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Grasim Industries Ltd.

BSE: 500300 Sector: Industrials
NSE: GRASIM ISIN Code: INE047A01021
BSE 00:00 | 24 Apr 2020 Grasim Industries Ltd
NSE 05:30 | 01 Jan 1970 Grasim Industries Ltd

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OPEN 488.00
PREVIOUS CLOSE 500.90
VOLUME 57827
52-Week high 958.55
52-Week low 380.00
P/E 20.64
Mkt Cap.(Rs cr) 32,828
Buy Price 494.00
Buy Qty 10.00
Sell Price 499.05
Sell Qty 103.00
OPEN 488.00
CLOSE 500.90
VOLUME 57827
52-Week high 958.55
52-Week low 380.00
P/E 20.64
Mkt Cap.(Rs cr) 32,828
Buy Price 494.00
Buy Qty 10.00
Sell Price 499.05
Sell Qty 103.00

Grasim Industries Ltd. (GRASIM) - Auditors Report


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Company auditors report

To the Members of Grasim Industries Limited

Report on the Audit of Standalone Financial Statements Opinion

We have audited the standalone financial statements of GrasimIndustries Limited ("the Company") which comprise the standalone balance sheetas at 31 March 2019 and the standalone statement of profit and loss (including othercomprehensive income) standalone statement of changes in equity and standalone statementof cash flows for the year then ended and notes to the standalone financial statementsincluding a summary of significant accounting policies and other explanatory information(herein after referred to as "Standalone Financial Statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2019and profit and other comprehensive income changes in equity and its cash flows for theyear ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the standalone financial statements under the provisions of the Act and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Key audit matters How our audit addressed the key audit matter
Assessment of impairment of investments in subsidiaries associates and joint ventures
As disclosed in note 2.3 of standalone financial statements the Company has investments in subsidiaries associates and joint venture companies of Rs 21186.76 Crore. The said investments are carried at cost less allowance for impairment if any. Our audit procedures included the following:
Assessment of whether there were indications of impairment of such investments. We have assessed on whether management has estimated the recoverable amounts of these investments the assumptions used by the management in making such estimates and the allowance for impairment.
The Management reviews regularly whether there are any indicators of impairment of the said investments by reference to the requirements under Ind AS 36. Comparison of the carrying values of the Company's investment in subsidiaries associates and joint ventures with their respective net asset values and discussions with management of the performance and their outlook.
The Management carries out impairment assessment for each investment by:
Comparing the carrying value of each investment with the net worth of each company based on audited financials.
Comparing the performance of the investee companies with projections used for valuations and approved business plans. Evaluating the methodologies used by the Company in projections used for valuations in particular those relating to the cash flows sales growth rate pre-tax discount rate and growth rates used. We also assessed the historical accuracy of management's estimates and evaluated the business plans incorporated in the projections.
As impairment assessment involves significant assumptions and judgment we regard this as a key audit matter.
Key audit matters How our audit addressed the key audit matter
Litigation pertaining to direct tax matters
As disclosed in note 4.1 of the standalone financials statements the Company has pending litigations on account of direct tax matters amounting to Rs 5950 Crore. Our audit procedures included the following:
Obtained and read the list of direct tax assessment / litigations for movements from previous periods;
- The Management applies significant judgment in estimating the likelihood of the future outcome in each case based on its own past assessments judicial precedents and opinions of experts / legal counsels when considering whether and how much to provide or in determining the required disclosure for the potential exposure. Read the orders passed during the year;
For appeals filed during the year read and assessed correspondence / grounds of appeal filed by the Company;
Assessed opinions obtained by the management from independent tax experts / counsels;
- Due to inherent complexity and magnitude of potential exposures we regard this as key audit matter. We have also involved our direct tax experts to evaluate management's assessment of possible outcome of disputes and;
Considered the disclosures in note 4.1 made in relation to these direct tax matter for compliance with disclosure requirements.

Information Other than the Standalone Financial Statements andAuditors' Report thereon

The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and ourauditors' report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Management's Responsibility for the Standalone FinancialStatements

The Company's management and Board of Directors is responsible forthe matters stated in section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view state of affairs profitand other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management and Boardof Directors is responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of Section143(11) of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the said Order to the extent applicable.

(A) As required by Section 143(3) of the Act we report that: a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) standalone statement of changes in equity andthe standalone statement of cash flows dealt with by this report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements complywith the specified under Section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 March 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2019 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate report in "Annexure B".

(B) with respect to the other matters to be included in theAuditor'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 theexplanations given to us: i. The Company has disclosed the impact of pending litigationsas at 31 March 2019 on its financial position in its standalone financial statements.Refer Note 4.1 to the standalone financial statements.

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts – Refer Note 4.10 to the standalonefinancial statements.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these financial statements since they donot pertain to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditors'Report under section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under section 197(16) whichare required to be commented upon by us.

For B S R & Co. LLP For S R B C & CO LLP
Chartered Accountants Chartered Accountants
Firm's Registration No: 101248W/W-100022 Firm's Registration No: 324982E/E300003
Akeel Master Vijay Maniar
Partner Partner
Membership No: 46768 Membership No: 36738
Mumbai Mumbai
24th May 2019 24th May 2019

Annexure - A

To the Independent Auditor's Report on standalone financialstatements of Grasim Industries Limited for the year ended 31 March 2019

Report on the Companies (Auditor's Report) Order 2016 ("theOrder") with reference to aforesaid standalone financial statements in terms ofSection 143(11) of the Companies Act 2013 ("the Act")

With reference to the Annexure referred to in the IndependentAuditors' Report to the Members of the Company on the standalone financial statementsfor the year ended 31 March 2019 we report the following:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of the fixed assets (propertyplant and equipment).

(b) The Company has a regular program of physical verification of itsfixed assets (property plant and equipment) by which all fixed assets (property plant andequipment) are verified in a phased manner over a period of three years. In accordancewith this program a portion of the fixed assets (property plant and equipment) has beenphysically verified by the management during the year and no material discrepancies havebeen noticed on such verification. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets.

(c) According to the information and explanations given to us thetitle deeds of immovable properties as disclosed in Note 2.1.1 to the standalonefinancial statements are held in the name of the Company except for the following:

( Rs in Crore)

Particulars Leasehold land Freehold land Building
Gross Block as at 31 March 2019 212.47 702.84 452.05
Net Block as at 31 March 2019 203.48 702.84 380.01

(ii) Inventory except good-in-transit has been physically verified bymanagement at reasonable intervals during the year. In our opinion the frequency of suchverification is reasonable. In respect of inventory lying with third parties these havesubstantially been confirmed by them. The discrepancies noticed on such verificationbetween physical stocks and the book records were not material.

(iii) In our opinion and according to information and explanationsgiven to us the Company has not granted any loans secured or unsecured to companiesfirms limited liability partnerships or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly Clause 3(iii) of the Order is not applicable tothe Company.

(iv) The Company has not granted any loans or provided any guaranteesor security to the parties covered under Section 185 of the Act. The Company has compliedwith the provisions of Section 186 of the Act in respect of investments made or loans orguarantees or security provided to the parties covered under Section 186.

(v) According to information and explanations given to us the Companyhas not accepted any deposits from the public within the meaning of the directives issuedby Reserve Bank of India provisions of Sections 73 to 76 of the Act any other relevantprovisions of the Act and the relevant rules framed thereunder.

vi) We have broadly reviewed the records maintained by the Companypursuant to the rules prescribed by Central Government for maintenance of cost recordsunder Section 148 (1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. However we have not made a detailedexamination of the records.

(vii) (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generallyregular in depositing the undisputed statutory dues including provident fundemployees' state insurance income tax goods and service tax duty of customs cessand other material statutory dues as applicable with the appropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome tax goods and service tax duty of customs cess and other material statutory dueswere in arrears as at 31 March 2019 for a period of more than six months from the datethey became payable.

(b) According to the information and explanations given to us thereare no dues of income tax sales tax service tax goods and service tax duty of customsduty of excise or value added tax which have not been deposited with the appropriateauthorities on account of any dispute other than those mentioned in Appendix I to thisreport.

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings tofinancial institutions banks government or due to debenture holders.

(ix) In our opinion and according to the information and explanationsgiven to us the Company has not raised any moneys by way of initial public offer orfurther public offer (including debt instruments) and term loans during the year.Accordingly the provisions of Clause 3(ix) of the Order is not applicable to the Company.

(x) According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations give to us and basedon our examination of the records the Company has paid or provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. Accordingly Clause 3(xii) of the Orderis not applicable is not applicable to the Company.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable. Thedetails of such related party transactions have been disclosed in the notes to thefinancial statements as required under Indian Accounting Standard (Ind AS) 24 RelatedParty Disclosures notified under the Companies (Indian Accounting Standards) (Amendment)Rules 2016.

(xiv) According to the information and explanations give to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly Clause 3(xiv) of the Order is not applicable tothe Company.

(xv) According to the information and explanations given to us andbased on our examination of the records the Company has not entered into non-cashtransactions with directors or persons connected with him as referred to in section 192 ofthe Act. Accordingly Clause 3(xv) of the Order is not applicable.

(xvi) In our opinion and according to the information and explanationsgiven to us the Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934. Accordingly Clause 3 (xvi) of the Order is notapplicable to the Company.

For B S R & Co. LLP For S R B C & CO LLP
Chartered Accountants Chartered Accountants
Firm's Registration No: 101248W/W-100022 Firm's Registration No: 324982E/E300003
Akeel Master Vijay Maniar
Partner Partner
Membership No: 46768 Membership No: 36738
Mumbai Mumbai
24th May 2019 24th May 2019

Appendix I as referred to in Clause 3(vii)(b) of the Annexure - A tothe Auditors' Report

Name of the Statute Nature of the Dues Amount Period to which the amount relates Forum where dispute is pending
( Rs Crore)
IncomeTax Act 1961 Income Tax and Interest 5872.13 2017-18 High Court
116.98 1984-18 Appellate Authority
627.25 2003-18 Assessing Authority
SalesTax / Value Added Sales Tax VAT Interest and 30.15 1992-18 Appellate Authority
Tax Act Penalty 8.48 2001-16 Assessing Authority
1.64 1999-12 High Court
EntryTax Act Entry Tax and Interest 0.89 2005-18 Appellate Authority
0.01 2004-05 Assessing Authority
15.83 2004-17 High Court
2.83 2006-18 Supreme Court
Service Tax under Finance Service Tax Interest and 29.80 1997-18 Appellate Authority
Act 1994 Penalty 50.13 1999-18 Assessing Authority
Customs Act 1962 Customs Duty Interest and 13.62 1979-18 Appellate Authority
Penalty 0.96 2004-08 Assessing Authority
2.20 1975-02 High Court
Central Excise Act 1944 Excise duty Interest and 60.88 1985-19 Appellate Authority
Penalty 39.83 1989-19 Assessing Authority
13.31 1978-18 High Court
Central Goods and Goods and Service Tax 0.23 2018-19 Appellate Authority
ServicesTax Act 2017

Annexure - B

To the Independent Auditor's Report on standalone financialstatements of Grasim Industries Limited for the year ended 31 March 2019

Report on the internal financial controls with reference to aforesaidstandalone financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 (Referred to in paragraph A(f) under ‘Report on Other Legal andRegulatory Requirements section of our report of even date)

Opinion

We have audited the internal financial controls with reference tostandalone financial statements of Grasim Industries Limited as of 31 March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls were operating effectively as at 31 March 2019 based on theinternal financial controls with reference to standalone financial statements criteriaestablished by the Company considering the essential components of internal controlstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India (the "GuidanceNote")

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal controls with reference to standalone financial statements criteria establishedby the Company considering the essential components of internal controls stated in theGuidance Note. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note and the Standards onAuditing prescribed under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls with reference to standalone financial statements.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements was established and maintainedand if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to standalone financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to standalone financial statements included obtaining an understanding ofinternal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal controls basedon the assessed risk. The procedures selected depend on the auditor's judgementincluding the assessment of the risks of material misstatement of the standalone financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to standalone financial statements.

Meaning of Internal Financial Controls with reference to standalonefinancial statements

A company's internal financial controls with reference tostandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalonefinancial statements for external purposes in accordance with generally acceptedaccounting principles. A Company's internal financial controls with reference tofinancial statements includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the standalone financialstatements.

Inherent Limitations of Internal Financial Controls with reference tostandalone financial statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

For B S R & Co. LLP For S R B C & CO LLP
Chartered Accountants Chartered Accountants
Firm's Registration No: 101248W/W-100022 Firm's Registration No: 324982E/E300003
Akeel Master Vijay Maniar
Partner Partner
Membership No: 46768 Membership No: 36738
Mumbai Mumbai
24th May 2019 24th May 2019

 


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