Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Siemens Limited ("theCompany") which comprise the standalone balance sheet as at 30 September 2021 andthe standalone statement of profit and loss (including other comprehensive income)standalone statement of changes in equity and standalone statement of cash flows for theyear then ended and notes to the standalone financial statements including a summary ofthe significant accounting policies and other explanatory information (hereinafterreferred to as "the standalone 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 30 September 2021 and profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
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 on the standalone financial statements.
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.
The key audit matters Description of Key Audit Matters
|Revenue recognition on construction contracts ||How the matter was addressed in our audit |
|A significant portion of the Company's business is from construction contracts where revenue is recognised under the percentage-of-completion method. This is based on the percentage of costs incurred to date compared to the total estimated contract costs. (Refer note 33 and 42 to the standalone financial statements). ||Our procedures included the following: |
| || 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: - ||. Evaluated the Company's estimates and assumptions based on risk-based selection of sample contracts. Our audit procedures covered 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 existence and valuation of revenues recognised considering the customized and complex nature of these contracts and significant inputs of IT systems. || Evaluated revenues recognised for the selected projects analysed billable revenues and cost of sales to be recognised 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. |
Description of Key Audit Matters
|Revenue recognition on construction contracts ||How the matter was addressed in our audit |
| These contracts may involve onerous obligations which require critical assessment of provision for foreseeable losses to be made by the Company. || Performed a retrospective analysis of costs incurred with planned costs to identify significant variations and if these are considered in estimating the balance costs to complete the contracts. |
| At year-end a significant amount of work- in-progress (contract assets) related to these contracts is recognised on the balance sheet. || We involved our Information Technology (IT) specialists to assess the design and operating effectiveness and testing of: |
| || 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. |
| || IT controls for accuracy and completeness of cost and revenue reports generated by the IT system. |
| || Access and application controls on allocation of resources and budgeting systems. |
|Revenue recognition on Sale of Products || |
|The Company recognises revenue from the sales of products when control over goods is transferred to the customer based on specific terms and conditions of sale contracts with respective customers. (Refer note 33 and 42 of the standalone financial statements). ||Our procedures included the following: |
| || Assessed the appropriateness of the policies in respect of revenue recognition by comparing with applicable accounting standards. |
|We have identified recognition of revenue on sale of products as a key audit matter as - || |
| revenue is a key performance indicator; and || Performed testing of design implementation and operating effectiveness of the Company's general Information Technology ('IT') controls over revenue recognition and key IT application controls by involving our IT specialists. |
| there is a presumed fraud risk of revenue being overstated through manipulation of the timing of transfer of control due to pressures to achieve performance targets as well as meeting external expectations. || Performed testing of design implementation and operating effectiveness of the Company's key manual controls around revenue recognition. |
| || Performed substantive testing of recognition of revenue in the correct period by selecting statistical samples of revenue transactions recorded during and at the end of the financial year. |
| || Examined the underlying documents such as sales invoices/ contracts and dispatch/ shipping documents for the selected transactions. |
| || Assessed manual journals posted in revenue ledger to identify any 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 standalone financial statements and our auditors'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 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 and Board of Directors' Responsibility for the Standalone FinancialStatements
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
financial statements that give a true and fair view of the state of affairs profit andother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the Management and Board of Directorsare responsible 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 the Board of Directors either intends to liquidate the Companyor to cease operations 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 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 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 companyhas adequate internal financial controls with reference to standalone financial statementsin place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue 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.
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.
2. (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 30September 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 30 September 2021 from being appointed as a director in terms ofSection 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".
(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 30 September 2021on its financial position in its standalone financial statements - Refer Note 39(b) to thestandalone financial statements.
ii. The Company has made provisions as required under applicable law and accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts - Refer Note 41 and 50 to the standalone financial statements.
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 standalone financial statements since they do not pertainto the financial year ended 30 September 2021.
(C) With respect to the matter to be included in the Auditors' Report under section197(16) of the Act:
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 Affairs has not prescribed other details under Section 197(16) of the Act whichare required to be commented upon by us.
|For B S R & Co. LLP |
|Chartered Accountants |
|Firm's Registration No: 101248W/W-100022 |
|Farhad Bamji |
|Membership No: 105234 |
|Place of Signature: Mumbai |
|Date: 24 November 2021 |
Annexure "A" to the Independent Auditors' report on the standalone financialstatements of Siemens Limited for the year ended 30 September 2021.
With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 30September 2021 we report the following:
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 bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its fixed assets. Pursuant to the programme certainfixed assets were physically verified by the Management during the year. In our opinionand according to the information and explanations give to us no material discrepancieswere noticed on such verification.
(c) According to the information and explanations given to us the title deeds ofimmovable properties of land and buildings as disclosed in Note 3 and 4 to the StandaloneFinancial Statements are held in the name of the Company.
ii. The inventory except for goods-in-transit and with third parties has beenphysically verified by the management at reasonable intervals during the year. In ouropinion the frequency of such verification is reasonable. In respect of inventory lyingwith third parties these have been substantially confirmed by them. The discrepanciesnoticed on verification between the physical stocks and the book records were not materialand these have been properly dealt with in the books of account.
iii. In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Companies Act 2013 ('the Act'). Accordingly paragraph 3 (iii) of the Order isnot applicable to the Company.
iv. In our opinion and according to the information and explanation given to us theCompany has not granted any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act. The Company has complied with the provisions ofSection
186 of the Act in respect of the loans and investments made guarantees and securitiesgiven.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public during the year in terms of theprovisions of Section 73 to 76 or any other relevant provisions of the Act and the rulesframed there under. Accordingly paragraph 3 (v) of the Order is not applicable to theCompany.
vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules prescribed by the Central Government for maintenance of cost records underSection 148 (1) of the Act in relation to products manufactured and are of the 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 the Company amountsdeducted/ accrued in the books of account in respect of undisputed statutory duesincluding Provident fund Employees State Insurance Income tax Goods and Services taxduty of Customs Cess and other statutory dues as applicable have generally beenregularly deposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income-tax Goods andServices Tax duty of Customs Cess and other material statutory dues were in arrears asat 30 September 2021 for a period of more than six months from the date they becamepayable.
(b) According to the information and explanations given to us there are no dues ofIncome-tax Sales tax Value added tax Service tax Goods and Service tax duty ofCustoms duty of Excise which have not been deposited with the appropriate authorities onaccount of any disputes except for the following:
|Name of the statute ||Nature of the disputed dues ||Amount (Rs in millions) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act1961 ||Income Tax ||271.00 ||2005-062008-09 and 2010-13 ||CIT (Appeal) |
| || ||3615.00 ||2008-17 ||Tribunal |
|Customs Act 1962 ||Duty ||120.00 ||1998-1999 ||High Court |
| || ||218.92 ||2003- 2008 2019-2020 ||CESTAT |
|State & Central Sales Tax Acts ||Tax Interest & Penalty ||414.29 ||1987-1990 1995-2001200520182019-2020 ||Assistant/Addl. Commissioner |
| || ||1173.41 ||1992-19931995-19971999-2020 ||Dy. Comm./Comm./Joint/ Spl. Comm. |
| || ||2171.35 ||1973-19781991-1992 1997-2018 ||Tribunal |
| || ||2007.98 ||1984-19851989-19912001-20072009 20132016-2017 ||High Court |
|Central Excise Act ||Duty & Penalty ||306.00 ||1988-20002003-132016-17 ||Tribunal |
|1944 & Service Act || ||483.36 ||2007-2012 ||High Court |
| || ||1.91 ||2016-17 ||Asst.Comm./Dy. Comm./ Comm./Comm.(Appeal) |
|Goods and Service Tax Act 2017 ||Tax Interest & Penalty ||46.73 ||2018-20 ||Dy. Comm./Comm./Joint/ Spl. Comm. |
viii. Based on examination of records of the Company and according to the informationand explanations given to us the Company has not defaulted in repayments of dues to itsbankers. The Company did not have any outstanding dues to any financial institutiongovernment or debenture holders during the year.
ix. According to the information and explanations given to us the Company has notraised any moneys by way of initial public offer further public offer (including debtinstruments) or term loans during the year. Accordingly paragraph 3 (ix) of the Order isnot applicable to the Company.
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 requisite approvals mandated by the provisions of Section 197 readwith 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. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
xiv. According to the information and explanations given 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. Accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.
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 him. Accordingly paragraph 3 (xv)of the Order is not applicable to the Company.
xvi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder Section 45-IA of the Reserve Bank of India Act 1934. Accordingly paragraph 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 |
|Date: 24 November 2021 |
Annexure "B" to the Independent Auditors' report on the standalone financialstatements of Siemens Limited for the year ended 30 September 2021.
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 2(A)(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 standalone financialstatements of Siemens Limited ("the Company") as of 30 September 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 30 September 2021 based on the internalfinancial controls with reference to standalone financial statements criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants 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 standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding 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 internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted 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 ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether 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 withreference to standalone financial statements.
Meaning of Internal Financial controls with Reference to Standalone FinancialStatements
A Company's internal financial controls with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A Company's internalfinancial controls with reference to standalone financial statements include thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of standalone financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the standalone financial statements.
Inherent Limitations of Internal Financial controls with Reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand 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 |
|Date: 24 November 2021 |