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Z F Steering Gear (India) Ltd.

BSE: 505163 Sector: Auto
NSE: ZFSTEERING ISIN Code: INE116C01012
BSE 00:00 | 23 Sep 434.65 2.30
(0.53%)
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432.95

HIGH

444.80

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NSE 05:30 | 01 Jan Z F Steering Gear (India) Ltd
OPEN 432.95
PREVIOUS CLOSE 432.35
VOLUME 3107
52-Week high 575.00
52-Week low 285.00
P/E 27.11
Mkt Cap.(Rs cr) 394
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 432.95
CLOSE 432.35
VOLUME 3107
52-Week high 575.00
52-Week low 285.00
P/E 27.11
Mkt Cap.(Rs cr) 394
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Z F Steering Gear (India) Ltd. (ZFSTEERING) - Auditors Report

Company auditors report

To

The Members of

ZF STEERING GEAR (INDIA) LIMITED

Report on the Audit of the Financial Statements \

Opinion

We have audited the accompanying financial statements of ZF Steering Gear (India)Limited (the "Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows ended on that date and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as the "financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (the "Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing ("SA"s) specified under section 143(10) of the Act. Ourresponsibilities 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 ("ICAI") together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Sr. No. Key Audit Matter Auditor's Response
1 Allowance for Credit Loss Principal Audit Procedures
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. Our audit procedures related to the allowance for credit losses for trade receivables included the following among others:
We tested the effectiveness of controls over the:
• development of the methodology for the allowance for credit losses including consideration of the current and estimated future economic conditions
The Company considered current and anticipated future economic conditions pertaining to auto component industry in which the Company deals with and in the countries where it operates. In calculating expected credit loss the Company has also considered credit reports and other related credit information of its customers to estimate the probability of default in future and has taken into account the estimate of possible effects from the pandemic relating to COVID-19. • completeness and accuracy of information used in the estimation of probability of default and computation of the allowance for credit losses.
For a sample of customers:
• We tested the mathematical accuracy and computation of the allowances by using the same input data used by the Company and
Due to COVID-19 We have identified credit losses as a key audit matter; and the Company exercises significant judgment in estimating that no such expected credit loss will arise. • Cut-off procedures reveal that such outstanding receivables have been realised
Sr. No. Key Audit Matter Auditor's Response
2 Revenue recognition- Rebates and Discounts Principal Audit Procedures
The Company measures revenue net of any trade discounts and volume rebates. Material estimation by the Company is involved in recognition and measurement of rebates and discounts. This includes establishing an accrual at the yearend particularly in arrangements with varying terms which are based on annual contracts or shorter- term arrangements. In addition the value and timing of promotions for products varies from period to period and the activity can span beyond the year end. • We tested the effectiveness of controls over design implementation and operating effectiveness of key manual and application controls. They cover control over computation of discounts and rebates and rebate and discount accruals;
• Inspecting on a sample basis key customer contracts. Based on the terms and conditions relating to rebates and discounts we evaluated the Company's revenue recognition policies with reference to the requirements of Indian Accounting Standard-115 (Revenue from contracts with customers);
We identified the evaluation of accrual for rebates and discounts as a key audit matter. Substantive testing performed by selecting samples of rebate and discount transactions recorded during the year and verifying the computation with the relevant source documents;
• Understanding the process followed by the Company to determine the amount of accrual of rebates and discounts. Testing samples of rebate accruals and comparing to underlying documentation;
• Critically assessing manual journal entries posted to revenue on a sample basis to identify unusual items;
• Checking completeness and accuracy of the data used by the Company for accrual of rebates and discounts.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Overview ofFinancial Performance Report of the Directors Business Responsibility Report ManagementDiscussion and Analysis and Report on Risk Management (collectively referred as"other information") but does not include the Financial Statements and ourauditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially misstated.

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 Responsibilities for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. 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 judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. The Board of Directors are responsible for overseeing the

Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial control 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves 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 deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical 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 withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit 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 Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the relevant books of account.

d) In our opinion the aforesaid financial statements com -ply with the Ind ASspecified 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 appoint -ed as a director in terms of Section 164(2) ofthe Act.

f) With respect to the adequacy of the internal financial controls over 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 fi -nancial controlsover financial 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 opinionand to the best of our information and according to the explanations given to us the r em u -neration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.

h) 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 has disclosed the impact of pending litigations on its financialposition in its financial state -ments. Refer Note 32(a) in Financial Statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and III There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company.

2. 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 ofthe Companies Act 2013 we give in the Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

For Joshi Apte & Co. Chartered Accountants

ICAI Firm registration number: 104370W

Prakash Apte Partner

Membership No.: 033212

UDIN: 21033212AAAABM9750

Pune May 15 2021

Annexure ‘A' to the Independent Auditor's Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of ZF Steering Gear (India) Limited ofeven date)

(i) In respect of the Company's fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us considering the nature of the Fixed

Assets the same have been physically verified by the management at reasonableintervals during the year as per the verification plan adopted by the company which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. According to the information and explanations given to us and the records producedto us for our verification the discrepancies noticed during such physical verificationwere not material and the same have been properly dealt with in the books of account.

(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds / registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate. In respect of immovable properties of land that have been taken on lease anddisclosed as fixed assets in the financial statements the lease agreements are in thename of the Company.

(ii). The inventory has been physically verified by the management at reasonableintervals during the year. Inventory lying with third parties and in-transit have beenverified by the management with reference to the confirmations received from them and/orsubsequent receipt of goods. The Company is maintaining proper records of inventory. Thediscrepancies noticed on verification between the physical stocks and book records werenot material considering the operations of the Company and have been properly dealt within the books of account.

(iii). During the year ended on 31st March 2021 the Company has not granted anyloans secured or unsecured to companies firmsor other parties covered in the registermaintained under section 189 of the Companies Act 2013. (iv). According to theinformation and explanations given to us the Company has not given any guarantee forloans taken by others from banks and financial institutions.

(v). The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2021 and therefore the provisions of the clause 3(v)of the Order are not applicable to the Company.

(vi). According to the information and explanations given to us the maintenance of costrecords has not been specified by the Central Government under section 148(1) of theCompanies Act 2013 for the business activities carried out by the Company. Thusreporting under clause 3(vi) of the order is not applicable to the Company.

(vii).According to the information and explanations given to us in respect ofstatutory dues: The Company has generally been regular in depositing undisputed statutorydues including Provident Fund Employees' State Insurance Income Tax Goods and ServiceTax Customs Duty Cess and other material statutory dues applicable to it with theappropriate authorities. There were no undisputed amounts payable in respect of ProvidentFund Employees' State Insurance Income Tax Goods and Service Tax Customs Duty Cessand other material statutory dues in arrears as at March 31 2021 for a period of morethan six months from the date they became payable. Details of dues of Income Tax SalesTax Service Tax Excise Duty and Value Added Tax which have not been deposited as atMarch 31 2021 on account of dispute are given below:

Nature of Statute Nature of Dues Forum where the Dispute is pending Financial Year Amount (Rs. In Crore)
Income Tax Act 1961 Assessment Dues ITAT Pune FY 2012-13 0.44
Income Tax Act 1961 Assessment Dues ITAT Pune FY 2013-14 0.26
Income Tax Act 1961 Assessment Dues CIT (Appeal) Pune FY 2015-16 0.33
Income Tax Act 1961 Assessment Dues Assessed CIT (Appeal) Pune FY 2016-17 0.13
Income Tax Act 1961 TDS Dues by CPC CIT (Appeal) Pune FY 2012-13 0.03
Maharash- tra Value Added Tax2002 Assessment Dues Joint Com- missioner Appeal FY 2016-17 0.34
Maharash- tra Value Added Tax2002 Assessment Dues Joint Com- missioner Appeal FY 2017-18 0.12

(viii). According to the information and explanations given to us and based on ourexamination we are of the opinion that the Company has not defaulted in repayment ofloans or borrowings to a financial institution bank Government or dues to debentureholders.

(ix). The Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments). Based on the information and explanation givento us by the management there are no term loans availed during the year.

(x). To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi). In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii). The Company is not a Nidhi Company and hence reporting under clause 3(xii) ofthe Order is not applicable to the Company.

(xiii). In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv). During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3(xiv) of the Order is not applicable to the Company.

(xv). In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company. (xvi). The Company is not requiredto be registered under section 45-IA of the Reserve Bank of India Act 1934.

For Joshi Apte & Co. Chartered Accountants

ICAI Firm registration number: 104370W

Prakash Apte

Partner

Membership No.: 033212

UDIN: 21033212AAAABM9750

Pune May 15 2021

Annexure "B" to the Independent Auditor's Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of ZF Steering Gear (India) Limited ofeven date) Report on the Internal Financial Controls Over Financial Reporting under Clause(i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ZF SteeringGear (India) Limited (the "Company") as of March 312021 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India (the"ICAI"). 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 to therespective company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the ICAI and the Standardson Auditing prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the

Guidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining an understanding of internal financial controlsover financial reporting assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations of themanagement 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 financial statements.

Inherent 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.

Opinion

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 March 31 2021 based on the internal financialcontrol over financial reporting 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 ICAI.

For Joshi Apte & Co. Chartered Accountants

ICAI Firm registration number: 104370W

Prakash Apte

Partner

Membership No.: 033212

UDIN: 21033212AAAABM9750

Pune May 15 2021

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