TO THE MEMBERS OF GRINDWELL NORTON LIMITED Report on the Audit of the Standalone Ind-AS Financial Statements
Opinion
We have audited the accompanying standalone Ind-AS financial statements of GRINDwELL Norton Limited ("the Company”), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity, the Statement of Cash Flow for the year then ended and the Notes to the standalone Ind-AS financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "standalone Ind-AS financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind-AS financial statements give the information required by the Companies Act, 2013, ("the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (India Accounting Standards) Rules, 2015, as amended (Ind-AS) and with other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2023, the profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
basis for Opinion
We conducted our audit of the standalone Ind-AS financial statements in accordance with the Standards on Auditing ("SAs”) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Ind-AS 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 ("ICAI”) together with the ethical requirements that are relevant to our audit of the standalone Ind-AS financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind-AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone Ind-AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our report.
|
sr.
No.
|
Key audit matter description
|
How the scope of our audit addressed the key audit matter
|
|
1.
|
Revenue recognition and measurement
Refer to Note 1.3 (Accounting policies) for revenue recognition and measurement, Note 30.1 of the standalone Ind-AS financial statements for aggregate revenue from sale of products recognised as required by the applicable Ind-AS. For the year ended March 31, 2023, the Company recognised revenues aggregating to ' 217,545.68 lakhs.
Revenue from sale of goods is recognised in accordance with Ind-AS 115 "Revenue from Contracts with Customers” at a point-in-time when control of goods has been transferred to customers. The control and ownership transfers to customers at a point-in-time when goods have been delivered to customers as that is generally when legal title, physical possession and risks and rewards of goods transfers to the customers.
Amounts disclosed as revenue are net of customer returns, trade allowance, rebates, goods and services tax.
|
Our procedures included:
accounting policies: Assessing the Company’s revenue recognition policies, including those related to commission, discounts, rebates and returns by comparing with the applicable Ind-AS.
Tests of controls:
Understanding and evaluating the design and testing the operating effectiveness of controls over the accuracy of discounts, commission and rebates and correct timing of revenue recognition, the accuracy of pricing master and discounts, rebates and incentives in the general ledger accounting system.
Tests of details:
- Verified the supporting documentation for determining that the revenue was recognised in the correct accounting period (cut-off testing). Performed tests, on a sample basis, on revenue recognised and verified that the revenue was recognised at a point-in-time, as per the terms of agreement with customers;
- Comparing the discounts and rebates with the prior year and where relevant, performed further inquiries and testing.
- Verifying the manual journals posted to revenue to identify unusual or irregular items.
|
| |
We have therefore identified Revenue Recognition and Measurement as a key audit matter.
|
- To assess the recoverability of trade receivables, our procedures included an assessment of whether the provision against, or write off of, impacted our view as to the initial recognition of the related revenue.
We also assessed as to whether the disclosures in respect of revenue were adequate.
|
|
2.
|
assessment of valuation of unquoted Equity Investment
The Company has investments amounting to ' 19,830 lakhs in equity interest of two unquoted companies valued on 'Fair Value through Other Comprehensive Income' in accordance with related Accounting Standard.
In measuring these investments, valuation methods are used based on inputs that are not directly observable from market information and certain other unobservable inputs. The Management has also used the services of an independent professional valuation expert in this regard, wherever considered necessary.
Key inputs used in the valuation of the above investments are cash flow projections, growth rate, terminal value, discount rate, net asset value etc.
Risk identified:
The valuation of these investments is a focus area of our audit as it is highly dependent on estimates (including various assumptions and techniques used) which contain assumptions that are not observable in the market.
Given the inherent subjectivity in the valuation of the above investments, relative significance of these investments to the standalone financial statements and the nature and extent of audit procedures involved, we determined this to be a key audit matter.
|
Our procedures to test the valuation of investment in the unquoted equity instruments include the following:
accounting policies: Assessed the appropriateness of the relevant accounting policies of the Company, including those relating to recognition and measurement of financial instruments and ensuring compliance with applicable accounting standards.
tests of controls:
Understanding and evaluation the design and testing of operating effectiveness of the controls over determination of fair value (including valuation model and assumptions / judgements) of unquoted equity instruments.
tests of details:
- Assessing the accuracy and reasonableness of the input data provided by the Management by agreeing with approved budgets.
- Comparing recent historical results vis-a-vis corresponding budgets.
- Evaluation of competence, capabilities and objectivity of the valuation expert engaged by the Management.
- Assessment of reasonableness of cash flow projections and performed audit procedures on Management's assumptions such as earnings, growth rate, cost escalation / savings etc. and have assessed valuation methodology, discount rate, terminal growth rate etc.
- Tested the mathematical accuracy of the discounted cash flow projections. Traced the net assets value to the financial statements of the investee.
- Assessed adequacy of relevant disclosures in the standalone Ind-AS financial statements
|
Information Other than the Standalone Ind-AS Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the Director's Report and Report on Corporate Governance but does not include the standalone Ind-AS financial statements and our auditor's report thereon.
Our opinion on the standalone Ind-AS 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 Ind-AS financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind-AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, 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 Responsibilities for the Standalone Ind-AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these standalone Ind-AS financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards 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 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 the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind-AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Ind-AS financial statements, Management is 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 Management 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 Ind-AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind-AS 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 Ind-AS 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 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 Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system 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 made by Management.
• Conclude on the appropriateness of Management’s 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of the users of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone Ind-AS financial statements.
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 Ind-AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order, 2020, (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.
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 best of our knowledge and belief were necessary for the purpose of our audit.
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books. Based on our examination and according to the information and explanations provided to us, and as represented by Management, the Company has maintained daily backups of books of account on servers physically located in India, except for intermittent periods during the year when said backups could not be maintained on servers physically located in India due to ongoing infrastructure changes. The backups were re-initiated after the infrastructure changes and included records for the period during which the infrastructure changes had taken place.
c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid standalone Ind-AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with relevant rules issued thereunder.
e) On the basis of the written representations received from the Directors of the Company as on March 31, 2023, and taken on record by the Board of Directors, none of the Directors of the Company are disqualified as on March 31, 2023, 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 financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.
g) According to information and explanations given to us and based on our examination of the records of the Company, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act.
h) With respect to the other matters to be included in the Auditor's 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 on its financial position in its standalone Ind-AS financial statements - Refer Note 44 to the standalone Ind-AS financial statements.
ii) The Company has made provision, as required under the applicable laws or Accounting Standards for material foreseeable losses, if any, on long term contracts including derivative contracts. Refer Notes 1.3(I) and Note 42(C) to the standalone Ind-AS financial statements.
iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31,2023, except when disputes relating to ownership of the underlying shares are unresolved. Refer Note 26 to the standalone Ind-AS financial statements.
iv) The Management has represented that:
a) to the best of its knowledge and belief, other than as disclosed in the standalone Ind-AS financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b) to the best of its knowledge and belief, other than as disclosed in the standalone Ind-AS financial statements, no funds have been received by the Company from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
Based on such audit procedures performed by us which is considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused us to believe that the representations under sub-clause (i) and (ii) contain any material misstatement.
v) As per information and explanation represented by Management and based on the records of the Company, the dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.
The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.
vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1,2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.
For Kalyaniwalla & Mistry LLP Chartered Accountants
Firm Reg. No.: 104607W / W100166
Daraius Z. Fraser partner
Membership Number - 42454 UDIN: 23042454BGXFQM5724
Place - Mumbai Date - May 6, 2023
|