M/s. Elgi Rubber Company Limited
Report on the audit of Standalone Financial Statements
Opinion
1. I have audited the accompanying standalone financial statements of ELGI Rubber Company Limited (“the Company”), which comprise the standalone balance sheet as at 31st March 2024, the standalone statement of Profit and Loss, the standalone statement of changes in equity, and the standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information in which are included the financial statements/ information for the year ended on that date.
2. In my opinion and to the best of my information and according to the explanations given to me, the aforesaid standalone financial statements give the information required by the Companies Act (“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, and total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.
Basis for Opinion
3. I conducted my audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the “Standalone Financial Statements” section of my report. I am 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 my audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the Code of Ethics. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Key Audit Matters:
4. Key audit matters are those matters that, in my professional judgment, were of the most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters:
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S.No.
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Key Audit Matter
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Auditor’s Response
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1.
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Assessment of carrying value of investment and Loans & Advances given to the overseas subsidiaries (Refer Note 8 and 9 to the Standalone Financial Statements)
As at March 31, 2024, the Company has equity investments of ' 859.55/- million in its subsidiaries and Loans & advances aggregating to ' 1361.37/- million in the aforesaid subsidiaries.
I considered the assessment of carrying value of investments and the recoverability of the Loans & Advances as a key audit matter, considering its significance to the Standalone Financial Statements, and where applicable, the judgement involved in estimating future cash flows, cash flow projections and terminal growth rates.
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My audit procedures included the following:
Understood and performed procedures to assess the design and tested the operating effectiveness of relevant controls related to the annual evaluation on assessment of the carrying value of investments and their recoverability of the Loans & Advances.
Tested the Company’s assessment with regard to key financial indicators including net worth of those respective subsidiaries with the carrying value of the investments made in those entities.
Where future cash flow projections were prepared, evaluated the reasonableness of these projections by checking the mathematical accuracy, and discussing with the management to understand the assumptions involved and my knowledge and understanding of the current business conditions. Evaluated, the key assumptions such as discount rate and growth rate used in the preparation of the cash flow projections.
Evaluated the adequacy of the disclosures made in the Standalone Financial Statements.
Based on the above procedures performed, the management’s assessment of the carrying value of investments in subsidiaries was reasonable and the management’s assessment on recoverability of the Loans & advances for the aforesaid subsidiaries are considered to be reasonable.
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S.No.
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Key Audit Matter
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Auditor’s Response
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2.
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Evaluation of uncertain tax positions
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My audit procedures included the following:
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The Company has uncertain tax positions including matters under
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Obtained details of completed tax assessments and demands received upto
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dispute which involves significant judgment to determine the
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the end of the financial year and till the date of finalisation of our report, from
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possible outcome of these disputes (Refer note 46 to standalone
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management.
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financial statements).
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Analysed the management's underlying assumptions in estimating the tax
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I considered the evaluation of uncertain tax positions as a key audit
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provision and the possible outcome of the disputes.
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matter, considering its significance of its impact to the Standalone
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Considered legal precedence and other rulings in evaluating management’s
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Financial Statements, and where applicable, the judgement
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position on these uncertain tax positions.
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involved in evaluating the uncertain tax positions.
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Additionally, I considered the effect of new information in respect of uncertain tax positions to evaluate whether any change was required to management’s position on these uncertainties.
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Information Other than the standalone Financial Statements and Auditor’s Report Thereon
5. The Company’s Management and Board of Directors are responsible for the other information. The other information comprises the Board’s Report and the Corporate Governance Report but does not include the standalone financial statements and my auditor’s report thereon.
My opinion on the standalone financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.
In connection with my audit of the standalone financial statements, my 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 my knowledge obtained during the course of my audit or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information; I am required to report that fact. I 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 Companies Act, 2013 (“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, read with relevant rules issued thereunder.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for the 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 financial statement that gives 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 Financial Statements
7. My objectives are to obtain reasonable assurance about whether the 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 my 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 financial statements.
I give in “Annexure A” a detailed description of Auditors; responsibilities for the Audit of the Standalone Financial Statements.
Report on Other Legal and Regulatory Requirements
8. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”), issued by the Central Government of India in terms of subsection (11) of section 143 of the Companies Act, 2013, I give in the “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
(a) I have sought and obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purposes of my audit.
(b) In my opinion, proper books of account as required by law have been kept by the Company so far as it appears from my examination of those books.
(c) The standalone balance Sheet, the standalone statement of Profit and Loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of Cash Flows dealt with by this Report are in agreement with the books of account.
(d) In my opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on 31st March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to my 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 my opinion, and to the best of my information and according to the explanations given to me:
• The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 46 to the financial statements;
• The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
• There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
(h) (A) 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 persons or entities, including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:
o directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate Beneficiaries”) by or on behalf of the Company or
o provide any guarantee, security, or the like to or on behalf of the Ultimate Beneficiaries.
(B) The management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall:
• directly or indirectly, lender invest in other persons or entities identified in any manner whatsoever(“Ultimate Beneficiaries”) by or on behalf of the Funding Party or
• provide any guarantee,security, or the like from or on behalf of the Ultimate Beneficiaries; and
(C) Based on such audit procedures as considered reasonable and appropriate in the circumstances, nothing has come to my notice that has caused me to believe that the representations under subclause (i) (A) and (i) (B) contain any material misstatement
(i) The Company has not declared or paid any dividend during the year and has not proposed final dividend for the year.
(j) Based on our examination which included test checks, the Company has used accounting software for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software.
Further, during the course of my audit, I did not come across any instance of the audit trail feature being tampered with, in respect of accounting software for the period for which the audit trail feature was operating.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1,2023, reporting under Rule 11 (g) of the Companies (Audit and Auditors) Rules, 2014 on the preservation of audit trail as per the statutory requirements for record retention is not applicable for the year ended March 31,2024.
In my opinion and according to the information and explanations given to me, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which is required to be commented upon by me.
for M/s ARUN & CO Chartered Accountants Firm Registration No.0014464S
Place : Coimbatore CA. A. Arun
Date : May 30, 2024 ProPrietor
Membership No. 227831 UDIN:24227831BKCKHM9257
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