Report on the Audit of the Standalone Financial Statements Opinion
We have audited the standalone financial statements of Minda Industries Limited (the Company”), which comprise the standalone balance sheet as at March 31, 2021, and the standalone statement of profit and loss (including other comprehensive income), standalone statement of changes in equity and standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of reports of other auditors as referred to in other matters para below, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, and profit and other comprehensive income, 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) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the
standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained and that obtained by the other auditors, in terms of their reports referred to in other matters para below is sufficient and appropriate to provide a basis for our opinion on the Standalone financial statements.
Emphasis of matter
We draw attention to note 58 to the standalone financial statements for the year ended March 31, 2021 which describes the overall accounting for and in particular basis for restatement of the previous year by the Company''s management consequent to the Scheme of Amalgamation (''Scheme'') for amalgamation of the Company and Harita Limited, Harita Venu Private Limited, Harita Cheema Private Limited, Harita Financial Services Limited and Harita Seating Systems Limited (collectively referred to as transferor Companies). The Scheme has been approved by the concerned National Company Law Tribunal (''NCLT'') vide its order dated February 1, 2021 & February 23, 2021 with appointed date of April 1, 2019
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Description of Key Audit Matters
Key Audit Matters
How the matter was addressed in our audit
1. Revenue Recognition
See note 2(b)(k) and 28 to the standalone financial statements
Revenue from sale of products is recognised when control of the products being sold is transferred to the customer and when there are no longer any unfulfilled obligations.
The performance obligations in the contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on customer terms and conditions. Revenue is measured at fair value of the consideration received or receivable, after deduction of any discounts/ rebates and any taxes or duties collected on behalf of the Government such as goods and services tax, etc. Customer acceptance is used to estimate the provision for price increase/decrease. Revenue is only recognised to the extent, that is highly probable, a significant reversal will not occur.
Standards on Auditing presume that there is fraud risk with regard to revenue recognition. The timing of revenue recognition is relevant to the reported performance of the Company. The management considers revenue as a key measure for evaluation of performance. There is a risk of revenue being recorded before control is transferred.
Our audit procedures included:
- Assessing the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
- Evaluating the integrity of the information and technology general control environment and testing the operating effectiveness of key IT application controls.
- Evaluating the design and implementation of Company''s key financial controls in respect of revenue recognition and tested the operating effectiveness of such controls for a sample of transactions (using random sampling).
- Testing the effectiveness of such controls over revenue cut off at period-end.
- Testing by selecting samples (using statistical sampling) of revenue transactions recorded during the year. For such samples, verified the underlying documents including customer contracts/ purchase order to identify terms and conditions relating to goods acceptance.
- Testing on a sample basis (selected based on specified risk-based criteria), the supporting documents for sales transactions recorded during the period closer to the year end and subsequent to the year end to determine whether revenue was recognised in the correct period.
- Performing analytical procedures on current year revenue based on trends and where appropriate, conducted further enquiries and testing.
Key Audit Matters
How the matter was addressed in our audit
2. Evaluation of impairment indicators in investments in subsidiaries, associates and joint ventures
See note 2(b)(b) and 4 to the standalone financial statements
The Company carries its investments in subsidiaries, associates and joint ventures at cost (net of provision) at an aggregate amount of Rs 1,131.16 Crores as at March 31, 2021.
The Company has identified the investments where indicators of impairment exists and performed an impairment assessment on those investments as at March 31, 2021. The Company adjusts the carrying value of the investment for the consequential impairment loss, if any, based upon valuation carried out internally or by independent experts.
The recoverable amount is considered to be the higher of the Company''s assessment of the value in use and fair value less cost of disposal. These models use several key assumptions, including future sales estimates, margins, growth rate, discount rate, etc. We have identified the assessment of impairment in respect of investment in subsidiaries, associates and joint ventures as a key audit matter since it involves significant judgement in making the above estimates and is dependent on external factors such as future market conditions and the economic environment.
In view of the significance of the matter we applied the
following audit procedures in this area, among others to obtain
sufficient appropriate audit evidence:
- Assessed the appropriateness of accounting policy for impairment of investment in subsidiaries, associates and joint ventures as per relevant accounting standard.
- Evaluated the Company''s assessment for identification of indicators of impairment.
- Evaluated the design implementation of key internal financial controls with respect to impairment including determination of recoverable value and tested the operating effectiveness of such controls.
- Evaluated the impairment model used by the Company. This included assessing the appropriateness of key assumptions used, with particular attention to future sales estimates, margins, growth rate, discount rate and other assumptions based on historical data, our knowledge of the Company and the industry with assistance of our valuation specialist wherever considered necessary.
- Considered historical forecasting accuracy, by comparing previously forecasted cash flows to actual numbers achieved.
- Performed sensitivity analysis of the key assumptions used to determine, which changes to assumptions would change the outcome of impairment assessment.
- Assessed the adequacy of the disclosures relating to impairment of investment.
The Company''s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company''s annual report, but does not include the standalone financial statements and our auditors'' report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Management''s and Board of Directors'' Responsibility for the Standalone Financial Statements
The Company''s Management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs, profit/loss and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Management and Board of Directors are responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company 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 financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures in the standalone financial statements made by the Management and Board of Directors.
• Conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
a) The standalone financial statements include the Company''s share of net profit of Rs. 8.50 Crores for the year ended March 31, 2021 in respect of three partnership firms, whose financial statements have not been audited by us. These financial statements have been audited by other auditors whose reports have been furnished to us by the management and our opinion on the standalone financial statements, in so far as it relates to the amounts, included in respect of these partnership firms, is based solely on the reports of the other auditors.
b) We did not audit the financial statements of Harita Limited, Harita Venu Private Limited, Harita Cheema Private Limited, Harita Financial Services Limited and Harita Seating Systems Limited whose financial statements reflects total assets (before eliminations) of Rs 306.74 Crores as at March 31, 2020 and total revenues (before eliminations) of Rs 353.74 Crores and net cash outflows (before eliminations) amounting to Rs 17.17 Crores for the previous year ended March 31, 2020 included in these standalone financial statements
consequent to its amalgamation with the Company with the appointed date of April 1, 2019 (refer note 58 to the standalone financial statements):
These financial statements were audited by other auditors, as adjusted for the accounting effects of the Scheme recorded by the Company (in particular, the accounting effects of lnd AS 103 ''Business Combinations'') and other consequential adjustments, which have been audited by us.
Our opinion is not modified in respect the above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors'' Report) Order, 2016 (the Order”) issued by the Central Government in terms of section 143 (11) of the Act, we give in the Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. (A) As required by Section 143(3) of the Act, we report
a) We have sought and obtained all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books
c) The standalone balance sheet, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows dealt with by this Report are in agreement with the books of account
d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under section 133 of the Act.
e) On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B”.
(B) With respect to the other matters to be included in
the Auditors'' Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at March 31, 2021 on its financial position in its standalone financial statements - Refer note 39 to the standalone financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank notes during the period from November 8, 2016 to December 30, 2016 have not been made in these standalone financial statements since they do not pertain to the financial year ended March 31, 2021.
(C) With respect to the matter to be included in the Auditors'' Report under section 197(16):
In our opinion and according to the information and explanations given to us, the remuneration paid by the company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.
For B S R & Co. LLP
Chartered Accountants Firm''s Registration No: 101248W/W-100022
Place: Gurugram Membership Number: 094549
Date: June 13, 2021 ICAI UDIN: 21094549AAAADD3547