To the Members of Yuken India Limited
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Yuken IndiaLimited ('the Company') which comprise the Balance Sheet as at 31 March 2021 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement the Statement of Changes in Equity for the year then ended and a summary of thesignificant accounting policies and other explanatory information.
2. 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 and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards ('Ind AS') specified under Section 133 of the Act of the state ofaffairs of the Company as at 31 March 2021 its profit (including other comprehensiveincome) its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Our responsibilities under those standards 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 ('ICAO togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Emphasis of Matter -Impact of COVID-19
4. We draw attention to Note 1 to the accompanying standalone financial statementswhich describes the uncertainties due to outbreak of COVID-19 pandemic and managementevaluation of the same on the business operations of the Company. In view of theseuncertainties the impact on the Company's operations is significantly dependent on futuredevelopments. Our opinion is not modified in respect of this matter.
Key Audit Matters
5. 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.
6. We have determined the matter described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How the matter was addressed in our audit |
|Impairment assessment of investments in subsidiary company ||Our audit procedures included but were not limited to the following: |
|As described in Note 6 to the standalone financial statements as at 31 March 2021 the Company has an investment aggregating to H264.60 lakhs in its wholly owned subsidiary company Yuflow Engineering Private Limited. The subsidiary has been incurring losses resulting in possible impairment indicators. || We obtained an understanding of the management process for identification of possible impairment indicators and process performed by the management for impairment testing. |
|In view of the above the management of the Company during the year ended 31 March 2021 has carried out an impairment test for such investments whereby the carrying amount of the investment was compared with their fair value for which the management had prepared detailed cash flow projections based on business plans of the subsidiary company expected growth rates in the business and other market related factors including the discount rates etc. . || We understood evaluated and tested controls around management's assessment of the impairment indicators and the testing performed. |
|Considering the materiality of the amounts involved and significant degree of judgement and subjectivity involved in the estimates and key assumptions used in determining the cash flows used in the impairment evaluation we have determined impairment of such non-current investments as a key audit matter. || We reconciled the cash flow projections to the business plans approved by the Company's board of directors; |
| || We challenged the management on the underlying assumptions used for the cash flow projections including the expected growth rates considering evidence available to support these assumptions and our understanding of the business; |
| || We assessed the reasonableness of the assumptions used and tested the discount rate and long-term growth rates used in the forecast including comparison to economic and industry forecasts where appropriate; |
| || Assessing the appropriateness of the methodology applied in determining the recoverable amount; |
| || We evaluated the sensitivity analysis performed by management in respect of the key assumptions such as discount and growth rates to ensure there was sufficient headroom with respect to the estimation uncertainty impact of such assumptions on the calculation; |
| || We assessed the appropriateness and adequacy of the disclosures made by the management for the impairment losses in accordance with applicable accounting standards. |
|Revenue recognition ||Our audit procedures included but were not limited to the following: |
|We refer to the Company's significant accounting policies in Note 2 and the revenue related disclosure in Note 24 and Note 45 of the standalone financial statements. || |
|Ind AS 115 "Revenue from Contracts with Customers" requires management to make certain key judgements such as identification of distinct performance obligations in contracts with customers determination of transaction price for the contract factoring in the consideration payable to customers (such as rebates and discounts) and selection of a method to allocate the transaction price to the performance obligations. || assessed the design and operating effectiveness of Company's controls (including the automated controls) around revenue recognition (including rebates / discounts); |
|Owing to the multiplicity of the Company's products volume of sales transactions size of distribution network and varied terms of contracts with customers and also in line with the requirements of the Standards on Auditing revenue has been determined as an area involving significant risk and hence we have assessed revenue recognition as a key audit matter. || assessed the appropriateness of Company's identification of performance obligations in its contracts with customers its determination of transaction price including allocation thereof to performance obligations and accounting policies for revenue recognition in accordance with the accounting principles laid down in Ind AS 115; |
| || scrutinized sales ledgers to verify completeness of sales transactions; |
| || on a sample basis tested the revenue recognized including testing of cut off assertion as at the year end. Our testing included tracing the information to agreements price lists invoices proof of dispatches/deliveries (as the case may be) and approved incentives/discounts schemes; |
| || tested the appropriateness of accruals for various rebates and discounts as at the year-end; |
| || assessed the revenue recognized with substantive analytical procedures including review of price quantity and product mix variances and analysis of discounts at customer level; |
| || circularized the balance confirmation for samples of customers and reviewing the reconciling items if any; |
| || tested the related disclosures made in notes to the standalone financial statements in respect of the revenue from operations. |
Information other than the Standalone Financial Statements and Auditor's Report thereon
7. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe 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 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.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
8. The accompanying standalone financial statements have been approved by the Company'sBoard of Directors. The Company's Board of Directors is 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 financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including the IndAS specified under Section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; 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.
9. In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
10. Those Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
11. 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 Standards on Auditing 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 financial statements.
12. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain 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 theCompany has adequate internal financial controls with reference to standalone financialstatements in place and the operating effectiveness of such controls;
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by 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 up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern; and
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.
13. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
16. As required by Section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under Section 197 read with Schedule V to the Act.
17 As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of Section 143(11) of the Act we give in theAnnexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
18. Further to our comments in Annexure I as required by Section 143(3) of the Actbased on our audit we report to the extent applicable 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 of our audit of theaccompanying standalone financial statements;
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 financial statements dealt with by this report are in agreement withthe books of account;
d) in our opinion the aforesaid standalone financial statements comply with Ind ASspecified under Section 133 of the Act;
e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2021 from being appointed as a director in terms of Section 164(2) of the Act;
f) we have also audited the internal financial controls with reference to financialstatements of the Company as on 31 March 2021 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 07 June 2021 as per Annexure II expressed an unmodified opinion;
g) with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. the Company as detailed in Note 35 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position as at 31 March 2021;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2021;
iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2021; and
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Vijay Vikram Singh
Membership No.: 059139
07 June 2021
Annexure I to the Independent Auditor's Report of even date to the members of YukenIndia Limited on the standalone financial statements for the year ended 31 March 2021
Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of two yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the head'Property plant and equipment') are held in the name of the Company.
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit and stocks lying withthird parties. For stocks lying with third parties at the year-end written confirmationshave been obtained by the management. No material discrepancies were noticed on theaforesaid verification.
(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable
(iv) In our opinion the Company has not entered into any transaction covered underSections 185 and 186 of the Act. Accordingly the provisions of clause 3(iv) of the Orderare not applicable.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(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 Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess goods and services tax and other material statutory dues as applicablehave generally been regularly deposited to the appropriate authorities. Further noundisputed amounts payable in respect thereof were outstanding at the year-end for aperiod of more than six months from the date they became payable.
(b) The dues outstanding in respect of income-tax sales-tax service-tax goods andservices tax duty of customs duty of excise and value added tax on account of anydispute are as follows:
Statement of Disputed Dues
|Name of the statute ||Nature of dues ||Amount (in Rs. lakhs) ||Amount paid Under Protest (in Rs. lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||19.10 ||- ||AY 2009-10 ||Income Tax Appellate Tribunal |
| ||Income Tax ||4.37 ||- ||AY 2011-12 ||Assessing Officer |
| ||Income Tax ||10.83 ||- ||AY 2012-13 ||Assessing Officer (Post remand back by ITAT) |
| ||Income Tax ||16.26 ||- ||AY 2014-15 ||Commissioner of Income Tax Appeals |
(viii) The Company has not defaulted in repayment of loans or borrowings to any bankduring the year. The Company did not have any outstanding debentures loans or borrowingsfrom financial institution or government and during the year.
(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.
(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the standalone financial statements etc. as required by the applicable IndAS.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion the Company has not entered into any noncash transactions with thedirectors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Vijay Vikram Singh
Membership No.: 059139
07 June 2021
Annexure II to the Independent Auditor's Report of even date to the members of YukenIndia Limited on the standalone financial statements for the year ended 31 March 2021
Independent Auditor's Report on the internal financial controls with reference to thestandalone financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 ('the Act')
1. In conjunction with our audit of the standalone financial statements of Yuken IndiaLimited ('the Company') as at and for the year ended 31 March 2021 we have audited theinternal financial controls with reference to standalone financial statements of theCompany as at that date.
Responsibilities of Management and Those Charged with Governance for Internal FinancialControls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal financial controls with reference tostandalone financial statements criteria established by the Company considering theessential components of internal control stated in 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 the Company's business including adherenceto the Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Standalone Financial Statements
3. 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 Standards on Auditing issued by the Instituteof Chartered Accountants of India ('ICAI') prescribed under Section 143(10) of the Act tothe extent applicable to an audit of internal financial controls with reference tofinancial statements and the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting ('the Guidance Note') 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 were established and maintained and ifsuch controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements includes 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.
5. 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
6. 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 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 standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance 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 have amaterial effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with Reference to StandaloneFinancial Statements
7. 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.
8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to standalone financial statements and such controlswere operating effectively as at 31 March 2021 based on the internal financial controlswith reference to standalone 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 issued by the Institute ofChartered Accountants of India.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Vijay Vikram Singh
Membership No.: 059139
07 June 2021.