Prism Johnson Limited
Report on the Audit of the Standalone Financial Statements
OPINION
We have audited the accompanying standalone financial statements of Prism Johnson Limited (“the Company”), which comprise the Balance sheet as at March 31, 2024, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of 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, as amended (“the 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 March 31, 2024, its profit including other comprehensive income, its cash flows and the changes in equity 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 (SAs), as 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 together with the ethical requirements that are relevant to our audit of the 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 audit 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 for the financial year ended March 31, 2024. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
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Key audit matters
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How our audit procedures addressed the key audit matter
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Revenue recognition (as described in note 1.15 of the standalone financial statements)
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Revenue from the sale of goods (hereinafter referred to as “Revenue”) is recognised when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such revenue recognition in case of sale of goods is when the control over the same is transferred to the customer.
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Our audit procedures included the following:
• Assessed the Company’s accounting policies relating revenue, discounts, incentives and rebates by comparing with applicable accounting standards.
• Evaluated the design, implementation and tested the operating effectiveness of Company’s controls in respect of revenue recognition, revenue cut off and accrual of discounts, incentives and rebates.
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Key audit matters
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How our audit procedures addressed the key audit matter
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The timing of revenue recognition is relevant to the reported
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On a sample basis, tested supporting documentation
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performance of the Company. The management considers
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for sales transactions recorded during the year which
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revenue as a key measure for evaluation of performance. There
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included sales invoices, customer contracts and shipping
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is a risk of revenue being recorded before control is transferred
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documents, etc.
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and hence considered as a key audit matter.
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Performed, on a sample basis, substantive testing in respect
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Further, revenue is measured net of discounts, incentives,
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of sales transactions recorded during the period closer to
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rebates etc. given to the customers on the Company’s sales. The
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the year end and subsequent to the year end.
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Company’s presence across different marketing regions within
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Compared revenue with historical trends and where
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the country makes the assessment of various types of discounts,
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appropriate, conducted further enquiries and testing.
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incentives and rebates complex.
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Assessed completeness and verified, on a sample basis,
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Therefore, there is a risk of revenue being misstated as a result
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the underlying documentation for discounts, incentives and
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of variations in the assessment of discounts, incentives and
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rebates recorded and disbursed during the year.
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rebates.
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Compared the historical trend of payments and reversal
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Given the complexity and judgement required to assess the
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of discounts, incentives and rebates to provisions made to
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provision for discounts, incentives and rebates, this is a key audit
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assess the current year accruals.
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matter.
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Examined the manualjournals posted to revenue, discounts, rebates and incentives to identify unusual or irregular items.
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Assessed disclosures in financial statements in respect of revenue, as specified in Ind AS 115.
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Litigations and claims (as described in note 4.05(a) of the standalone financial statements)
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The Company has ongoing litigations relating to direct tax,
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Our audit procedures included the following:
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indirect tax and other legal matters with various authorities which could have a significant impact on the results, if the potential
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Obtained and read the Company’s accounting policies in respect of claims, provisions and contingent liabilities to
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exposures were to materialise.
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assess compliance with accounting standards.
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The amounts involved are significant, and the application of
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Assessed the design and implementation of the
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accounting standards to determine the amount, if any, to be
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Company’s controls over the assessment of litigations and
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provided as a liability or disclosed as a contingent liability, is
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completeness of disclosures. Supporting documentation
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inherently subjective.
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were tested for the positions taken by the management,
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Claims against the Company not acknowledged as debts are disclosed in the financial statements by the Company after a careful evaluation of the facts and legal aspects of the matters
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meetings conducted with Company’s in-house legal team, tax team and minutes of Board were reviewed, to test the operating effectiveness of these controls.
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involved. The outcome of such litigation is uncertain and the
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Involved our tax specialists to assess relevant historical and
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position taken by management involves significant judgment
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recent judgements passed by the appropriate authorities
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and estimation to determine the likelihood and/or timing of cash
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in order to challenge the basis used for the accounting
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outflows and the interpretation of preliminary and pending court
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treatment and resulting disclosures.
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rulings.
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Read the legal opinions of external legal advisors, wherever applicable, for significant matters. Also, assessed the objectivity and competence of external legal experts/law firms as referred herein.
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Obtained direct legal confirmations for significant matters from external law firms handling such matters to corroborate management conclusions.
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Assessed in accordance with accounting standards, the provisions in respect of litigations and assessed disclosures relating thereto, including those for contingencies.
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Key audit matters
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How our audit procedures addressed the key audit matter
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Impairment of investment in Raheja QBE General Insurance Company Limited, a subsidiary company (as described in note 2.03 of the standalone financial statements)
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The Company has a carrying value of investment in Raheja QBE General Insurance Company Limited, a subsidiary company of Rs. 295.89 crores as at March 31, 2024.
Considering the continued losses recorded over the years by the aforesaid subsidiary company, the management has identified that indicators exist that requires the management to test the carrying value of such investment for possible impairment.
We identified impairment assessment of investment in the said subsidiary as a key audit matter because carrying value of the investment is significant, assessment process is complex, judgemental by nature and considering the subjectivity involved in key assumptions viz., projected future cash inflows, expected growth rate, discount rate and terminal growth rate.
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Our audit procedures included the following:
• Evaluated the key judgements / assumptions underlying management’s assessment of potential indicators of impairment.
• Obtained the projections and evaluated management’s methodology, assumptions and estimates used in these calculations.
• Performed sensitivity analysis around impact of future cash flows due to changes in key assumptions considered by management.
• Verified the arithmetical accuracy of the future cash flow model including comparison with approved budgets.
• Involved our valuation specialist to review the appropriateness of methodology and key assumptions considered by management to determine discounted future cash flows.
• Ensured appropriate disclosures in the financial statements.
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INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON
The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone financial statements and our 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 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 identified above when it becomes available and, in doing so, consider whether such other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
RESPONSIBILITIES OF MANAGEMENT FOR THE STANDALONE FINANCIAL STATEMENTS
The Company’s Board of Directors is 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, 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) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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, management is 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 management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are 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:
• 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 management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting 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 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 for the financial year ended March 31, 2024 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
The financial statements of the Company for the year ended March 31, 2023, included in these standalone financial statements, have been audited by the predecessor auditor who expressed an unmodified opinion on those statements on May 10, 2023.
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 sub-section (11) of section 143 of the Act,
we give in the “Annexure 1” a statement on the matters
specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, 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 except for matters stated in paragraph (i)(vi) below on reporting under Rule 11(g);
(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and 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 financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph (i)(vi) below on reporting under Rule 11(g).
(g) With respect to the adequacy of the internal financial controls with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;
(h) In our opinion, the managerial remuneration for the year ended March 31, 2024 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(i) 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 on its financial position in its standalone financial statements - Refer note 4.05(a) to the standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer note 4.05(c) to the standalone 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. a) The management has represented that,
to the best of its knowledge and belief, other than as disclosed in the note 4.26(iii)
(a) 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, whether, 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 its knowledge and belief, other than as disclosed in the note 4.26(iii)
(b) 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, whether, 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; and
c) Based on such 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 (a) and (b) contain any material misstatement.
v. No dividend has been declared or paid during the year by the Company.
vi. Based on our examination which included test checks, the Company has used accounting software 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 software except that, audit trail feature is not enabled for direct changes to data when using certain access rights, as described in note 4.29 to the financial statements. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of other accounting software.
For S R B C & CO LLP
Chartered Accountants ICAI Firm Registration Number: 324982E/E300003
per Firoz Pradhan
Partner
Membership Number: 109360 UDIN: 24109360BKFMCI4348
Place of Signature: Mumbai Date: May 16, 2024
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