Sona BLW Precision Forgings Limited
Report on the Audit of the Standalone Financial Statements
OPINION
1. We have audited the accompanying standalone financial statements of Sona BLW Precision Forgings Limited (‘the Company’), which comprise the Standalone Balance Sheet as at March 31, 2026, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Cash Flow and the Standalone Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information.
2. 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 (‘Ind AS’) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
BASIS FOR OPINION
3. We conducted our audit in accordance with the Standards on Auditing 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 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.
KEY AUDIT MATTERS
4. 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.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Key audit matters
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How our audit addressed the key audit matters
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Impairment of goodwill
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Our audit procedures included, but were not limited to the following:
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As detailed in Note 46 to the standalone financial statements, the
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a)
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Obtained an understanding from the management with respect
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Company carries goodwill amounting to INR 3,628.00 million in its
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to its impairment assessment process, assumptions used and
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standalone balance sheet as at March 31,2026.
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estimates made by the management;
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The goodwill (related to Comstar) was recorded pursuant to scheme
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b)
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Evaluated the design and tested the operating effectiveness of
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of amalgamation being approved by the Hon'ble National Company
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controls related to aforementioned process of impairment testing;
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Law Tribunal vide its order dated January 7, 2022 post which the
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c)
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Obtained the impairment analysis carried out by the management
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Company and its wholly owned subsidiary Comstar Automotive
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and tested its mathematical accuracy. Understood and evaluated
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Technologies Private Limited were merged.
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the basis of identification of CGUs to which goodwill is allocated
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The goodwill (related to Railway Division) was recorded pursuant to
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for impairment assessment;
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business transfer agreement dated February 10, 2025, effective from
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d)
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Traced the cash flows considered in future projections to approved
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June 01, 2025, being the date on which substantive conditions for
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business plans and compared past projections with actual results
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consummation of the transaction were met.
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to evaluate efficacy of the business projections process;
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In terms with Indian Accounting Standard 36, Impairment of Assets,
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e)
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Evaluated the inputs and assumptions used by the management
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goodwill is tested for impairment annually by the management at
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in future projections with respect to revenue and cost growth
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the CGU level, whereby the carrying amount of the CGU (including
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trends for reasonableness thereof, basis our understanding of the
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goodwill) is compared with the recoverable amount of the CGU.
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business and market trends;
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Impairment assessment requires significant estimations and judgement with respect to inputs used and assumptions made to prepare the forecasted financial information, used to determine the recoverable amount, using discounted cash flow model (‘Model’).
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f)
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Assessed the professional competence and objectivity of the expert used by the management for to estimate the recoverable value of the CGUs;
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g)
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Engaged auditor’s valuation experts to assess appropriateness of
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Key assumptions used in management’s assessment of the carrying
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the valuation methodology applied and the reasonableness of the
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amount of goodwill and indefinite life intangible assets includes the
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assumptions used including discount rate and long-term growth
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expected growth rates, estimates of future financial performance,
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rates, basis comparison to economic and industry forecasts
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market conditions and discount rates, amongst others.
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where appropriate;
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The management has concluded that the recoverable amount of the CGU is higher than its carrying amount and accordingly, no impairment provision has been recorded as at March 31, 2026.
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h)
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Performed sensitivity analysis on these key assumptions to assess the degree of estimation uncertainty involved in the estimates and Assessed the adequacy and appropriateness of the disclosures
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i)
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Considering the materiality of the amount involved and significant degree of judgement and subjectivity involved in the estimates and assumptions used in determining the cash flows used in the impairment evaluation, we have determined impairment of such intangibles as a key audit matter for the current year audit.
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made by the management in the standalone financial statements in accordance with the accounting standards.
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Key audit matters
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How our audit addressed the key audit matters
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Impairment assessment of investment in a subsidiary company
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Our audit procedures included, but were not limited to, the following:
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As described in Note 46 to the standalone financial statements, the
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a)
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Obtained an understanding from the management with respect to
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Company owns 54% equity share capital in one of its subsidiaries,
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its impairment assessment process, including around identification
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Novelic d.o.o. Beograd (‘the Subsidiary’). As at year end, the
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of impairment indicators and the assumptions and estimates used
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Subsidiary’s net worth is lower than the carrying value of the
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made by the management in detailed impairment assessment
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investment, and such condition has been identified as an impairment
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workings.
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indicator under Ind AS 36, Impairment of Assets (‘Ind AS 36’) and
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b)
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Evaluated the design and tested the operating effectiveness
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accordingly, the management has performed a detailed impairment
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of controls related to aforementioned impairment assessment
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assessment in accordance with the requirements of Ind AS 36.
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process.
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The management has determined the recoverable value of the investment through fair valuation using discounted cash flow method, which requires the management to make significant estimates and judgements with respect to appropriate discount rate and cash flow projections based on underlying business plans of the subsidiary company, expected growth rates in the business and other market related factors.
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c)
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Obtained the impairment analysis carried out by the management for the Subsidiary investment and tested its mathematical accuracy.
Traced the cash flows considered in future projections to approved business plans of the investee company and compared past projections with actual results to evaluate efficacy of the business projections process;
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d)
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The management has concluded that the recoverable amount of the
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investment is higher than its carrying amount and accordingly, no impairment provision has been recorded as at March 31,2026.
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e)
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Evaluated the inputs and assumptions used by the management in future projections with respect to revenue and cost growth trends for reasonableness thereof, basis our understanding of the
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Considering the materiality of the amounts involved and significant degree of judgement and subjectivity involved in the estimates and
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f)
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business and market trends;
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key assumptions used in determining the recoverable value, we have
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Assessed the professional competence and objectivity of the
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determined impairment of such investment as a key audit matter for
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external valuation expert engaged by the management for
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current year audit.
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performing the required valuations to estimate the recoverable value of the investment;
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g)
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Engaged auditor’s valuation experts to assess appropriateness of the valuation methodology applied and the reasonableness of the assumptions used including discount rate and long-term growth rates, basis comparison to economic and industry forecasts where appropriate;
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h)
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Performed sensitivity analysis on these key assumptions to assess the degree of estimation uncertainty involved in the estimates;
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i)
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Assessed the adequacy and appropriateness of the disclosures made by the management in the standalone financial statements in accordance with the accounting standards.
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Business combination
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Our audit procedures included, but was not limited to the following
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As set out in note 49 to the standalone financial statements, the
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procedures:
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Company has acquired the Railway Division of Escorts Kubota Limited,
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a)
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Obtained and understood the terms of the arrangement underlying
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as a going concern on a slump sale basis for a total consideration of
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the business acquisition made by the Company during the year to
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INR 16,426.32 million (including licenses worth INR 8,550 million)
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confirm the determination of control and the acquisition date in
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pursuant to the Business Transfer Agreement dated February 10, 2025.
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accordance with Ind AS 103;
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The business combination has been given effect from June 1, 2025,
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b)
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Evaluated the design and tested the operating effectiveness
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being the date on which substantive conditions for consummation
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of the Company’s controls over the accounting of business
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of the transaction were met determined as the acquisition date in
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combination, which includes valuation of identified assets and
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accordance with Ind AS 103, Business Combinations (‘Ind AS 103’).
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liabilities acquired under the business combination;
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The said business combination has resulted in recognition of goodwill and licenses, apart from other identifiable assets acquired and liabilities assumed. The Company has performed a purchase
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c)
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Assessed appropriateness of the accounting policy adopted by the management in terms of the requirements of Ind AS 103;
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price allocation by allocating the purchase consideration paid to the
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d)
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Assessed the competence and objectivity of the management’s
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respective fair values of the assets acquired and liabilities assumed
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expert and gained an understanding of the work done by the
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as above.
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management’s valuation expert.
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The identification and valuation of acquired assets and assumed
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e)
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Obtained report of the management’s external valuation specialist
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liabilities including intangible assets involved significant management
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for the valuations performed of acquired assets and assumed
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judgement in terms of making estimates and assumptions including
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liabilities for the purpose of purchase price allocation, and tested
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the discount rate and growth rate assumptions which have high
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the mathematical accuracy of underlying workings.
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inherent estimation uncertainty.
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f)
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1 nvolved our auditor’s valuation experts to assist us in validating
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Considering the materiality of the amount involved and significant
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the valuation assumptions and methodology considered by the
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degree of judgement and subjectivity involved as described above, we have determined the accounting for business combination as a
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management’s expert to allocate the purchase price to identifiable assets and liabilities;
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key audit matter for the current year audit.
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g)
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Assessed the reasonableness of the management estimates and judgements used to fair value the identifiable assets and liabilities and identifiable intangible assets acquired;
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h)
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Evaluated the appropriateness and adequacy of disclosures given in the consolidated financial statements, including disclosure of significant assumptions and judgements, in accordance with applicable accounting standards.
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presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the standalone financial statements, the Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. 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
10. 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 Standards on Auditing 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.
11. As part of an audit in accordance with Standards on Auditing, specified under Section 143(10) of the Act 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
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON
6. The Company’s Board of Directors are 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 will 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 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.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE FINANCIAL STATEMENTS
7. The accompanying standalone financial statements have been approved by the Company’s Board of Directors. The Company’s Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation and presentation 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 Ind AS specified under Section 133 of the Act 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 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, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and
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 Board of Directors’ 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 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; and
• 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.
12. 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.
13. 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.
14. 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
15. As required by Section 197(16) of the Act, based on our audit, we report that the Company has paid and provided for remuneration to its directors during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act.
16. 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 I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
17. Further to our comments in Annexure I, 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 purpose of our audit of the accompanying standalone financial statements;
b) Except for the matters stated in paragraph 17(h) (vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended), 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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2026 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 17(b) above on reporting under Section 143(3)(b) of the Act and paragraph
17(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on March 31, 2026 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we have expressed an unmodified opinion; and
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, as detailed in note 39 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at March 31,2026.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at March 31,2026;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31,2026;
iv. a The management has represented that,
to the best of its knowledge and belief, as disclosed in note 50 to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (‘the 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 (‘the Ultimate
Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 50 to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (‘the 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 as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.
v. The interim dividend declared and paid by the Company during the year ended March 31, 2026 and until the date of this audit report is in compliance with Section 123 of the Act. The final dividend paid by the Company during the year ended March 31,2026 in respect of such dividend declared for the previous year is in accordance with Section 123 of the Act to the extent it applies to payment of dividend. As stated in note 34 to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended March 31, 2026 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with Section 123 of the Act to the extent it applies to declaration of dividend.
vi. Based on our examination which included test checks, the Company, in respect of financial year commencing on April 01, 2025, has used accounting software for maintaining its books of account which have a feature of recording audit trail (edit log) facility and the same have been operated throughout the year for all relevant transactions recorded in the software except that audit trail feature was not enabled throughout the year at data base level for accounting software to log any direct data changes. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of the accounting software being
where such feature is enabled. Furthermore, the audit trail has been preserved by the Company as per the statutory requirements for record retention.
For Walker Chandiok & Co LLP
Chartered Accountants
Firm’s Registration No.: 001076N/N500013
Nalin Jain
Partner
Membership No.: 503498
UDIN: 26503498XTMQFS4739
Place: New Delhi
Date: April 30, 2026
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