed the records maintained by the Companypursuant for maintenance of cost records under Section 148 (1) of the Act for maintenanceof cost records in respect of products manufactured by the Company and are of opinionthat prima facie the prescribed accounts and records have been made and maintained.However we have not made a detailed examination of the cost records with a view determinewhether they are accurate or complete.
vii. (a) According to the information and explanations
given to us and on the basis of our examination of the records of theCompany amounts deducted/ accrued in the books of account in respect of undisputedstatutory dues including Provident fund Employees State Insurance Income tax Goods andService tax duty of Customs Cess and other statutory dues as applicable have generallybeen regularly deposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Employees' State InsuranceIncome-tax Goods and Service Tax duty of Customs Cess and other material statutory dueswere in arrears as at 30 September 2020 for a period of more than six months from thedate they became payable.
According to the information and explanations given to us there are nodues of Income-tax Sales tax Value added tax Service tax Goods and Service tax dutyof Customs duty of Excise which have not been deposited with the appropriate authoritieson account of any disputes except for the following:
|Name of the Statute ||Nature of dues ||Amount ( Rs in millions) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act 1944 & Service Tax ||Duty Penalty ||10 ||2003-11 ||Asst. Comm / Dy. Comm / Comm / Comm(Appeals) |
| || ||285 ||1988-00 and 2003-13 ||Tribunal |
|State & Central Sales Tax Acts ||Tax Interest & Penalty ||398 ||1967-69 1970-711972-73 1987-90 1995-97 1998-01 and 2005-18 ||Assistant/Additional Commissioner |
| || ||988 ||1992-931995-97 and 1999-18 ||Dy. Comm / Comm / Joint / Spl. Comm |
| || ||2529 ||1972-781991-92 1993-94 and 1995-16 ||Tribunal |
| || ||2150 ||1984-851989-912001 -07 2009-13 and 2016-17 ||High Court |
|Goods and Service Tax Act 2017 ||Tax & Interest ||42 ||2018-20 ||Dy. Comm / Comm / Joint / Spl. Comm |
|Custom Act1962 ||Duty ||120 ||1998-99 ||High Court |
| || ||197 ||2003-08 ||High Court |
| || ||7 ||2003-08 ||Tribunal |
|Income Tax Act1961 ||Income Tax ||275 ||2005-06 2008-09 2010-11 and 2012-13 ||CIT (Appeal) |
| || ||2293 ||2008-15 ||Tribunal |
viii. According to the information and explanations given to us theCompany has not taken any loans or borrowings from any financial institution bank orGovernment nor has it issued any debentures. Accordingly paragraph 3 (viii) of the Orderis not applicable to the Company.
ix. According to the information and explanations given to us theCompany has not raised any moneys by way of initial public offer further public offer(including debt instruments) or term loans during the year. Accordingly paragraph 3 (ix)of the Order is not applicable to the Company.
x. According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year.
xi. According to the information and explanations given to us and basedon our examination of the records the Company has paid/ provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of theOrder is not applicable to the Company.
xiii. According to the information and explanations given to us andbased on our examination of the records of the Company all transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.
xiv. According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3 (xiv) of the Order is not applicableto the Company.
xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3 (xv) of the Order is not applicable to the Company.
xvi. According to the information and explanations given to us andbased on our examination of the records of the Company the Company is not required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934. Accordinglyparagraph 3 (xvi) of the Order is not applicable to the Company.
|For B S R & Co. LLP |
|Chartered Accountants |
|Firm's Registration No. 101248W/W-100022 |
|Farhad Bamji |
|Membership No. 105234 |
|ICAI UDIN: 20105234AAAACG7815 |
|Place of Signature: Mumbai |
|Date: 25 November 2020 |
Annexure B to the Independent Auditors'report on the standalone financial statements of Siemens Limited for the year ended 30September 2020.
Report on the internal financial controls with reference to theaforesaid standalone financial statements under Clause
(i) of Sub-section 3 of Section 143 of the Companies Act 2013.
(Referred to in paragraph 2(A)(f) under 'Report on Other Legal andRegulatory Requirements' section of our report of even date)
We have audited the internal financial controls with reference tostandalone financial statements of Siemens Limited ("the Company") as of 30September 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls were operating effectively as at 30 September 2020 based onthe internal financial controls with reference to standalone financial statements 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 (the "Guidance Note").
Management's Responsibility for Internal FinancialControls
The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").
Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to standalone financial statements based on our audit.We conducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements. 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 financial controls with reference to standalone financial statementswere established and maintained and whether such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to standalone financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to standalone financial statements included obtaining an understanding ofsuch internal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the standalone financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to standalone financial statements.
Meaning of Internal Financial controls with Reference to StandaloneFinancial Statements
A company's internal financial controls with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to standalone financial statementsinclude those policies and procedures that (1) pertain to the maintenance of records thatin reasonable detail accurately and fairly reflect the transactions and dispositions ofthe assets of the company; (2) provide reasonable assurance that transactions are recordedas necessary to permit preparation of standalone financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of thecompany are being made only in accordance with authorisations of management and directorsof the company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financialcontrols with Reference to Standalone Financial Statements
Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
|For B S R & Co. LLP |
|Chartered Accountants |
|Firm's Registration No. 101248W/W-100022 |
|Farhad Bamji |
|Membership No. 105234 |
|ICAI UDIN: 20105234AAAACG7815 |
|Place of Signature: Mumbai |
|Date: 25 November 2020 |