RANE (MADRAS) LIMITED
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of Rane (Madras) 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 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 ("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 we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
Key Audit Matter(s)
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.
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Revenue recognition
See Note 23 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 recognition involves identification of contracts with customers, identification of distinct performance obligations, determination of transaction price and the basis used to recognise revenue at a point in time.
Revenue is recognised when (or as) a performance obligation is satisfied i.e. when 'control' of the goods underlying the particular performance obligation is transferred to the customer.
Revenue recognition has been identified as a key audit matter because the Company and its external stakeholders focus on revenue as a key performance metric. Therefore, there may be a possibility for revenue to be overstated or recognised before control has been transferred.
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In view of the significance of the matter, the following key
audit procedures were performed by us:
• Assessed the compliance of the Company's revenue recognition accounting policies with applicable accounting standards.
• Evaluated the design and implementation of the key internal financial controls with respect to the timing of revenue recognition and tested the operating effectiveness of such controls on a sample basis.
• Performed substantive testing of revenue transactions recorded during the year on a sample basis by verifying the underlying documents including shipping document, customer acknowledgement, dispatch notes, etc.
• Performed testing for samples of revenue transactions recorded closer to the year-end by verifying underlying documents, to determine the accuracy of the period in which revenue was recognized.
• Performed testing of non-standard journal entries posted in revenue.
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Recognition and recoverability of deferred tax assets See Note 21 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 recorded deferred tax assets of INR
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In
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view of the significance of the matter, the following key
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113.34 crores relating to tax losses consequent to reduction/
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audit procedures were performed by us:
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write down of investments in the context of the sale of the stake in the underlying step-down subsidiary.
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•
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Assessed the compliance of the Company's accounting policies with applicable accounting standards.
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The recognition and recoverability of these deferred tax assets involves:
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•
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Evaluated the design and implementation of the key internal financial controls with respect to the
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• assessment of the underlying tax laws;
• dependency on the generation of sufficient future
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measurement and recognition of deferred tax assets and tested the operating effectiveness of such controls.
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taxable income that can be set off against the losses
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recognized
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•
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I nvolved our tax specialists to assist us in evaluating
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and hence, involves significant judgement. These judgements could change over time as the matter
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the appropriateness of the nature of the tax losses that can be set off against the future profits.
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progresses depending on experience on actual assessment
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•
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Evaluated the appropriateness of the key assumptions
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proceedings by tax authorities and other judicial precedents.
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used in the projections considered for estimating
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The Company has obtained legal advice on the matter.
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future taxable profits.
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Recognition and recoverability of deferred tax assets has
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•
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Performed sensitivity analysis on the key assumptions
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been identified as a key audit matter due to the high degree
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used in the evaluation.
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of judgment required and significance of the amounts involved.
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•
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Assessed the adequacy of the disclosures in the standalone financial statements.
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Other Information
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 is also 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, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• I dentify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures
The Company's Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's directors' report, but does not include the financial statements and auditor's report(s) 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 in the 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. We have nothing to report in this regard.
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. This responsibility also includes 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,
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.
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 Other Legal and Report on Other Legal and Regulatory Requirements 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, 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 except for the matters stated in the paragraph 2(B)(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
c. 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.
d. I n 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 2 April 2024 and 10 April 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.
f. the qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 2(A)(b) above on reporting under Section 143(3)(b) and paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
g. 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:
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 40 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. The following are the instances of delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
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Amount outstanding
Date of declaration
in unclaimed dividend
of dividend
account
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Due date for transfer to Actual date of transfer
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Year
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Investor to Investor Education
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Education Protection Fund Protection Fund
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2017
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23 January 2017 INR 95,564
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1 March 2024 2 May 2024
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d
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(i)
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The management has represented that, to the
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maintaining its books of account which have a
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best of its knowledge and belief, as disclosed
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feature of recording audit trail (edit log) facility
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in the Note 38 to the standalone financial
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and the same has been operating throughout the
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statements, no funds have been advanced
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year for all relevant transactions recorded in the
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or loaned or invested (either from borrowed
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respective softwares:
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funds or share premium or any other sources
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• the feature of audit trail was not enabled at
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or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the
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the database layer of the accounting software for the entire period.
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understanding, whether recorded in writing
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• the feature of audit trail was enabled at the
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or otherwise, that the Intermediary shall
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application layer for the accounting softwares
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directly or indirectly lend or invest in other
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used for maintaining books of accounts
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persons or entities identified in any manner
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except for certain fields relating to payroll,
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whatsoever by or on behalf of the Company
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inventory, production records and price
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("Ultimate Beneficiaries") or provide any
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change system relating to sales / purchases.
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guarantee, security or the like on behalf of the Ultimate Beneficiaries.
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• The feature of audit trail was not enabled
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at the application layer of the accounting
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(ii)
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The management has represented that,
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software for direct data changes performed
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to the best of its knowledge and belief, as
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by users having privileged access.
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disclosed in the Note 38 to the standalone financial statements, no funds have been
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Further, for the periods where audit trail (edit log) facility
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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
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was enabled 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:
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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.
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In our opinion and according to the information and explanations given to us, the remuneration paid 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 to any director is not in excess of the limit laid down under Section 197 of the
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(iii)
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Based on the audit procedures performed
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Act. The Ministry of Corporate Affairs has not prescribed
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that have been considered reasonable and
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other details under Section 197(16) of the Act which are
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appropriate in the circumstances, nothing has come to our notice that has caused us to
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required to be commented upon by us
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believe that the representations under subclause (i) and (ii) of Rule 11(e), as provided
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For B S R & Co. LLP
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under (i) and (ii) above, contain any material
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Chartered Accountants
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misstatement.
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Firm's Registration No.:101248W/W-100022
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e.
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The Company has neither declared nor paid any dividend during the year.
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S Sethuraman
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f.
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Based on our examination which included test
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Partner
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checks, except for the instances mentioned below,
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Place: Chennai Membership No.: 203491
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the Company has used accounting softwares for
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Date: May 09 2024 ICAI UDIN:24203491BKCQPD2659
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