1. We have audited the accompanying standalone financial statements of NRB Bearings Limited ('the Company'), which comprise the standalone balance sheet as at 31 March 2024, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of cash flows 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 ('the 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 31 March 2024, 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 issued by the ICAI. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
Non-compliance with laws and regulations
4. We draw attention to Note 15(iii) and Note 29(iv) to the accompanying standalone financial statements which indicates delay in receipt of foreign currency trade receivables amounting to ^ 3,091 lakhs and delay in payment of foreign currency trade payables amounting to ^ 191 lakhs, as at 31 March 2024, beyond the timelines stipulated vide FED Master Direction No. 16/2015-16 and FED Master Direction No. 17/2016-17, respectively, under the Foreign Exchange Management Act, 1999. The management of the Company is in the process of recovering the outstanding dues and making the payments for outstanding payables and regularising these defaults by filing necessary applications with the appropriate authority for condonation of such delays. The management is of the view that the fines/penalties if any, that may be levied pursuant to delay's, are currently unascertainable but are not expected to be material and accordingly, the accompanying standalone financial statements do not include any consequential adjustments that may arise due to such delay/default. Our opinion is not modified in respect of this matter.
5. We draw attention to Note 42(iii) of the accompanying standalone financial statements, which describes that a fire incident occurred at one of the Company's manufacturing plant situated at Waluj on 8 May 2023, effecting the operations of the plant and resulting in damage to inventories, plant and equipments and other accessories, building and other civil structures, for which the Company has estimated and provided for impairment loss (net) amounting to ^ 2,076 lakhs for the year ended 31 March 2024. The Company has also recorded total insurance claim income amounting to ^ 3,051 lakhs received as a final payment towards inventories and interim payment towards plant and equipments and other accessories, building and other civil structures. Such loss and insurance claim income has been disclosed as 'Exceptional Items' in the accompanying standalone financial statements. The management of the Company is currently in the process of ascertaining the further operational losses caused due to fire and believes that all such losses are adequately insured. Our opinion is not modified in respect of this matter.
Key Audit Matter
6. 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.
7. 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 our audit addressed the key audit matter
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Existence and valuation of inventories
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Refer Note 1.1(i) to the accompanying standalone financial statements for material accounting policy on inventories and Note 14 for details of inventories as at 31 March 2024.
As at 31 March 2024, total value of inventories amounting to ^ 29,625 lakhs, comprising of raw materials, work-inprogress, stores and spares and finished goods, represents 26% of the total assets of the Company. Such inventories are stored at various locations which include plants and warehouses situated nationwide and carried at cost or net realisable value whichever is lower.
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Our audit procedures relating to existence and valuation of inventories included, but was not limited to, the following:
• Understood the management's process of physical verification of inventories, valuation of inventories, identifying slow-moving obsolete inventories and NRV assessment and assessed the appropriateness of Company's accounting policy and valuation of inventories method in accordance with Ind AS 2.
• Evaluated the design and tested the operating effectiveness of the Company's key manual and IT application controls over physical verification, valuation of inventories, identifying slow-moving obsolete inventories and NRV assessment.
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A) Physical verification of inventories
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A) Physical verification of inventories
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The management has undertaken the physical verification of inventories at periodic intervals during the year and short-age/excess, if any are recorded in the books of account. Owing to multiple plant locations and significant amount of inventories held at such locations, significant attention and audit efforts are spent by us to obtain comfort on existence of such inventories.
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• Inspected management's inventory counts records and observed physical verification conducted by management for locations selected based on materiality and risk con-siderations.^ Performed independent test counts to corroborate the management counts for the selected locations.
• Ensured that necessary adjustments have been made in the books of account basis the results of the physical counts performed by the management.
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B) Valuation of inventories
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B) Valuation of inventories
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Raw material costs include cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Finished goods and work-in-progress cost consists of direct materials, labour and allocation of various production and administration overheads. The valuation of inventories of work in progress and finished goods is complex as it is carried out across the locations in excel spreadsheets based on the quantitative inputs received from the respective departments and the valuation process involves management judgement and estimation around inputs used for overhead allocation basis various criteria's, cost drivers, product mix and allocation of expenses through various stages of production.
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• Verified the expenses considered as cost of conversion including estimates for apportionment of the cost of conversion on the different classes of finished goods and work in progress inventories, corroborated the same with underlying records such as, books of account, purchase register, cost and productions records etc. and recomputed the arithmetical accuracy thereof for calculating the overhead rates considered as part of the finished goods and work in progress inventories for a sample of items.
• Tested on a sample basis, the appropriateness of capturing of cost of overheads from various process and basis of allocation of overheads.
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C)Slow-moving/Obsolete/NRV (Net realisable value) assessment
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C) Slow-moving/obsolete/NRV assessment
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At the end of each reporting period, management of the
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• Tested inventories ageing obtained through system re-
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Company assesses whether there is adequate provision for
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ports.
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inventory on account of lower net realisable value and for
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• Understood the management's basis for classification of
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slow-moving/obsolete inventory. The Company's provision-
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such inventories as slow and non-moving/obsolete inven-
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ing policy is based on past trends of usage of materials and
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tories and ensured the same is consistently applied. Eval-
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sales forecasts, which further involves estimation and uncertainty. During the current year the Company also revised its inventory provisioning policy for work in progress based
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uated the management's assessment for provisioning and estimating NRV by performing an independent age-wise analysis of the inventories items, comparing with subse-
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on the usability of the inventories. An allowance of ^ 2,459 lakhs is created as at 31 March 2024, for obsolesces of slow
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quent and recent selling prices.
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and non-moving inventories.
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• Obtained and reviewed the losses ascertained by the Company and the surveyor with respect to the inventories
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Further during the year, a fire incident occurred at the Com-
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damaged in fire incident, the insurance claim filed by the
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pany's manufacturing plant in Waluj, resulting damage to
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Company with insurer and examined the insurance pay-
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inventories held at that location amounting to ^ 1,658 lakhs (net of provisions amounting ^ 375 lakhs) against which the
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ments received by the Company.
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Company received an insurance claim amounting ^ 1,801
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• Assessed the appropriateness and adequacy of the re-
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lakhs.
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lated disclosures in the standalone financial statements in
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Owing to complexities as stated above, significance of carrying amount of inventories and significant management assumptions, estimates and judgement involved, existence and valuation of inventories has been considered as a key audit matter during the current year audit.
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accordance with the requirements of applicable accounting standards.
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Information other than the Standalone Financial Statements and Auditor's Report thereon
8. The Company's Board of Directors are responsible for the other information. The other information comprises the information included in the Report on Corporate Governance but does not include the standalone financial statements and our auditor's report thereon which we obtained prior to the date of this auditor's report, and the annual report, which is expected to be made available to us after that date.
Our opinion on the standalone financial statements does not cover the other information and we do not and 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 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 on the other information that we obtained prior to the date of this auditor's report, 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.
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
9. 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 standalone financial position, standalone financial performance including other comprehensive income, standalone changes in equity and standalone 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 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.
10. 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.
11. 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
12. 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.
13. 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 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 of the Company;
• 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.
14. 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.
15. 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.
16. 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
17. As required by section 197(16) of the Act based on our audit, we report that the Company has paid 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.
18. As required by the Companies (Auditor's Report) Order, 2020 ('the Order1) issued by the Central Government of India in terms of section 143(11) of the Act we give in the "Annexure-A", a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
19. Further to our comments in "Annexure-A", 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) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books, except for the matters stated in paragraph 19(h)(vi) below on reporting under rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
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 31 March 2024 from being appointed as a director in terms of section 164(2) of the Act;
f) The reservation relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 19(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 standalone financial statements of the Company as on 31 March 2024 and the operating effectiveness of such controls, refer to our separate report in "Annexure-B" 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, has disclosed the impact of pending litigations on its financial position as at 31 March 2024 in the standalone financial statement;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2024;
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 ended 31 March 2024;
iv.
a. The management of the Company has represented that, to the best of its knowledge and belief, as disclosed in note 58(ix) 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 of the Company has represented that, to the best of its knowledge and belief as disclosed in note 58(iii) 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 31 March 2024 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 31 March 2024 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.
vi. As stated in Note 58(xi) to the standalone financial statements and based on our examination which included test checks, except for instance mentioned below, the Company, in respect of financial year commencing on 1 April 2023, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with, other than the consequential impact of the exception given below.
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Nature of exception noted
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Details of exception
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Instances of accounting software used for maintaining books of account for which the feature of recording audit trail (edit log) facility was not operated throughout the year for all relevant transactions recorded in the software.
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The audit trail feature was not enabled at the database level for accounting software to log any direct data changes, used for maintenance of all accounting records by the Company.
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For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Adi P. Sethna
Partner
Membership No.: 108840 UDIN: 24108840BKFDQR6193
Place: Mumbai Date: 27 May 2024
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