FUTURE GODREJ INDUSTRIES Auditors Report

Independent Auditor’s Report


TO THE MEMBERS OF


GODREJ INDUSTRIES LIMITED


Report on the Standalone Ind AS Financial Statements


We have audited the accompanying Standalone Ind AS Financial Statements of GODREJ INDUSTRIES LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the Standalone Ind AS Financial Statements”).


Management’s Responsibility 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 Companies Act, 2013 (“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 including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with relevant rules issued there under. 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 Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


Auditor’s Responsibility


Our responsibility is to express an opinion on these Standalone Ind AS Financial Statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.


We conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone Ind AS Financial Statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Standalone Ind AS Financial Statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the Standalone Ind AS Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the Standalone Ind AS Financial Statements.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS Financial Statements.


Opinion


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 Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, including the Ind AS, of the financial position of the Company as at March 31, 2017 and its financial performance including Other Comprehensive Income, its cash flows and the changes in equity for the year ended on that date.


Emphasis of Matter


We draw attention to Note No. 49 to the Standalone Ind AS Financial Statements, relating to remuneration paid to two Directors which is in excess of the limits prescribed under Section 197 read with Schedule V to the Companies


Act, 2013, by Rs, 4.54 crore. The Company has made an application to the Central Government for payment of the said remuneration which is in excess of the prescribed limits, the approval for which is awaited. Pending such approval, the amount is held in trust on behalf of the Company.


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, 2016, (“the Order”), issued by the Central Government of


India in terms of Section 143(11) 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.


2. 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 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 Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity 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 Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with relevant rules issued there under.


e) On the basis of the written representations received from the Directors of the Company as on March 31, 2017 and taken on record by the Board of Directors, none of the Directors of the Company is disqualified as on March 31, 2017, 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.


g) 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 No. 26 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 Note No. 53 to the Standalone Ind AS Financial Statements.


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 Company has provided requisite disclosures in its Standalone Ind AS Financials Statements as to holdings as well as dealings in Specified Bank Notes during the period from November 08, 2016 to December 30, 2016. Based on audit procedures and relying on the Management representation, we report that the disclosures are in accordance with the books of account and other records maintained by the Company and as produced to us by the Management. Refer Note No. 47 to the Standalone Ind AS Financials Statements.


The Annexure referred to in paragraph 1 ‘Report on Other Legal and Regulatory Requirements’ in our Independent


Auditor’s Report to the members of the Company on the Standalone Ind AS Financial Statements for the year ended March 31, 2017:


Statement on Matters specified in paragraphs 3 and 4 of the Companies (Auditor’s Report) Order, 2016:


1. Fixed Assets:


a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.


b) The Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on such verification are not material and have been properly dealt with in the books of account.


c) According to the information and explanations given to us and on the basis of the records of the Company examined by us, the title deeds of immovable properties are held in the name of the Company.


2. The Management has conducted physical verification of inventory at reasonable intervals except goods in transit. In case of inventory lying at third party locations, written confirmations have been obtained by the Management. The discrepancies noticed on physical verification were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.


3. During the year, the Company has not granted any loans, secured or unsecured to companies, firms, LLP or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Therefore, the provisions of sub-clauses (a), (b) and (c) of paragraph 3 (iii) of the Order are not applicable.


4. In our opinion and according to the information and explanations given to us, the Company has not advanced any loans to parties or granted securities covered under Section 185 of the Companies Act, 2013. In our opinion and according to the information and explanations given to us and records examined by us, the provisions of Section 186 of the Companies Act, 2013, in respect of loans given, guarantees given and investments made have been complied with by the Company.


5. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Rules framed there under in respect of the deposits accepted from the public.


6. We have broadly reviewed the books of account and records maintained by the Company in respect of products covered under the Rules made by the Central Government for maintenance of cost records, under Sub Section (l) of Section 148 of the Companies Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.


7. Statutory Dues:


a) According to the information and explanations given to us and on the basis of the records examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues, including Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax, Service Tax, Duty of Customs, Duty of Excise, Value added tax, Cess and any other statutory dues with the appropriate authorities wherever applicable. We have been informed that there are no undisputed dues which have remained outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.


b) According to the information and explanations given to us, there are no dues of Income-tax, Sales tax, Service tax, Duty of Customs, Duty of Excise, Value added tax or Cess outstanding on account of any dispute, other than the following:









































































































































Name of Statute



Nature of Dues



Amount (Rs, crores)



Period to which the amount relates



Forum where dispute is pending



Central Excise Act, 1944



Excise Duty / Service Tax demands relating to disputed classification, post manufacturing expenses, assessable values, etc., which the Company has contested and is in appeals at various levels.



0.43



2002-03, 2004-07, 2005-08, 2007-12, 2008-09, 2009-10, 2009-11, 2009-14, 2010-11, 2011-12, 2011-13, 2012-13, 2013-14, 2014-15, 2015-16



Assistant Commissioner



1.29



1993-97, 2009-13, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17 2012-14, 2013-14



Joint Commissioner



1.40



2008-09, 2009-13, 2010-11, 2011-12, 2012-13, 2013-14, 2013-15, 2014-15, 2015-16



Additional


Commissioner



0.01



2006-10, 2009-10



Deputy Commissioner



0.14



2010-11



Commissioner



0.26



2005-06, 2009-10



Commissioner (Appeals)



0.00



2009-10, 2012-14, 2013-14, 2013-15, 2014-15, 2015-16



Superintendent



3.55



2008-11, 2009-13, 2010-11



CESTAT



0.28



1997-98



Tribunal



0.04



1995-96



High Court



3.91



1993-97



The Supreme Court



The Customs Act, 1962



Custom Duty demands relating to lower charge, differential duty, classifications, etc.



2.63



2010-11



Commissioner (Appeals)



1.32



1978-93



High Court



VAT Acts of Various States



Sales Tax demands relating to purchase tax on Branch Transfer / Disallowance of high sea sales.



0.02



1997-98



Sales Tax Officer



0.07



2000-01



Commissioner (Appeals)



11.07



2003-04, 2005-06, 2010-11



Deputy Commissioner



32.91



2002-03, 2003-04, 2006-07, 2007-08, 2008-09, 2009-10, 2011-12



Joint Commissioner



1.96



2003-04, 2004-05, 2005-06, 2006-07



Tribunal



Income-tax Act, 1961



Income-tax demands against which the company has preferred appeals.



2.96



A.Y. 2007-08



Assessing Officer



15.29



A.Y. 1993-94, 1994-95, 1995-96, 1996-97, 1997-98, 2012-13



CIT



16.03



A.Y. 2006-07, 2011-12, 2013-14, 2014-15



Deputy Commissioner



16.74



A.Y. 1986-87, 1988-89, 1990-91, 1991-92,1996-97, 1998-99, 2000-01, 2001-02,


2002-03,


2003-04



ITAT



16.90



A.Y.1989-90, 1993-94, 1997-98, 2000-01, 2001-02, 2002-03



High Court







































Name of Statute



Nature of Dues



Amount (Rs, crores)



Period to which the amount relates



Forum where dispute is pending



Octroi



Octroi demand relating to classification issue on import of Palm Stearine and interest thereon.



0.03



1997-98



Deputy Commissioner



0.24



1997-2003



Tribunal



0.02



1998-99, 2000-01



The Supreme Court



Stamp Duty



Stamp Duties claimed on certain properties which are under appeal by the Company.



1.82



2000-01



Controlling Revenue Authority



8. According to the information and explanations given to us and based on the documents and records produced before us, there has been no default in repayment of dues to banks. There are no dues to financial institutions, Government or debenture holders.


9. According to the information and explanations given to us and the records examined by us, the term loans obtained by the Company were applied for the purpose for which the loans were obtained. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year.


10. During the course of our examination of the books of account and records of the Company, to the best of our knowledge and belief and according to the information and explanations given to us by the Management, no fraud on, or by the Company, has been noticed or reported during the year.


11. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act, except for remuneration paid to two Directors which is in excess of the limits prescribed under Section 197 read with Schedule V to the Companies Act, 2013, by Rs, 4.54 crore. The Company has made an application to the Central Government for payment of the said remuneration which is in excess of the prescribed limits, the approval for which is awaited. Pending such approval, the amount is held in trust on behalf of the Company.


12. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company; hence the provisions of Clause 3(xii) of the Order are not applicable to the Company.


13. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Standalone Ind AS Financial Statements as required by the applicable accounting standards.


14. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.


15. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with Directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.


16. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.


Referred to in Paragraph 2(f) ‘Report on Other Legal and Regulatory Requirements’ in our Independent Auditor’s Report to the members of the Company on the Standalone Ind AS Financial Statements for the year ended March 31, 2017.


Report on the Internal Financial Controls under Clause (i) of Sub-Section 3 of Section 143 of the Companies Act,


2013.


We have audited the internal financial controls over financial reporting of GODREJ INDUSTRIES LIMITED (“the Company”) as of March 31, 2017, in conjunction with our audit of the Standalone Ind AS Financial Statements of the Company for the year ended on that date.


Management’s Responsibility for Internal Financial Controls


The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (the “Act” or the “Companies Act”).


Auditors’ Responsibility


Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.


Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.


Meaning of Internal Financial Controls over Financial Reporting


A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Standalone Ind AS Financial Statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that:


1. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;


2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of Standalone Ind AS Financial Statements in accordance with generally accepted accounting principles and that receipts


and expenditures of the Company are being made only in accordance with authorizations of Management and Directors of the Company; and


3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Standalone Ind AS Financial Statements.


Inherent Limitations of Internal Financial Controls over Financial Reporting


Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Opinion


In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the ICAI.


For KALYANIWALLA & MISTRY LLP


Chartered Accountants


Firm Regn. No.: 104607W / W100166



Daraius Z. Fraser


Partner


M. No.: 42454


Mumbai: May 22, 2017

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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