Repro India Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Repro India Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2024, and the Statement of Profit and Loss, including Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including material accounting policy information 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 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 March 31, 2024, and profit, other 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 (SAs) 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 obtained by us is sufficient and appropriate to provide a basis for our opinion.
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 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. 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 Matter
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How the Key Audit Matter was addressed in our audit
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A. Impairment of property, plant & equipment, valuation of inventories, and adequacy of provision for employee dues in the matter of labor strike and closure of at Mahape plant of the Company. (Refer note 42 to the financial statement).
The workers at Mahape plant ('the plant') of the Company have been on strike since April 8, 2017. Further, The Company has declared the factory as closed consequent upon the order from Hon'ble High Court of Bombay effect from May 6, 2020.
We have identified the following as Key Audit Matters in connection with the Mahape plant:
• The carrying value of moveable assets situated at the plant aggregates to Rs. 409 lakhs which is not in use since the commencement of the strike.
At the end of each reporting period, the Company assesses the recoverable value of the property, plant and equipment to determine the indications of impairment of those assets which is subject to significant judgement and estimation uncertainty considering the value of these assets and the fact that they have not been in use for the past seven years. The amounts involve significant impact on financial statements.
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Our audit procedures in respect
of these matters included but not
limited to following:
• Understood the Company policies and processes and evaluated design implementation and operating effectiveness of controls relating to impairment provision of property, plant and equipment, valuation of inventories and provision for employee dues arising on account of the strike/ closure of the plant.
• Assessing the valuation methodology, evaluating, and challenging the reasonableness of the assumptions used by independent valuer engaged by the Company in impairment assessment of property, plant and equipment, with the assistance of an internal expert.
• Obtained the physical verification report from the management and verified the same with the books of accounts.
• Examined valuation of inventory at the lower of cost and net realizable value, as conducted by the Company.
• Verified net realizable value in compliance with requirements of Ind AS 2.
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Key Audit Matter
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How the Key Audit Matter was addressed in our audit
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• The Company also has inventories aggregating to
' 590 lakhs at the plant which have not been consumed since April 8, 2017, due to Labour strike. Inventories are valued at the lower of the cost and net realizable value. However, since there have been no consumptions of these inventory items during this considerate time period, there is estimation uncertainty in arriving at the Net Realizable Value for these assets, which would have a significant impact on financial statements.
• As the employees are on strike, the Company has made the necessary provision in the books on account of the statutory dues payable to them towards the settlement of claims raised by employees, which is further based on reasonable estimates made by management that are subject to key assumptions.
The Company applies significant judgement and estimation in the impairment testing of property, plant and equipment, valuation of inventories and in making provision for employee dues towards settlement of their claims.
In view of the above, these matters have been identified as Key Audit Matters.
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• With respect to the adequacy of provision on account of employee dues resulting from the strike:
a) Verified the legal opinion obtained by the Company from their external legal advisors with respect to the potential employee dues resulting on account of claims raised by the striking employees.
b) Examined and inquired with management about prior and current year correspondence related to strike with authorities involved and labor union.
c) Verified worker dues in line with the applicable laws and regulations and assessed adequacy and reasonableness of provision in the light of payments made in settlement of statutory dues till date; and
d) Performed inquiries with management on any developments in matter post year end and the Company's assessment of possible outcome of this matter and the resultant impact thereof on the existing provisions.
• Assessed the completeness & adequacy of disclosures in the financial statements relating to the above matters in accordance with applicable Ind AS requirements.
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Key Audit Matter
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How the Key Audit Matter was addressed in our audit
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B. Significant judgement and estimates are involved with respect to the following matters of Intangible assets and Intangible assets under development (Refer note 4b to the financial statements).
• In the year ended March 31, 2024, the Company has incurred capital expenditure on Technology project amounting to ' 1,341 lakhs (March 31, 2023 - ' 1,125 lakhs) out of which ' Nil lakhs have been capitalised under Intangible Assets (March 31,2023 - ' 344 lakhs) and balance of
' 2,122 lakhs (March 31, 2023 -' 781 lakhs) represents Intangible Assets under development as on March 31, 2024. This is on account of development of technology which would generate future economic benefits to the Company and enable the Company to meet the ever-growing demand of the customers and help to generate revenue to the Company.
• At the times of recognition of Intangible asset, significant management judgement is required to determine whether the said expenditure meets the recognition criteria for capitalisation as Intangible asset or internally generated intangible assets under development in accordance with Ind AS.
Due to the materiality of the assets recognized and the level of management judgement involved being significant, initial recognition and measurement of intangible and internally generated intangible assets is a key audit matter.
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Our audit procedures included and were not limited to the following: -
• Understood the Company policies and processes and evaluated
the design, implementation and operating effectiveness of the controls with respect to assessment criteria for recognition and measurement of the expenditure incurred on the technology project, in Intangible assets, and whether to be capitalised as Intangible assets under development.
• Assessed the nature of the capitalisation and development cost made to Intangible assets and Intangible assets under development and performed verification of underlying records and information of capital and development cost on sample basis to test whether they meet the recognition and measurement criteria as set out in Ind AS
38- Intangible Assets, including evaluation of reasonableness of estimation of future economic benefits and intended use of the Intangible assets and Intangible assets under development.
• Computed the mathematical accuracy of the amortization charge and reasonableness of useful life of Intangible asset.
Evaluated the adequacy of disclosures made by the Company in the financial statements in view of the requirements as specified in the Indian Accounting Standards.
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Information Other than the Standalone 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 Director's report
but does not include the standalone financial statements and our auditor's report thereon. The Director's 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 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 Director's report if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance under SA 720 'The Auditor's responsibilities Relating
to Other Information'.
Responsibilities of Management and Those Charged with Governance 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, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards 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, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statement 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 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.
We give in "Annexure A" a detailed description of Auditor's responsibilities for
Audit of the Standalone Financial Statements.
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 "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. 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.
(c) The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, the Statement of Changes in Equity and the
Statement of Cash Flow 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.
(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 are disqualified as on March 31, 2024 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 with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure C”.
(g) 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:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer note 41 to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the
Company.
iv. 1) The Management has represented that, to the best of
its 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.
2) The Management has represented, that, to the best of its 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, as on the date of this audit report, 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.
3) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided to us by the Management in this regard nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) as provided under (1) and (2) above, contain any material mis-statement.
v. The Company has neither declared nor paid any dividend during the year.
vi. Based on our examination, the Company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility. The audit trail feature has been operated throughout the year for all transactions recorded in the accounting software. Further, during the course of our audit, we did not come across any instance of the audit trail feature being tampered with.
3. In our opinion, according to information, explanations given to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 read with Schedule V of the Act and the rules
thereunder.
For M S K A & Associates
Chartered Accountants ICAI Firm Registration No. 105047W
Amrish Vaidya
Partner
Membership No. 101739
UDIN: 24101739BKEZRQ7336
Place: Mumbai
Date : May 10, 2024
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