To the members of TVS Motor Company Limited
Report on the Audit of the Standalone financial statements
We have audited the standalone financial statements of TVS Motor Company Limited("the Company") which comprise the standalone Balance Sheet as at 31st March2019 the standalone Statement of Profit and Loss (including Other Comprehensive Income)standalone Statement of changes in Equity and standalone Statement of Cash Flow for theyear then ended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and profit other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SA) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance 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 financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters:
|Key Audit Matter ||Principal Audit Procedures |
|Overseas Equity Investments in Subsidiaries || |
|Equity Investments in overseas subsidiaries account for a significant percentage of the Company's total equity investments. To assess whether there are indications of impairment requires significant management judgement in determining the recoverable amount of these equity investments. ||Management has obtained a valuation of the equity investment in the overseas subsidiary based on the discounted cash flow method of valuation. We gained an understanding of the key assumptions used to forecast the free cash flows and the discount factors applied to arrive at the equity value of the investment. Based on the above procedures we consider that the management conclusions concerning the absence of impairment in the overseas equity investments are adequately supported and consistent with the information currently available. |
|Evaluation of Uncertain Tax positions ||We obtained an understanding of the Key uncertain positions relating to direct and indirect tax from the management. We considered legal precedence and other rulings as well as external opinions obtained by management in evaluating management's position on these uncertain tax positions. |
|The Company has material uncertain tax positions including matters under dispute which involve significant management judgement to determine the possible outcome of these uncertain tax positions. || |
Information other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Directors' Report to theShareholders but does not include the standalone financial statements and our auditor'sreport thereon. The Directors' Report to the Shareholders is expected to be made availableto us after the date of this Auditor's Report.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
When we read the Directors' Report to the Shareholders if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.
Responsibilities of Management and those charged with Governance for the standalonefinancial statements.
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the state of affairs profit and other comprehensiveincome changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards(Ind AS)specified under section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the audit of the standalone financial statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign 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 hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Act we give in the Annexure A statement on the matters specified in paragraphs 3 and4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our 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 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 comply with theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its stand-alone financial statements - Refer Note 37(a) to the standalonefinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses Refer Note No. 28(D);
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
3. With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act;
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act.
Annexure A to Independent Auditors' Report - 31st March 2019 (Referred to in our reportof even date)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular program of physically verifying all the fixed assets atits plants / offices in a phased manner over a period of 2 years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets.
No material discrepancies as compared to book records were noticed on suchverification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) The inventories have been physically verified by the management during the year.In our opinion the frequency of physical verification is reasonable. The discrepanciesnoticed on verification between the physical stocks and the book stocks were not materialand have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct. Accordingly the provisions of clause (iii) (a) (b) and (c) of para 3 of the Orderare not applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public. Therefore the provisions of clause (v) of the para3 of the Order are not applicable to the Company.
(vi) The Central Government has prescribed the maintenance of cost records underSection 148(1) of the Act in respect of certain products manufactured by the Company. Wehave broadly reviewed the books of account maintained by the Company pursuant to the rulesmade by the Central Government for the maintenance of cost records under Section 148(1) ofthe Act and are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained.
(vii) (a) According to the records of the Company the Company is regular in depositingundisputed statutory dues payable including Provident Fund Employees' State InsuranceIncome Tax Goods and Service Tax Customs Duty Cess and other material statutory dueswith the appropriate authorities. According to the information and explanations given tous no undisputed amounts payable in respect of Income Tax Goods and Service Tax CustomsDuty and Cess were in arrears as at 31st March 2019 for a period of more than six monthsfrom the date they became payable.
(b) According to the information and explanations given to us and the records of theCompany the dues of Sales Tax / Income-Tax / Customs Duty / Wealth Tax / Service Tax /Excise Duty / Value Added Tax / Cess which have not been deposited on account of anydispute are as follows:
|Name of the Statute / (Nature of dues) ||Period of dues || |
Amount (Rs. in cr.)
|Forum where dispute is pending |
| || || ||Central Excise and |
|Central Excise Act 1944 (Cenvat/Excise Duty) ||1998-2017 || |
|Service Tax Appellate Tribunal Chennai |
| ||1999-2016 || |
|Assistant / Deputy / Commissioner of Central Excise Hosur and Mysore |
|Name of the Statute / (Nature of dues) ||Period of dues ||Amount (Rs. in cr.) ||Forum where dispute is pending |
|Finance Act 1994 (Service Tax) ||2007-2016 ||0.04 ||Assistant / Deputy / Commissioner of Central Excise Hosur and Mysore |
| || || ||Central Excise and Service |
| ||2002-2014 ||1.45 ||Tax Appellate Tribunal. |
| || || ||Chennai / Bangalore |
|Customs Act 1962 (Customs Duty) ||1999-2001 ||1.36 ||Hon'ble High Court of Judicature Chennai |
| ||1998-2016 ||1.41 ||Department Authorities |
|Sales Tax / VAT Laws (Sales Tax) ||2004-2005 ||0.04 ||Joint Commissioner (Appeals) |
| ||1998-2010 ||0.33 ||Tribunals |
|Wealth Tax Act 1957 ||2007-2009 ||0.98 ||Commissioner Appeal |
|Income Tax Act 1961 (Income Tax and Interest thereon) ||2014-2015 ||11.67 ||Commissioner Appeal) |
(viii) On the basis of verification of records and according to the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to Financial Institutions Government and Banks. The Company has not raised anymonies by issue of debentures.
(ix) In our opinion and according to the information and explanations given to us theterm loans availed by the Company have been applied for the purpose for which they wereobtained. The Company has not raised monies by way of initial public offer or furtherpublic offer (including debt instruments) during the year.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements to the best of our knowledge and belief and as perthe information and explanations given to us by the Management no material fraud by theCompany and no fraud on the company by its officers or employees has been noticed orreported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company and hence reporting under para 3 of clause(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and Section 188 of the Act whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underpara 3 of clause (xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of Section 192 of the Act arenot applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Annexure - B to the Independent Auditors' Report - 31st March 2019 (Referred to in ourreport of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls over financial reporting of TVSMotor Company Limited ("the Company") as of March 31 2019 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.
Managements Responsibility for Internal Financial Controls
2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
3. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting 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 financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
8. In our opinion the Company has in all material respects an adequate internalfinancial Control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Control over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For V. SANKAR AIYAR & CO |
| ||Chartered Accountants |
| ||Firm Regn. No.: 109208W |
| ||S. VENKATRAMAN |
|Place: Chennai ||Partner |
|Date : 30th April 2019 ||Membership No.: 34319 |