We have audited the accompanying Standalone Financial
Statements of ZF Steering Gear (India) Limited (the
“Company”), which comprise the Balance Sheet as at 31
March 2025, the Statement of Profit and Loss (including Other
Comprehensive Income), the Statement of Changes in Equity
and the Statement of Cash Flows for the year ended on that date,
and notes to the Standalone Financial Statements, including a
summary of material accounting policies and other explanatory
information (hereinafter referred to as the “Standalone Financial
Statements”).
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid Standalone
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 (Indian Accounting Standards) Rules, 2015, as
amended, (“Ind AS”) and other accounting principles generally
accepted in India, of the state of affairs of the Company as at
31 March 2025, and its 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 Financial Statements
in accordance with the Standards on Auditing (“SA”s) 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 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
Financial Statements under the provisions of the Act and the
Rules made 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
obtained by us is sufficient and appropriate to provide a basis
for our audit opinion on the Standalone Financial Statements.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, 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. We have determined the matters described
below to be the key audit matters to be communicated in our
report.
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Sr.
No.
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Key Audit Matter
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Auditor's Response
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1
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Revenue recognition-
Rebates, Discounts
and Price Variations
The Company
measures revenue net
of any trade discounts
volume rebates and
price variations.
Material estimation
by the Company is
involved in recognition
and measurement of
rebates, discounts and
price variations. This
includes establishing
an accrual at the year
end, particularly in
arrangements with
varying terms which
are based on annual
contracts or shorter-
term arrangements. In
addition, the value and
timing of promotions for
products varies from
period to period, and
the activity can span
beyond the year end.
We identified the
evaluation of accrual
for rebates, discounts
and price variations as
a key audit matter.
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Principal Audit Procedures
• We tested the effectiveness
of controls over design, im¬
plementation and operating
effectiveness of, key manual
and application controls.
They cover control over
computation of discounts
and rebates and rebate and
discount accruals;
• Inspecting on a sample
basis, key customer
contracts. Based on the
terms and conditions relating
to rebates, discounts
and price variations, we
evaluated the Company's
revenue recognition
policies with reference to
the requirements of Indian
Accounting Standard-115
(Revenue from contracts
with customers);
• Substantive testing
performed by selecting
samples of rebates,
discounts and price
variations transactions
recorded during the year and
verifying the computation
with the relevant source
documents;
• Understanding the process
followed by the Company
to determine the amount of
accrual of rebates, discounts
and price variations. Testing
samples of rebate accruals
and comparing to underlying
documentation;
• Critically assessing manual
journal entries posted to
revenue, on a sample basis,
to identify unusual items;
• Checking completeness and
accuracy of the data used by
the Company for accrual of
rebates and discounts.
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Sr.
No.
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Key Audit Matter
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Auditor's Response
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2
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Evaluation of
Investment in equity
investment and loans
given to Subsidiaries
The Company
has made equity
investments of Rs.
12.97 crores and has
advanced loans of
Rs. 90.23 crores to
DriveSys Systems
Private Limited,
NexSteer Systems
Private Limited and
Metacast Auto Private
Limited.
(Subsidiaries of the
Company).
The Company's
evaluation of its equity
investments and
loans given involves
the comparison
of its recoverable
value of each cash¬
generating unit to its
corresponding carrying
value. The Company
used the discounted
cash flow model to
estimate recoverable
value, which requires
management to make
significant estimates
and assumptions
related to forecasts
of future revenues
and discount rates.
DriveSys Systems
Private Limited has
been operational
from March 2024
and Metacast Auto
Private Limited has
been operational
from November 2024,
whereas NexSteer
Systems Private
Limited is currently in
pre operative stage.
We focused on this
area as Key Audit
Matter because of the
Company's assessment
of the 'recoverable
value' of the CGU
(at the entity level)
involves judgements
about the future results
of the business and the
discount rates applied
to future cash flow
forecasts.
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Principal Audit Procedures
With the assistance of our
fair value specialists, we
evaluated the reasonableness
of the
(1) valuation methodology and
(2) discount rate by:
• Testing the source
information underlying
the determination of the
discount rate and the
mathematical accuracy of
the calculation.
• Developing a range of
independent estimates and
comparing those to the
discount rate selected by
management.
• Performed a sensitivity
analysis to determine the
effect of variation in the
cash flow estimates.
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Sr.
No.
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Key Audit Matter
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Auditor's Response
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3
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Litigation with
regard to Trade
Mark disclosed in
note 37 of Financial
Statements
The Company
is in receipt of a
communication which
alleges an infringement
and passing off, of the
trademark/mark “ZF”
and/or “ZF India” and a
claim of Rs.100 Crores
as damages.
In addition to the same,
the Company has filed
2 (two) commercial
suits against ZF
Friedrichshafen AG
and others, before the
Hon'ble District Court,
Pune and the same are
pending for adjudication
before the Hon'ble
District Court, Pune.
In current year, ZF
Friedrichshafen AG
and ZF India Private
Limited have filed a
Commercial IP Suit
along with Interim
Application before the
Hon'ble High Court of
Judicature at Bombay.
Refer Note No. 37 of
Standalone Financial
Statements.
Whether a liability
is to be recognized
or disclosed as a
contingent liability in the
financial statements is
inherently judgemental
and dependent on
assumptions and
assessments. We
placed specific focus
on the judgement
in respect to this
claim against the
Company. Determining
the amount, if any,
to be recognized
or disclosed in the
financial statements, is
inherently subjective.
Therefore, this litigation
amount is considered to
be a key audit matter.
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Principal Audit Procedures
Our procedures included,
but were not limited to, the
following:
• Obtained an understanding
from the management with
respect to process and
controls followed by the
Company for identification
and monitoring of significant
developments in relation
to the litigations, including
completeness thereof.
• Obtained the list of
litigations from the
management and reviewed
their assessment of the
likelihood of outflow of
economic resources being
probable, possible or
remote in respect of the
litigations.
• Assessed management's
discussions held with their
legal consultants and
understanding precedents
in similar cases;
• Obtained and evaluated
the managements
representation from
the company's internal
dedicated team and
consultant opinion wherever
required representing
the Company before
the various authorities.
Assessed and validated
the adequacy and
appropriateness of the
disclosures made by the
management in the financial
statements.
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Information Other than the Standalone Financial Statements
and Auditor's Report Thereon
The Company's Management and Board of Directors are
responsible for the preparation of the other information.
The other information comprises the information included in
Management Discussion and Analysis, Report of the Directors,
Boards Report including Annexure to Boards Reports,
Corporate Governance and Shareholders information, the
Overview of Financial Performance, and Report on Risk
Management (collectively referred as “other information”) but
does not include the Standalone Financial Statements and our
auditor's 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 during the course of our
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 to those charged with governance.
We have nothing to report in this regard.
Management's and Board of Directors' Responsibilities for
the Standalone Financial Statements
The accompanying Standalone Financial Statements have
been approved by the Company's Board of Directors. 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 financial position, financial
performance, including 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, read with the Companies (Indian accounting
standards) Rules 2015, as amended from time to time and
other accounting principles generally accepted in India.
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
judegments 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 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 are 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, specified under
section 143(10) of the Act, we exercise professional judgement
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 financial 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 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 the management and Board
of Directors.
• Conclude on the appropriateness of 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 information/ Standalone Financial Statements of
the Company to express an opinion on the Standalone
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 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
1. As required by Section 143(3) of the Act, based on our
audit 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 on
reporting under Rule 11(g) of the Companies (Audit
and Auditors) Rules, 2014 (as amended).
c) The Balance Sheet, the Statement of Profit and Loss
including Other Comprehensive Income, Statement of
Changes in Equity and the Statement of Cash Flows
of Standalone Financial Statements dealt with by this
Report are in agreement with the relevant 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, 2025 taken on
record by the Board of Directors, none of the directors
is disqualified as on March 31, 2025 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 A”. Our report
expresses an unmodified opinion on the adequacy
and operating effectiveness of the Company's internal
financial controls over financial reporting.
g) With respect to the other matters to be included in the
Auditor's Report in accordance with the requirements
of section 197(16) of the Act, as amended,
In our opinion and to the best of our information and
according to explanations given to us, the remuneration
paid by the company to its directors during the year is
in accordance with the provisions of section 197 read
with Schedule V 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,
as amended 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, 2025 on its financial
position in its Standalone Financial Statements.
Refer Note 31 and 37 in Standalone Financial
Statements.
ii. The Company did not have any long-term contracts
including derivative contracts for which there were
any material foreseeable losses; and
iii. There has been no delay in transferring amounts,
required to be transferred, to the Investor
Education and Protection Fund by the Company.
iv. a. The Management has represented that, to
the best of it's knowledge and belief, 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.
b. The Management has represented, that,
to the best of it's knowledge and belief, 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 Party (“Ultimate
Beneficiaries”) or provide any guarantee,
security or the like on behalf of the Ultimate
Beneficiaries.
c. Based on such audit procedures performed
as considered reasonable and appropriate
in the circumstances, nothing has come to
our attention that causes us to believe that
the management representations under sub¬
clauses (a) and (b) above contain any material
misstatement.
v. The final dividend paid by the Company during
the year, in respect of the same declared for the
previous year, is in accordance with section 123
of the Act to the extent it applies to payment of
dividend.
vi. The reporting under Rule 11(g) of the Companies
(Audit and Auditors) Rules, 2014 is applicable from
1 April 2023, based on the our examination which
is conducted on test check basis and information
and explanation provided by the management of
the company, the Company has used accounting
software (SAP HANA) for maintaining its books of
account, which have a feature of recording audit
trail (edit log) facility and the same has operated
throughout the year for all relevant transactions
recorded in the software. Furthermore, the audit
trail has been preserved by the Company as per
the statutory requirements for record retention.
2. 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 'B', a statement on the matters specified in
paragraphs 3 and 4 of the Order, to the extent applicable.
For Joshi Apte & Co.,
Chartered Accountants
(ICAI Firm registration number: 104370W)
Per Kaustubh Deshpande
Partner
Membership No.: 131090
UDIN: 25131090BMHWWL4876
Pune, May 17, 2025
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