Independent Auditor’s Report - Godrej Industries · PDF file Godrej Industries Limited...

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Transcript of Independent Auditor’s Report - Godrej Industries · PDF file Godrej Industries Limited...

  • 85

    To the Members of Godrej Industries Limited

    Report on the Financial Statements

    We have audited the accompanying fi nancial statements of GODREJ INDUSTRIES LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profi t and Loss and the Cash Flow Statement of the Company for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

    Management’s Responsibility for the Financial Statements

    Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards notifi ed under the Companies Act, 1956 (“the Act”), read with the General Circular 15/2013 dated September 13, 2013, issued by the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial 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 fi nancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

    An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the fi nancial statements.

    We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

    Opinion

    In our opinion and to the best of our information and according to the explanations given to us, fi nancial 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:

    a. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

    b. in the case of the Statement of Profi t and Loss, of the profi t of the Company for the year ended on that date; and

    c. in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.

    Emphasis of Matter

    1. We draw attention to sub-note (1) of Note 4: Reserves and Surplus, to the Standalone Financial Statements regarding the Scheme of Amalgamation (“the Scheme”) of Swadeshi Detergents Limited (SDL) (a wholly owned Subsidiary of the Company) with the Company approved by The Honourable High Court of Judicature at Bombay vide its order dated August 16, 2013. Pursuant to the said Scheme, which came into effect from April 1, 2013, the Company has restated / revised the value of certain assets of the Company, to the extent considered appropriate by the Board of Directors and accordingly reduced the value of certain assets by ` 114.82 crores and the same has been debited directly to General Reserve. The costs and expenses incurred on the Scheme amounting to ` 0.23 crores have also been debited directly to the General Reserve.

    Annual Report 2013-14

    Independent Auditor’s Report

  • 86

    The above treatment prescribed under the Court Scheme differs from the treatment prescribed under the Accounting Standards according to which the said amounts should have been debited to the Statement of Profit and Loss. Had the Scheme not prescribed this accounting treatment, the profit for the year ended March 31, 2014, would have been lower by ` 115.05 crores and the General Reserve would have been higher by that amount.

    2. We draw attention to sub-note (3) of Note 4: Reserves and Surplus, to the Standalone Financial Statements where the Company has included the financial statements of the ESOP Trust in preparation of the Company’s standalone financial statements to portray the picture as if the Company itself is administering the ESOP Scheme. Consequently, the operations of the ESOP Trust, in so far as the ESOP is concerned and the assets and liabilities of the Trust have been included in the financial statements of the Company. The loans to the ESOP Trust in the books of the Company are eliminated against the loan from the Company as appearing in the books of the Trust and investments in the equity shares of the Company held by the Trust have been reduced from Share Capital to the extent of the face value of the shares and the balance has been adjusted in “ESOP Trust Adjustments” under Reserves and Surplus. Balances arising from transactions between the Company and the Trust have been appropriately eliminated. The opening excess of expenditure over income of the Trust has been adjusted in “ESOP Trust Adjustments” under Reserves and Surplus.

    Our Opinion is not qualified in respect of these matters.

    Report on Other Legal and Regulatory Requirements

    1. As required by the Companies (Auditor’s Report) Order, 2003, (‘‘the Order”), as amended, issued by the Central Government in terms of sub-Section (4A) of section 227 of the Companies Act, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

    2. As required by section 227(3) of the Companies Act, we report that :

    a) We have 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 and proper returns adequate for the purposes of our audit have been received from the branch not visited by us.

    c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the branch not visited by us.

    d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report comply with the Accounting Standards notified under the Companies Act, 1956, read with the General Circular 15/2013 dated September 13, 2013, issued by the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

    e) On the basis of the written representations received from the Directors of the Company as on March 31, 2014 and taken on record by the Board of Directors, none of the directors of the Company is disqualified as on March 31, 2014 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

    For and on behalf of

    Kalyaniwalla & Mistry Chartered Accountants

    Firm Regn. No.: 104607W

    Daraius Z. Fraser Partner

    M. No.: 42454

    Mumbai: May 28, 2014.

    Godrej Industries Limited

    Independent Auditor’s Report

  • 87

    Referred to in paragraph 1 under the heading ‘Report on Other Legal and Regulatory Requirements’ of our report of even date. 1. Fixed Assets: a) The Company has maintained proper records showing full particulars, including quantitative details and situation of

    fixed assets, except in case of certain continuous process plants where item-wise values are not available and in case of furniture, fittings and equipment where the records maintained show quantitative details with their situation and values based on valuation by an approved valuer.

    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 reported on such verification are not material and have been properly dealt with in the books of account.

    c) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption. 2. Inventory: a) The Management has conducted physical verification of inventory at reasonable intervals. In our opinion, the

    frequency of verification is reasonable. b) The procedures of physical verification of inventories followed by the Management are reasonable and adequate

    in relation to the size of the Company and the nature of its business. c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between

    physical inventories and book records 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. Loans and Advances: a)