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SKF India Ltd.

BSE: 500472 Sector: Engineering
NSE: SKFINDIA ISIN Code: INE640A01023
BSE 00:00 | 22 Oct 3167.35 -112.85
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NSE 00:00 | 22 Oct 3168.10 -109.20
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OPEN 3280.00
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VOLUME 1427
52-Week high 3440.00
52-Week low 1441.00
P/E 41.52
Mkt Cap.(Rs cr) 15,659
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3280.00
CLOSE 3280.20
VOLUME 1427
52-Week high 3440.00
52-Week low 1441.00
P/E 41.52
Mkt Cap.(Rs cr) 15,659
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SKF India Ltd. (SKFINDIA) - Auditors Report

Company auditors report

To the members of SKF India Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

1. We have audited the accompanying standalone financial statements ofSKF India Limited ("the Company") which comprise the balance sheet as at March31 2021 the statement of Profit and Loss (including Other Comprehensive Income)statement of changes in equity and statement of cash flows for the year then ended andnotes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information.

2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the 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 March 31 2021and total comprehensive income (comprising of profit and other comprehensive income)changes in equity and its cash flows for the year then ended.

Basis for opinion

3. We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

4. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.

Key audit matter How our audit addressed the key audit matter
Assessment of Contingencies relating to Transfer pricing Matters
Refer to note 39 and 2(A) of the standalone financial statements for the related disclosures Our audit procedures included:
The Company has received income tax demands mainly pertaining to disallowances towards pricing of intragroup services for the financial years 2010-11 to 2015-16. The demand (including interest of INR 742 million as per the demand order) on these matters is INR 2403 million which have been disclosed as Contingent Liabilities in the standalone financial statements. • Understanding and evaluation of processes and controls designed and implemented by the management for assessment of litigations and testing their operating effectiveness;
The Company has filed appeals against the above orders with appropriate tax authorities. The management's assessment as supported by their tax experts' views is that no provision is required against these matters. The assessment of outcome from and the need for provisions in case of an unfavourable outcome is an area of significant judgement involving the tax expert as well as evaluation of data presented during the assessment proceedings. • Verification of the supporting documents such as agreements and invoices pertaining to the group costs incurred by the company.
This has been considered a key audit matter in view of the uncertain outcome of the litigations and involvement of significant management judgement in assessing the probability of outflow of economic resources. • Discussion with the management on their assessment of the probability of outcome and the likelihood of outflow of economic resources.
• Evaluation of the management assessment including view from the management's tax experts and the submissions made by the Company to tax authorities with the involvement of auditors' tax experts to examine the positions taken;
• Assessed the adequacy of disclosures in the standalone financial statements.
On the basis of the above procedures performed we observed the management's assessment of the contingent liabilities relating to litigations in respect of transfer pricing matters to be reasonable.

Other Information

5. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the standalone financial statements and our auditor'sreport 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 in this regard.

Responsibilities of management and those charged with governance forthe standalone financial statements

6. The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

7. 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 responsibilities for the audit of the standalonefinancial statements

8. 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.

9. As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism 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 made by management.

• Conclude on the appropriateness of management's use of thegoing 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'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence 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.

10. 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.

11. From the matters communicated with those charged with governancewe determine 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 auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on other legal and regulatory requirements

12. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure B" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

13. 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 havebeen kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (includingother comprehensive income) the Statement of Changes in Equity and Cash Flow Statementdealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controlswith reference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure A".

(g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 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 litigations on itsfinancial position in its standalone financial statements – Refer Note 39 to thestandalone financial statements;

ii. The Company has long-term contracts as at March 31 2021 for whichthere were no material foreseeable losses. The Company did not have any derivativecontracts as at March 31 2021

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

iv. The reporting on disclosures relating to Specified Bank Notes isnot applicable to the Company for the year ended March 31 2021.

14. 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.

Annexure A to Independent Auditors' Report

REFERRED TO IN PARAGRAPH 13 (F) OF THE INDEPENDENT AUDITORS'REPORT OF EVEN DATE TO THE MEMBERS OF SKF INDIA LIMITED ON THE STANDALONE FINANCIALSTATEMENTS FOR THE YEAR ENDED MARCH 31 2021

Report on the Internal Financial Controls with reference to standalonefinancial statements under Clause (i) of Subsection 3 of Section 143 of the Act

1. We have audited the internal financial controls with reference tostandalone financial statements of SKF India Limited ("the Company") as of March31 2021 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).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 Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing deemed to be prescribed under section 143(10) of the Act to theextent applicable to an audit of internal financial controls both applicable to an auditof internal financial controls and both issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to standalone financial statements was established and maintained and ifsuch controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain auditevidence about the adequacy of the internal financial controls system with reference tostandalone financial statements and their operating effectiveness. Our audit of internalfinancial controls with reference to standalone financial statements included obtaining anunderstanding of internal financial controls with reference to standalone financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system with reference to standalone financial statements.

Meaning of Internal Financial Controls with reference to standalonefinancial statements

6. A company's internal financial controls with reference tostandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalonefinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial controls with reference tostandalone financial statements includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary 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 assetsthat could have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference tostandalone financial statements

7. Because of the inherent limitations of internal financial controlswith reference to standalone financial statements including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls with reference to standalone financial statements to future periods aresubject to the risk that the internal financial control controls with reference tostandalone financial statements may become inadequate because of changes in conditions orthat the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects anadequate internal financial controls system with reference to standalone financialstatements and such internal financial controls with reference to standalone financialstatements were operating effectively as at March 31 2021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

Annexure B to Independent Auditors' Report

REFERRED TO IN PARAGRAPH 12 OF THE

INDEPENDENT AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF SKFINDIA LIMITED ON THE STANDALONE FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH31 2021 i. (a) The Company is maintaining proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the Managementaccording to a phased programme designed to cover all the items over a period of 3 yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. Pursuant to the programme a portion of the fixed assets has beenphysically verified by the Management during the year and no material discrepancies havebeen noticed on such verification.

(c) The title deeds of immovable properties as disclosed in Note 3 and4 on fixed assets to the standalone financial statements are held in the name of theCompany.

ii. The physical verification of inventory have been conducted atreasonable intervals by the Management during the year. The discrepancies noticed onphysical verification of inventory as compared to book records were not material.

iii. The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Act. Therefore the provisions of Clause 3(iii)(iii)(a) (iii)(b) and (iii)(c) of the said Order are not applicable to the Company.

iv. The Company has not granted any loans or made any investments orprovided any guarantees or security to the parties covered under Section 185 and 186.Therefore the provisions of Clause 3(iv) of the said Order are not applicable to theCompany.

v. The Company has not accepted any deposits from the public within themeaning of Sections 73 74 75 and 76 of the Act and the Rules framed there under to theextent notified.

vi. Pursuant to the rules made by the Central Government of India theCompany is required to maintain cost records as specified under Section 148(1) of the Actin respect of its products.

We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.

vii. (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is regular indepositing the undisputed statutory dues including provident fund employees' stateinsurance income tax sales tax service tax duty of customs cess goods and servicetax and other material statutory dues as applicable with the appropriate authorities.Also refer note 39 to the standalone financial statements regarding management'sassessment on certain matters relating to provident fund.

(b) According to the information and explanations given to us and therecords of the Company examined by us there are no dues of customs service tax and goodsand service tax which have not been deposited on account of any dispute. The particularsof dues of income tax sales tax duty of excise and value added tax as at March 31 2021which have not been deposited on account of a dispute are as follows:

Particulars Useful Life (in years) Useful Life (in years) Useful Life (in years) Useful Life (in years) Useful Life (in years)
Central Excise Act 1944 Excise Duty (including interest and penalty if applicable) 221.6 29.8 Various Years Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Income Tax Act 1961 Income Tax (including interest and penalty if applicable) 311.1 136.7 FY 2010-11 Commissioner of Income-tax (Appeals)
436.1 0 FY 2015-16 Assessing Officer
1661.7 382.6 Various Years Income Tax Appellate Tribunal (ITAT)
Central and Local Sales Tax Act Sales Tax (including interest and penalty if applicable) 55.7 8.5 FY 2011-12 to FY 2017-18 Appellate Deputy Commissioner
43.0 3.9 FY 2007-08 to FY 2011-12 Appellate Revision Board
4.1 4.1 FY 2008-09 to FY 2014-15 Appellate Tribunal
5.3 1.9 FY 2011-12 to FY 2014-15 Assessing Officer
80.6 2.4 FY 2011-12 to FY 2013-14 Deputy Commissioner Appeal
55.7 3.1 FY 2003-04 to FY 2016-17 Deputy Commissioner of
23.2 10.5 FY 2010-11 to FY 2015-16 Commercial Taxes –Audit Joint Commissioner (Appeal)
28.5 0.3 FY 2005-06 to FY 2016-17 Objection Authority Department of Trade & Taxes New Delhi

viii. According to the records of the Company examined by us and theinformation and explanation given to us the Company has not defaulted in repayment ofloans or borrowings to any financial institution or bank or Government or dues todebenture holders as at the balance sheet date.

ix. The Company has not raised any moneys by way of initial publicoffer further public offer (including debt instruments) and term loans. Accordingly theprovisions of Clause 3(ix) of the Order are not applicable to the Company.

x. During the course of our examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.

xi. 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. As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it the provisions of Clause 3(xii) of the Order are not applicableto the Company.

xiii. The Company has entered into transactions with related parties incompliance with the provisions of Sections 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the standalone financial statements asrequired under Indian Accounting Standard (Ind AS) 24 Related Party Disclosures specifiedunder Section 133 of the Act.

xiv. The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of Clause 3(xiv) of the Order are not applicable tothe Company.

xv. The Company has not entered into any non cash transactions with itsdirectors or persons connected with him. Accordingly the provisions of Clause 3(xv) ofthe Order are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934. Accordingly the provisions of Clause 3(xvi) ofthe Order are not applicable to the Company.

For Price Waterhouse & Co Bangalore LLP
Firm Registration Number: 007567S/S-200012
Chartered Accountants
Place: Pune Amit Borkar
Date: May 14 2021 UDIN: 21109846AAAAEG6481 Partner
Membership Number: 109846

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