We have audited the standalone financial statements of Godrej Consumer Products Limited (the "Company"), which comprise the standalone balance sheet as at 31 March 2024, 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 material accounting policies and other explanatory information in which are included the Returns for the year ended on that date audited by the branch auditor of the Company's branch at Singapore.
In our opinion and to the best of our information and according to the explanations given to us, and
based on the consideration of report of the branch auditor on financial statements/financial information of such branch as was audited by the branch auditor, 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 31 March 2024, and its 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 obtained by us along with the consideration of report of the branch auditor referred to in paragraph (a) of the "Other Matters" section below, is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
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.
Revenue recognition
See Note 34 to standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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Revenue is measured net of any discounts and rebates.
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Our audit procedures included:
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Recognition and measurement of discounts and rebates accruals, involves judgement and estimates. This leads to a
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Assessing the compliance of revenue recognition accounting policies, including those relating to discounts and rebates, with reference to Ind AS 115 Revenue from contracts with customers (applicable accounting standard);
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risk of revenue being misstated due to inaccurate estimation
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over discounts and volume rebates.
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Revenue is recognised when the control of the products being sold has transferred to the customer.
There is a risk of revenue being overstated on account of
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Testing the design, implementation and operating effectiveness of the Company's general IT controls and key IT application/ manual controls over the Company's systems, with the assistance of our IT specialists. These IT systems enable recording of revenue and computing discounts and
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manipulation in the timing of transfer of control, due to the pressure on the Company to achieve performance targets for
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volume rebates in the general ledger accounting system;
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the year.
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Performing substantive testing by selecting statistical samples of revenue transactions recorded for the year as well as
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Accordingly, revenue recognition is considered to be a key
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period end cut-off and agreeing to the underlying documents,
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audit matter.
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which included sales invoices and shipping documents;
Performing substantive testing by agreeing statistical samples of discounts and rebate accruals and disbursements to underlying documents;
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Performing a retrospective assessment of discounts and rebate accruals with prior period to evaluate the historical accuracy; and
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Assessing manual journals posted to revenue to identify unusual items.
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Intangible Assets -impairment assessment See Note 6 to standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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The carrying amount of goodwill and brands (indefinite life
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Our audit procedures included:
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intangible assets) represent 27% of the Company's total
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• Evaluating design and implementation and testing operating
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assets.
The identification of relevant Cash Generating Units (CGUs)
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effectiveness of controls over the Company's process of impairment assessment and approval of forecasts;
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for the annual impairment evaluation of Goodwill by the
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• Evaluating Company's basis to identify relevant CGUs;
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Company involves significant judgement.
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• Assessing the valuation methodology and challenging the assumptions used, in particular those relating to forecast
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The annual impairment testing of goodwill and other
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revenue growth and earnings, weighted average cost of
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intangible assets by the Company involves significant
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capital and royalty rates, long-term growth rates with the
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estimates and judgment due to the inherent uncertainty involved in forecasting and discounting future cash flows and
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assistance of our valuation specialists;
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determining the recoverable amounts.
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• Assessing the reliability of the financial projections prepared by the Company by comparing projections for previous
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Accordingly, impairment assessment of goodwill and other
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financial years with actual results realized and analysis of
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intangible assets is considered to be a key audit matter.
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significant variances,
• Performing sensitivity analysis by assessing the effect of possible reductions in the above assumptions on the recoverable amount; and
• Evaluating the adequacy of disclosures in respect of impairment evaluation of intangible assets in the standalone financial statements.
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Business Combination - Acquisition of business from Raymond Consumer Care Limited
See Note 55 to standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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The Company has completed the acquisition of FMCG
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Our audit procedures included:
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business of Raymond Consumer Care Limited effective 8 May
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• We have read the business transfer agreement to understand
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2023 pursuant to a business transfer agreement at a total consideration of ' 2,825 crores.
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the key terms and conditions of the acquisition;
• We have evaluated the accounting treatment followed by the
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The Company has accounted for such acquisition as a business
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Company with reference to Ind AS 103;
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combination as per Ind AS 103 'Business Combinations' by
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• We have evaluated the design and implementation and tested
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recognizing identifiable assets and liabilities at fair value. The measurement of the identifiable assets and liabilities
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the operating effectiveness of key internal controls related to the Company's valuation process;
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acquired at fair value is inherently judgmental.
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• We have involved our valuation specialists;
- to gain an understanding of the work of the experts by
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Fair value of brands was determined by the Company with the assistance of an external valuation expert using income
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examining the valuation reports.
- to critically evaluate the key assumptions (including
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approach (royalty relief method), considering the assets being measured.
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revenue projections, royalty rate, terminal growth
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rate and discount rate) and purchase price allocation
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Given the complexity and judgement involved in fair value
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adjustments.
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measurements and magnitude of the acquisition made by the
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- to evaluate the valuation of acquired tangible and
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Company, this is a key audit matter.
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intangible assets based on our knowledge of the Company and the industry.
• We have assessed the adequacy of the Company's disclosures in respect of the acquisition in accordance with the requirements of Ind AS 103.
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Impairment evaluation of Investments in subsidiaries See Note 8 to standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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The carrying amount of the investments in subsidiaries (held
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Our audit procedures included:
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at cost less impairment) represents 27 % of the Company's
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• Evaluating design and implementation and testing operating
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total assets.
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effectiveness of controls over the Company's process of
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The investments are assessed for impairment when an indicator of impairment exists. Due to restructuring of
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impairment assessment and approval of forecasts;
• Assessing the indicators for impairment of the subsidiaries
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operations and businesses in overseas geographies, there are
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and understanding the Company's assessment of those
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impairment triggers requiring evaluation.
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indicators;
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The impairment assessment involves use of significant
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• Assessing the valuation methodology and challenging the assumptions used, in particular those relating to forecast
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estimates and judgements due to the inherent uncertainty
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revenue growth and earnings, weighted average cost of
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involved in forecasting discounting future cash flows and
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capital and long-term growth rates, with the assistance of our
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determining the recoverable amounts.
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valuation specialists;
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In view of the significance of these investments and estimates
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• Assessing the reliability of the financial projections prepared
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and judgments involved, we consider impairment evaluation
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by the Company by comparing projections for previous
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of investments in subsidiaries to be a key audit matter.
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financial years with actual results realized and analysis of
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significant variances;
• Performing sensitivity analysis by assessing the effect of possible reductions in the above assumptions on the recoverable amount; and
• Comparing the carrying amount of investments with recoverable amount based on discounted cash flow analysis.
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Other Information
The Company's Management and Board of Directors are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and auditor's report thereon. The annual report is expected to be made available to us after the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other information and we will 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 identified above when it becomes available 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.
When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary actions, as applicable under the relevant laws and regulations.
Management's and Board of Directors' Responsibilities 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. The Management and Board of Directors of the Company are responsible for 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 the 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 ability of the Company 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 are responsible for overseeing the financial reporting process of the Company.
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 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 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 in preparation of standalone financial statements 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.
• Obtain sufficient appropriate audit evidence regarding the financial statements/financial information of the branch of the Company to express an opinion on the standalone financial statements. For the branch included in
the standalone financial statements, which has been audited by branch auditor, such branch auditor remains responsible for the direction, supervision and performance of the audit carried out by them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further described in paragraph (a) of the section titled "Other Matter" in this audit report.
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 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.
Other Matter
a. We did not audit the financial statements of one branch included in the standalone financial statements of the Company whose financial statements reflect total assets of ' 0.21 crores as at 31 March 2024, total revenue of ' 1.33 crores, total net profit after tax of ' 0.12 crores and net cash inflows of ' 0.11 crores for the year ended on that date, before giving effects to consolidation adjusments, as considered in the standalone financial statements. The financial statements of this branch has been audited by the other auditor whose report has
been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such other auditor.
Our opinion is not modified in respect of this matter.
Report on Other Legal and
Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government of India 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, based on our audit and on the consideration of report of the other auditor on financial statements of such branch as was audited by other auditor, as noted in the "Other Matter" paragraph, we report, to the extent applicable, 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 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 and the report of the other auditor and proper returns adequate for the purposes of our audit have been received from the branch not visited by us, except for the matter stated in the paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
c. The report on the accounts of the branch office of the Company audited under Section 143(8) of the Act by branch auditor has been sent to us and has been properly dealt with by us
in preparing this report.
d. 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 and with the return received from the branch not visited by us.
e. In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.
f. On the basis of the written representations received from the directors as on 31 March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2024 from being appointed as
a director in terms of Section 164(2) of the Act.
g. The modification relating to the maintenance of accounts and other matters connected therewith are
as stated in the paragraph 2A(b) above on reporting under Section 143(3) (b) of the Act and paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
h. 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".
B. 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 and based on the consideration of the report of the other auditor on separate financial statements of the branch, as noted in the "Other Matters" paragraph:
a. The Company has disclosed the impact of pending litigations as at 31 March 2024 on its financial position in its standalone financial statements - Refer Note 33 and 46 to the standalone financial statements.
b. The Company did not have any long-term contracts including derivative contracts for which
there were any material foreseeable losses.
c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
d (i) The management of the Company represented that, to the best of their knowledge and belief, as disclosed in the Note 58(i) to the standalone 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(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall 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.
(ii) The management of the Company represented that, to the best of their knowledge and belief, as disclosed in the Note 58(ii) to the standalone financial statements, no funds have been received
by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Parties ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(iii) Based on the audit procedures performed that have been considered
reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (i) and (ii) above, contain any material misstatement.
e. The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with Section 123 of the Act.
f. Based on our examination which included test checks, except for the instance mentioned below, the Company has used accounting softwares for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in
the respective softwares;
In the absence of independent auditor's report for the period 1 April
2023 to 31 March
2024 in relation to controls at service organisation for accounting software used for maintaining the books of account relating
to consolidation process, which is operated by a third-party software service provider, we are unable to comment whether audit trail feature of the said software was enabled and operated for the period 1 April 2023 to 31 March 2024 for all relevant transactions recorded in the software.
Further, for the period audit trail (edit log) facility was enabled and operated for the respective accounting softwares, we did not come across any instance of the audit trail feature being tampered with.
C. With respect to the matter to be included in the Auditor's Report under Section 197(16) of the Act:
In our opinion and according to the information and explanations given to us, the remuneration paid/payable 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/ payable 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) of the Act which are required to be commented upon by us.
For B S R & Co. LLP
Chartered Accountants Firm's Registration No.: 101248W/W-100022
Vijay Mathur
Partner
Membership No: 046476 ICAI UDIN:24046476BKGPAY7136
Mumbai: 06 May 2024
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