To the Members of Sundram Fasteners Limited
Report on the Audit of the Standalone Ind AS financial statements Opinion
We have audited the Standalone Ind AS financial statements of Sundram Fasteners Limited("the Company") which comprise the standalone balance sheet as at March 312021 the 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 Ind AS financial statements including asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the Standalone Ind AS financial statements"). Inour opinion and to the best of our information and according to the explanations given tous the aforesaid Standalone Ind AS financial statements give the information required bythe 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 March 31 2021 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
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 Ind ASfinancial 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 Ind AS financial statements under the provisions of the Act and the Rulesthereunder and we have fulfi lled 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 on theStandalone Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignifi cance in our audit of the Standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the Standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
Description of Key Audit Matter
| Impairment assessment of long-term investments in subsidiaries |
| The key audit matter | How the matter was addressed in our audit |
| The Company has long-term investments in subsidiaries as at March 31 2021. The Company assesses investment in subsidiaries at each reporting date for any impairment indicators based on internal or external sources of information. Where such indicators exist the Company performs impairment testing. | In view of the signifi cance of the matter we performed the following key audit procedures: |
| The changes in business environment including impact of COVID-19 pandemic on budgets and forecasts and uncertainties caused by external factors affecting estimated performance of subsidiaries has triggered impairment testing in respect of certain subsidiaries. | • Assessed the design implementation and operating effectiveness of key controls in respect of the Company’s impairment analysis process including evaluation and approval of forecasts and the valuation model used; |
| As impairment assessment involves significant estimates and judgements it is a key area of focus in our audit. | • Examined the valuation reports of the independent third-party specialists as engaged by the Company; |
| Refer Notes 3 and 6 to the standalone financial statements. | • Evaluated and challenged the key assumptions considered in cash flow forecasts for assessing the recoverable amount such as growth rates profitability discount rates etc. with reference to our understanding of the business and historical trends; |
| • Involved our valuation specialists to examine the valuation methodology and key assumptions; |
| • Performed sensitivity analysis considering possible changes in key assumptions used; |
| • Evaluated the adequacy of disclosures made in the standalone financial statements. |
Taxation and contingent liability related matters
| The key audit matter | How the matter was addressed in our audit |
| Determination of tax provisions and assessment of contingent liabilities involves judgment with respect to various tax positions on deductibility of expenditure interpretation of laws and regulations etc. Judgment is also required in assessing the range of possible outcomes for these matters. | In view of the signifi cance of the matter we applied the following key audit procedures: |
| The Company makes an assessment to determine the outcome of these matters and records an accrual or discloses this as a contingent liability in accordance with applicable accounting standards. | • Involved our tax specialists and evaluated and challenged the underlying judgements used in respect of estimation of provisions exposures and contingencies. |
| Accordingly taxation and contingent liability related matters are areas of focus in the audit. | • Considered third party advice received by the Company where applicable status of recent and current tax assessments outcome of previous claims judgmental positions taken in tax returns and developments in tax environment. |
| Refer Notes 3 18 and 35 to the standalone financial statements. | • Evaluated the adequacy of disclosures on tax provisions and contingent liabilities made in the standalone financial statements. |
| Revenue recognition | |
| The key audit matter | How the matter was addressed in our audit |
| The Company’s revenue is derived primarily from sale of automobile spare parts and components ("goods"). Revenue from the sale of goods is recognised upon the transfer of control of the goods to the customer. | In view of the signifi cance of the matter we applied the following key audit procedures in this area: |
| The Company and its external stakeholders focus on revenue as a key performance metric and the Company uses various shipment terms across its operating markets. | • Assessed the Company’s accounting policy for revenue recognition as per applicable accounting standards. |
| Revenue recognition has been identified as a key audit matter as there could be an incentive or external pressures to meet expectations resulting in revenue being overstated or recognized before control has been transferred. | • Tested the design implementation and operating effectiveness of key controls relating to revenue recognition. |
| • Performed substantive testing of revenue transactions recorded during the year using statistical sampling by verifying the underlying documents. |
| Refer 3 and 23 to the standalone financial statements. | • Tested samples of revenue transactions recorded closer to the year-end by verifying underlying documents to assess the accuracy of the period in which revenue was recognized. |
| • Tested manual journal entries posted to revenue. |
Information Other than the Standalone Ind AS fi financial statements and Auditors’Report Thereon
The Company’s management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in theCompany’s annual report but does not include the financial statements and ourauditors’ report thereon.
Our opinion on the Standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. 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.
Management’s and Board of Directors’ Responsibility for the Standalone Ind ASfi financial statements
The Company’s Management and Board of Directors are responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these StandaloneInd AS 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 Standalone Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the Standalone Ind AS financial statements the Management and Board ofDirectors are responsible for assessing the Company’s ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or 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 Ind AS fi financialstatements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASfinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Standalone Ind AS 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 Standalone Ind ASfinancial 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 company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the Standalone Ind AS financialstatements made 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’sreport to the related disclosures in the Standalone Ind AS 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 futureevents or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation structure and content of the Standalone IndAS financial statements including the disclosures and whether the Standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant defi ciencies 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 signifi cance in the audit of the Standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese 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 ("theOrder") issued by the Central Government in terms of section 143 (11) of the Act wegive in the "Annexure A" a statement on the matters specified in paragraphs 3and 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 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 Ind AS financial statements comply with theInd AS specified under section 133 of the Act.
e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer 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 March31 2021 on its financial position in its Standalone Ind AS financial statements - ReferNote 35 to the Standalone Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company;
iv. The disclosures in the Standalone Ind AS financial statements regarding holdings aswell as dealings in specified bank notes during the period from November 8 2016 toDecember 30 2016 have not been made in these financial statements since they do notpertain to the financial year ended March 31 2021.
(C) With respect to the matter to be included in the Auditors’ Report underSection 197(16):
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) which arerequired to be commented upon by us.
for B S R & Co. LLP
Chartered Accountants
Firm’s Registration number: 101248W/W-100022
S Sethuraman
Partner
Membership No.: 203491
ICAI UDIN: 21203491AAAACP5395
Place : Chennai
Date : May 6 2021
Annexure A to the Independent Auditor’s Report
To the Members of Sundram Fasteners Limited on the Standalone Ind AS financialstatements for the year ended March 31 2021 (Referred to in paragraph 1 under‘Report on Other Legal and Regulatory Requirements’ section of our report ofeven date)
(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 verifi cation of its fi fixedassets by which all fixed assets are verifi ed in a phased manner. In our opinion thisperiodicity of physical verifi cation is reasonable having regard to the size of theCompany and the nature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) The inventory except goods in transit and certain stocks lying with thirdparties has been physically verified by the management during the year. In our opinionthe frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material. For stock lyingwith third parties at the year end written confi rmations have been obtained by themanagement.
(iii) (a) According to the information and explanations given to us during the yearthe Company 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 Act. Accordingly the provisions of clause (iii) (a) of the Order are notapplicable to the Company.
(b) The Company has granted loans in the earlier years to companies covered in theregister maintained under section 189 of the Act. The schedule of repayment of principaland payment of interest has been stipulated for the loans granted and borrowers have beenregular in payment of principal and interest as applicable.
(c) There are no amounts overdue for more than ninety days in respect of loans grantedto companies listed in the register maintained under section 189 of the Act.
(iv) According to the information and explanations given to us the Company hascomplied with the provisions of sections 185 and 186 of the Act with respect to loansinvestments guarantees and security as applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits. Accordingly paragraph 3(v) of the Order is notapplicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersubsection (1) of Section 148 of the Act in respect of products manufactured and are ofthe opinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the records.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees stateinsurance income tax goods and services tax duty of customs and other materialstatutory dues have generally been regularly deposited by the Company with the appropriateauthorities. As explained to us the Company did not have any dues on account of cesssales tax service tax duty of excise value added tax.
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 and other material statutory dues were in arrears as atMarch 31 2021 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us the dues set out inAppendix I in respect of income tax sales tax service tax duty of customs duty ofexcise value added tax and Goods and Service tax have not been deposited by the Companyon account of disputes.
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to banks or financial institutions. TheCompany has not taken any loans or borrowings from government and have not issued anydebenture.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. According to information andexplanations given to us no money has been raised through term loans during the year bythe Company.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its offi cers or employees has been noticed or reportedduring the course of our audit.
(xi) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the managerial remuneration for the year endedMarch 31 2021 has been paid or provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Act and rules framedthereunder.
(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.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the Standalone Ind AS financialstatements as required under applicable 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.
(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 any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable
for B S R & Co. LLP
Chartered Accountants
Firm’s Registration number: 101248W/W-100022
S Sethuraman
Partner
Membership No.: 203491
ICAI UDIN: 21203491AAAACP5395
Place : Chennai Date : May 6 2021
Appendix I as referred to under para (vii)(b) of Annexure A to the IndependentAuditor’s Report
To the Members of Sundram Fasteners Limited on the Standalone Ind AS financialstatements for the year ended March 31 2021
| Name of the Statute | Nature of the Dues | Amount* (Rs. in crores) | Period to which the amount relates | Forum where the dispute is pending |
| Central Excise Act 1944 | Excise duty | 2.26 | FY 2004-16 | Customs Excise and Service tax Appellate Tribunal |
| | 0.01 | FY 2005-17 | Commissioner - Appeals |
| | 0.21 | FY 2009-18 | Adjudicating authority / Assessing Officer/ Division |
| Finance Act 1994 | Service tax | 0.22 | FY 2004-18 | Customs Excise and Service tax Appellate Tribunal |
| | 0.06 | FY 2008-16 | Commissioner – Appeals |
| | 0.34 | FY 2008-17 | Joint / Deputy / Assistant / Additional Commissioner |
| Income Tax Act 1961 | Income-tax dues | 3.90 | AY 2015-16 | The Income tax Appellate Tribunal |
| | 0.02 | AY 2016-17 | The Income tax Appellate Tribunal |
| | 0.04 | AY 2019-20 | The Income tax Appellate Tribunal |
| Tamil Nadu Value Added Tax Act 2006 Telangana Value Added Tax | Sales tax | 0.58 | FY 2006-17 | Joint / Deputy / Assistant / Additional Commissioner |
| | 0.03 | FY 2017-18 | Joint / Deputy / Assistant / Additional Commissioner |
| Act 2005 Central Sales Tax Act 1956 | | | | |
| | 0.34 | FY 2014-17 | High Court of Madras |
| Customs Act 1962 | Customs duty | 0.69 | FY 2014-15 | Customs Excise and Service tax Appellate Tribunal |
| | 0.65 | FY 2014-15 | High Court of Madras |
* net of amount paid under protest
Annexure B to the Independent Auditor’s Report
To the Members of Sundram Fasteners Limited on the Standalone Ind AS financialstatements for the year ended March 31 2021 Report on the internal financial controlswith reference to the aforesaid standalone financial statements under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (Referred to in paragraph B (f)under ‘Report on Other Legal and Regulatory Requirements’ section of our reportof even date)
Opinion
We have audited the internal fi financial controls with reference to fi financialstatements of Sundram Fasteners 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.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at March 31 2021 based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting (the "GuidanceNote") issued by the Institute of Chartered Accountants of India (‘ICAI’).
Management's Responsibility for Internal Financial Controls
The Company’s management and the Board of Directors are responsible forestablishing and maintaining internal fi financial controls based on the internal fifinancial controls with reference to 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’spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").
Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal fi financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols 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.
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 controlswith reference to financial statements.
Meaning of Internal financial controls with reference to financial statements
A company’s internal financial controls with reference to financial statements isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal fi financialcontrols with reference to financial statements include those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company’s assets that could havea material 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 tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to Standalone fi financial statements to future periods are subject to the riskthat the internal financial controls with reference to standalone financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.
for B S R & Co. LLP
Chartered Accountants
Firm’s Registration number: 101248W/W-100022
S Sethuraman
Partner
Membership No.: 203491
ICAI UDIN: 21203491AAAACP5395
Place : Chennai
Date : May 6 2021
