REPORT FOR THE YEAR ENDED 31ST MARCH 2020
To the Members of
Report on the Audit of the Standalone IND AS Financial Statements
We have audited the standalone financial statements of Sundaram-Clayton Limited("the Company") which comprise the Balance Sheet as at 31st March2020 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and Statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "the standalonefinancial 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 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the company as at 31st March 2020 the profit andtotal comprehensive income changes in equity and its cash flows for the year ended onthat date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance withStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with ethical requirements that are relevant toour audit of the financial statements under the provisions of the Companies Act 2013 andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgement 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.
|S.No. Key Audit Matter ||Auditor's Response |
|1 Application of IND AS 116 ||Principal Audit Procedures |
|From 1st April 2019 IND AS 116 has to be applied on all applicable leasing contracts with the application and appropriate accounting treatment of identifying lease liability right to use asset interest on such lease. ||The company has employed an external agency to assist with the transition into IND AS 116 during the financial year and has extensively documented for each of its leases based on a policy of general materiality the applicability or non-applicability of the standard to such lease. We have verified the new leases during the year for new assets leased during the year and have found that the approach applied is consistent to the policy in place and also in line with the requirements of the standard. |
| ||The company has had modifications in lease by way of changes in lease period. The company has appropriately treated this in the book of accounts with proper recognition of lease liability. |
| ||We have also performed an independent verification of the calculation of the lease liability interest on lease and right to use assets based on the information made available to us and found the results satisfactory. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Information butdoes not include the standalone financial statements and 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 in the course of audit or otherwise appears to be materially misstated. aa If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of the Management and Board of Directors 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 financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act. 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 judgements and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatementswhether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatements 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 scepticism 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basisof accounting 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 upto 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent 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 economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 a statement that we have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships 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
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of Section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified in theparagraphs 3 and 4 of the Order to the extent applicable.
As required by the 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 purpose our audit.
(b) In our opinion proper books of accounts 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 the CashFlow Statement dealt with by this Report are in agreement with books of accounts.
(d) In our opinion the aforesaid standalone financial statements comply with IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rule 2014.
(e) On the basis of 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 directors in term ofSection 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over the financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.
(h) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended 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 on the financialposition in its standalone financial statements- Refer Note 37(i) to the financialstatements;
ii. The company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred theInvestor Education and Protection Fund by the Company.
Annexure'A' to Independent Auditors' Report - 31st March 2020 (Referred toin our report of even date)
i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) Fixed assets are physically verified by the management in accordance with a regularprogramme at reasonable intervals. In our opinion the interval is reasonable having regardto the size of the company and nature of its assets.
No material discrepancies have been noticed on such verifications;
(c) The title deeds of the immovable properties of the company are held in the name ofthe company;
ii) The inventory other than in-transit has been physically verified at reasonableintervals during the year under review by the management. The discrepancies noticedbetween the book stock and physical stock were not material and have been properly dealtwith in the books of accounts.
In respect of inventories with third parties which have not been physically verifiedthere is a process of obtaining confirmation from such parties;
iii) During the year the Company has not granted any loan to a company firm or otherparties covered in the register maintained under Section 189 to the Companies Act 2013;
iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofgrant of loans making investments as applicable. The company has not provided anyguarantees or securities;
v) The Company has not accepted any deposits from the public within the meaning ofSection 73 to 76. Hence reporting under sub- clause
(v) of paragraph 3 of the Order is not applicable to the company;
vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules made by the Central Government under Section 148(1) of the Companies Act2013 for the maintenance of cost records and we are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have however not madea detailed examination of the cost records with a view to determine whether they areaccurate or complete.
vii) (a) According to the information and explanation given to us and on the basis ofour examination of the records of the company the Company is generally regular indepositing undisputed statutory dues including provident fund employees state insuranceIncome-tax sales-tax custom duty excise duty service tax value added tax cess goodsand services tax and any other material statutory dues with the appropriate authoritiesexcept for few marginal delays;
(b) According to the information and explanations given to us no undisputed amountspayable in respect of income-tax sales-tax custom duty excise duty service tax valueadded tax cess goods and services tax were in arrears as at 31st March 2020for a period of more than six months from the date they became payable;
(c) According to the information and explanations given to us following are thedetails of the disputed dues that were not been deposited on account of any dispute as on31st March 2020:
|Nature of Duty / Tax under Dispute Central Excise ||Amount Involved (Rs. in crores) 1.41 ||Forum where dispute is pending Central Excise and Service Tax |
|Service Tax ||1.40 ||Appellate Tribunal Central Excise and Service Tax |
|VAT ||0.03 ||Appellate Tribunal Tamil Nadu Sales |
|Income tax ||0.11 ||Tax Appellate Tribunal Commissioner of Income Tax (Appeals) |
viii) Based on our verification and according to the information and explanations givenby the management the company has not - defaulted in repayment of dues to its banks or tothe Government.
The Company has not borrowed from any financial institution nor has issued anydebentures.
ix) (a) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. Hence reporting on utilizationof such money does not arise;
(b) In our opinion and according to the information and explanations given to us theterm loans availed by the Company have been utilised for the purpose for which they wereobtained;
x) Based on the audit procedures adopted and the information and explanation given tous no fraud by the Company or on the Company has been noticed or reported during thecourse of our audit;
xi) In our opinion and according to the information and explanations given to usManagerial remuneration paid/provided are in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V of the Act;
xii) The Company is not a Nidhi Company and as such this clause of the order is notapplicable;
xiii) In our opinion and according to the information and explanations given to us alltransactions with the related parties are in compliance with Section 177 and 188 of theAct and details of such transactions have been disclosed in standalone Ind AS financialstatements as required by the applicable accounting standards;
xiv) According to the information and explanation given to us and in our opinion thecompany has not made any preferential or private placement of shares or fully or partlyconvertible debentures during the year under review;
xv) According to the information and explanation given to us and in our opinion thecompany has not entered into any non-cash transactions with directors or persons connectedwith them;
xvi) The company is not required to be registered under Section 45- IA of the ReserveBank Act 1934.
Annexure 'B' to the Independent Auditors' Report for the year ended 31stMarch 2020
Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting ofSundaram-Clayton Limited ("the Company") "Chaitanya" No.12 KhaderNawaz Khan Road Chennai 600 006 as of 31st March 2020 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management and Board of Directors are responsible for establishing andmaintaining internal financial controls based on the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by Institute ofChartered Accountants of India and deemed to be 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 judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls 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 standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that; (1) Pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) Provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 standalone financial statements.
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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2020 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.
| ||For RAGHAVAN CHAUDHURI & NARAYANAN |
| ||Chartered Accountants |
| ||Firm Regn. No. 007761S |
| ||V. SATHYANARAYANAN |
| ||Partner |
|Place : Bengaluru ||Membership No. 027716 |
|Date : 29th May 2020 ||UDIN : 20027716AAAAFL4375 |