Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying Standalone Financial Statements of Akzo Nobel India Limited (“the Company”), which comprise the Balance Sheet as at 31 March 2023, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the Standalone Financial Statements, including a summary of significant accounting policies 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 accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2023, and total comprehensive income (comprising profit and other comprehensive income), changes in equity and its cash flows for the year then ended.
Basis for Opinion
3. We conducted our audit 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 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.
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How our audit
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Key audit matter
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addressed the key audit matter
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A. Revenue recognition
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Our audit procedures
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including variable
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included the following:
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consideration
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•
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We assessed the
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[Refer to Notes 1(o)
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design and tested the
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(Significant accounting
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operating effectiveness
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policies) and 18 (Revenue
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of internal controls
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from operations) to the
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related to recognition
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Standalone Financial
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of revenue including
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Statements]
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variable consideration.
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The Company recognises
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•
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We tested sales
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revenue when control of
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transactions on
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the goods is transferred
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a sample basis,
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to the customer at an
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by comparing the
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amount that reflects the
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underlying sales
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net consideration, which
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invoices, sales
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the Company expects
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orders and dispatch
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to receive for those
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documents to assess
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goods from customers.
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whether revenue
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The sales arrangements
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was recognised
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are voluminous and in
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appropriately.
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determining the sales price, the Company
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•
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We assessed
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considers the effects of
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the underlying
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variable consideration,
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assumptions and
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which requires estimation,
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estimates used for
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leading to complexities
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determination of
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and application of
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variable consideration.
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significant effort and
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•
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We tested rebates
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judgment.
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and discount provided to the customers on a sample basis, comparing the same with underlying approvals and terms of the contracts and schemes offered to customers.
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•
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We assessed the adequacy of the disclosures made in the Standalone Financial Statements in respect of revenue recognition.
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How our audit
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Key audit matter
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addressed the key audit matter
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Considering these
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Based on the above
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significant judgements,
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procedures, we did not
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estimates and the risk
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identify any significant
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associated with revenue
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deviation to the
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recognition, the matter
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assessment made by the
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has been determined to
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management in respect
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be a key audit matter.
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of revenue recognition including variable consideration.
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B. Assessment of ongoing
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Our procedures included
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income tax and indirect
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the following:
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tax litigations
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• Obtained an
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[Refer to Notes 1(l)
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understanding of
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and 1(m) (Significant
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the process and
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accounting policies),
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controls designed
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Note 27(b) (Contingent
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and implemented
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liabilities), Note 6.2 [Non-
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by the management
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current tax assets (net)],
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and tested the
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Note 13 (Provisions) to
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design and operating
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the Standalone Financial
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effectiveness of
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Statements].
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relevant controls;
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As at 31 March 2023, the
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• Obtained an
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Company is subjected to
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understanding of
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a number of significant
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the tax litigations
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income tax litigations
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through enquiry with
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relating to disallowance
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the management,
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of expenses, transfer
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including the
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pricing adjustments etc.
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significant
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and indirect tax litigations
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developments,
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relating to taxable
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additions and
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turnover, availability of
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settlements during the
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statutory forms etc.
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year and subsequent
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(together referred to as
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to the year-end;
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“tax litigations”). These matters are in appeal before various judicial forums.
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• Inspected demand notices received from the tax authorities and evaluated the
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The eventual outcome of
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Company's response
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tax litigations is uncertain
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to those matters;
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and the positions taken by the management are based on the application of significant judgement and estimation. The assessment of the tax matters requires application and interpretation of tax laws and reference to applicable judicial pronouncements.
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• Obtained independent confirmations from the Company's external tax experts including the status of the significant tax litigations, their views regarding the likely outcome and magnitude of the potential exposure;
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Key audit matter
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How our audit addressed the key audit matter
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Based on management
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• Involved specialists
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judgement and advice
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to evaluate the
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from external legal and tax
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management's
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consultants and considering
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assessment on the
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the merits of the case, the
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likely outcome and
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Company has recognised
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potential magnitude
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provisions wherever required
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on complex or
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and for the balance matters,
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significant tax matters
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where the management
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as considered
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expects favourable outcome, the tax litigations have been
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necessary; and
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disclosed as contingent
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• Assessing the
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liabilities in the Standalone
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adequacy of
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Financial Statements unless
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the Company's
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the possibility of outflow of
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disclosures in respect
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resources is considered to be remote.
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of litigations.
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We did not identify any
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We identified this matter as
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significant exceptions
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a key audit matter as the
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to the management's
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ultimate outcome of matters
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assessment of the
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is uncertain and the positions
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ongoing tax litigations
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taken by the management are
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as a result of the above
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based on the application of significant judgement, related legal advice including those relating to interpretation of laws and regulations.
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procedures.
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Other Information
5. 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.
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.
Responsibilities of Management and Those Charged With Governance for the Standalone Financial Statements
6. 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 Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
7. 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
8. 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.
9. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism 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 Standalone 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 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 Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
10. 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.
11. 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.
12. 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
13. 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 B” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
14. 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 that the backup of the books of account and other books and papers maintained in electronic mode has not been maintained on a daily basis on servers physically located in India.
(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 Flows 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 31 March 2023, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2023, from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the maintenance of accounts and other matters connected therewith, reference is made to our comments in paragraph 14(b) above that the back-up of the books of account and other books and papers maintained in electronic mode has not been maintained on a daily basis on servers physically located in India.
(g) 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 A”.
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Note 27 to the Standalone Financial Statements;
ii. The Company was not required to recognise a provision as at 31 March 2023 under the applicable law or accounting standards, as it does not have any material foreseeable losses on long-term contract. The Company did not have any longterm derivative contracts as at 31 March 2023.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year.
iv. (a) The management has represented that, to the
best of its knowledge and belief, as disclosed in the notes 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 [“Intermediary(ies)”], with the understanding, whether recorded in writing or otherwise, that the Intermediary(ies) 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 (Refer Note 38 to the Standalone Financial Statements);
(b) The management has represented that, to the best of its knowledge and belief, as disclosed in the notes 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 (Refer Note 38 to the Standalone Financial Statements); and
(c) Based on such audit procedures that we 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. The dividend declared and paid during the year by the Company is in compliance with Section 123 of the Act, except for the delay in transferring the amount of final dividend for the year ended March 31,2022, to a separate bank account within the timeline specified in sub-section (4) of section 123 of the Act.
vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 (as amended), which provides for books of account to have the feature of audit trail, edit log and related matters in
the accounting software used by the Company, is applicable to the Company only with effect from financial year beginning April 1, 2023, the reporting under clause (g) of Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), is currently not applicable.
15. The Company has paid / provided for managerial
remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Anurag Khandelwal
Partner
Place: Gurugram Membership Number: 078571
Date: 23 May 2023 UDIN: 23078571BGXZHS6607
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