To
The Members of UCAL FUEL SYSTEMS LIMITED
Report on the Audit of the Consolidated Ind AS Financial
Statements
Opinion
We have audited the accompanying Consolidated Ind AS Financial Statements of UCAL
FUEL SYSTEMS LIMITED
(hereinafter referred to as the "Holding Company"), and its subsidiaries
(Holding Company and its subsidiaries together referred to as "the Group") which
comprise the Consolidated Balance Sheet as at March 31, 2023, the Consolidated Statement
of Profit and Loss (including other Comprehensive income), the Consolidated Statement of
Changes in Equity and the Consolidated Statement of Cash Flows for the year ended on that
date and Notes to the Consolidated Financial Statements, including a summary of
significant accounting policies and other explanatory information (hereinafter referred to
as "the Consolidated Financial Statements"). In our opinion and to the best of
our information and according to the explanations given to us, the aforesaid Consolidated
Financial Statements give the information required by the Companies Act, 2013
("Act") in the manner so required and give a true and fair view in conformity
with the Indian Accounting Standards prescribed under Section 133 of the Act read with the
Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and
other accounting principles generally accepted in India, of the Consolidated state of
affairs of the Group as at March 31, 2023, of Consolidated Profit (Including Other
Comprehensive Income), Consolidated changes in Equity, and its Consolidated cash flows for
the year 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 those Standards are further
described in the Auditors Responsibilities for the Audit of the Consolidated Ind AS
Financial Statements section of our report. We are independent of the Group 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 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 ICAIs Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
We draw attention to Note 38(b) forming part of the financial statements for the year
in connection with the non-availability of RBI approval for writing off made during the
year 2017-18 in respect of Trade Receivable and Loan receivable aggregating to 15,191.85
lakhs due from foreign subsidiary (UCAL Holdings Inc., formerly Amtec Precision Products
Inc.,) Our opinion is not modified in respect of the above matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the Consolidated Financial Statements of the current period.
These matters were addressed in the context of our audit of the Consolidated Financial
Statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. We have determined the matters described below to be
the key audit matters to be communicated in our report.
The following have been considered as Key Audit Matters:
| Sl. No. Key Audit Matter |
Auditors Response |
| 1 Evaluation of uncertain tax positions |
Principal Audit Procedures: |
| The Company has material uncertain tax positions including matters under dispute which
involves significant judgment to determine the possible outcome of these disputes. |
i. We obtained details of completed tax assessments and demands for the year ended 31
March 2023 from management. |
|
ii. We involved our internal experts to analyse the managements underlying
assumptions in estimating the tax provision and the possible outcome of the disputes. |
|
iii. We also considered legal precedence and other rulings in evaluating managements
position on these uncertain tax positions. |
| 2 Valuation of inventories: |
Principal Audit Procedures: |
| At the balance sheet date, the carrying amount of inventory amounted to 9,783 lakhs
representing 12.5% of total assets. As per the accounting policy adopted by the Company,
Inventories are valued at the lower of cost and net realisable value. |
To address the risk of material error on inventories, our audit procedures included
amongst others: |
|
i. Evaluated the compliance of companys accounting policies with respect to inventory
for compliance with applicable Accounting Standards |
|
ii. Evaluated the internal controls governing accounting of inventory and its
valuation |
|
iii. Performed substantive audit procedures including observation of physical
inventory count and sample verification of inventory valuation. |
Information Other Than the Consolidated Financial Statements and Auditors Report
Thereon
The other information comprises the information included in the Directors Report
including Annexures to Directors Report but does not include the Financial Statements and
our Auditors report thereon. The other information is expected to be made available to us
after the date of this Auditors report.
Our opinion on the Ind AS Financial Statements does not cover the other information and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS Financial Statements, our responsibility is
to read the other information identified above when it becomes available and, in doing so,
consider whether the other information is materially inconsistent with the Ind AS
Financial Statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. On receipt of other information, if we conclude that there is a
material misstatement therein, we are required to communicate the matter to those charged
with governance and we shall: (a) If the material misstatement is corrected, perform
necessary procedure to ensure the correction; or (b) If the material misstatement is not
corrected after communicating the matter to those charged with governance, take
appropriate action considering our legal rights and obligations, to seek to have the
uncorrected material misstatement appropriately brought to the attention of users for whom
this Auditors report is prepared.
Responsibilities of Management and Those Charged with
Governance for the Consolidated Financial Statements
The Holding Companys Board of Directors is responsible for the matters stated in
section 134(5) of the Act with respect to the preparation of these Consolidated Financial
Statements that give a true and fair view of the Consolidated financial position,
Consolidated financial performance (including Other Comprehensive Income), Consolidated
changes in equity and Consolidated cash flows of the Group in accordance with the
accounting principles generally accepted in India, including the Indian Accounting
Standards specified under section 133 of the Act. The respective Board of Directors of the
companies included in the Group are responsible for maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding the assets of the
Group 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 Consolidated financial statement that give a true and fair view and are free from
material misstatement, whether due to fraud or error, which have been used for the purpose
of preparation of the consolidated financial statements by the Directors of the Holding
Company, as aforesaid.
In preparing the Consolidated Financial Statements, the respective management and Board
of Directors of the Companies included in the Group are responsible for assessing the
ability of Group to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless respective
Board of Directors either intends to liquidate the respective entities or to cease
operations, or has no realistic alternative but to do so.
The respective Board of Directors of the Companies included in the Group are
responsible for overseeing the financial reporting process of the Group.
Auditors Responsibilities for the audit of the Consolidated
Financial Statements
Our objectives are to obtain reasonable assurance about whether the Consolidated
Financial Statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditors report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these Consolidated Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Consolidated 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 the internal financial
controls with reference to the Consolidated Financial Statements and the operating
effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concern basis of
accounting in preparation of Consolidated Financial Statements and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the appropriateness of this assumption. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditors
report to the related disclosures in the Consolidated 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 auditors report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the Consolidated Financial
Statements, including the disclosures, and whether the Consolidated Financial Statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of
the audit of the financial statements of such entities included in the consolidated
financial statements of which we are the independent auditors. For the other entities
included in the consolidated financial statements, which have been audited by other
auditors, such auditor remains responsible for the direction, supervision and performance
of the audits carried out by them. We remain solely responsible for our audit opinion.
Materiality is the magnitude of misstatements in the consolidated financial statements
that, individually or in aggregate, makes it probable that the economic decisions of a
reasonably knowledgeable user of the consolidated financial statements may be influenced.
We consider quantitative materiality and qualitative factors in (i) planning the scope of
our audit work and in evaluating the results of our work; and (ii) to evaluate the effect
of any identified misstatements in the consolidated financial statements.
We communicate with those charged with governance of the Holding Company and such other
entities included in the Consolidated Financial Statements of which we are the independent
auditors 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.
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. From the matters communicated with
those charged with governance, we determine those matters that were of most significance
in the audit of the Consolidated Financial Statements of the current period and are
therefore the key audit matters. We describe these matters in our auditors 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.
Other Matters
1. Financial statements / financial information of M/s. Ucal Holdings
Inc.,(Previously known as Amtec Precision Products Inc.,) a wholly owned foreign
subsidiary, whose financial statements / financial information reflect total assets of
18,496.02 lakhs as at March 31st 2023, total revenues of 24,014.43 lakhs and net loss
after tax amounting to 887.344 lakhs for the year ended on that date, as considered in the
consolidated financial statements were not audited by us. The financial information has
been audited by another auditor whose reports have been furnished to us by the Management.
The financial statements and other financial information have been prepared in accordance
with accounting principles generally accepted in the United States of America
("USA") and which have been audited by other auditor under generally accepted
auditing standards applicable in that country. The Companys management has converted the
financial statements from accounting principles generally accepted in USA to accounting
principles generally accepted in India. We have audited these conversion adjustments made
by the Companys management. Our opinion in so far as it relates to the balances and
affairs of this subsidiary is based on the report of other auditor and the conversion
adjustments prepared by the management of the Company and audited by us.
2. Financial statements / financial information of M/s. UCAL Polymer Industries
Limited, a wholly owned subsidiary, whose financial statements / financial information
reflect total assets of 7,081.82 lakhs as at March 31st, 2023, total revenues from
operations of 4,418.71 lakhs and net profit after tax amounting to 160.93 lakhs for the
year ended on that date, as considered in the consolidated financial statements were
audited by us.
Our opinion on the Consolidated Financial Statements, and our report on Other Legal and
Regulatory Requirements below, is not modified in respect of the above matters with
respect to our reliance on the work done and the reports of the other auditors.
Report on Other Legal and Regulatory Requirements
1. With respect to the matters specified in paragraphs 3(xxi) and 4 of the Companies
(Auditors Report) Order, 2020 ("CARO") issued by the Central Government in
terms of sec 143(11) of the Act, to be included in the Auditors report, we report that
according to the information and explanations provided to us, and based on the CARO
reports issued by us UCAL Polymer Industries Limited included in the Consolidated
Financial Statements of the Holding Company, to which the reporting under CARO is
applicable, there are no qualification or adverse remarks by us.
2. As required by Section 143(3) of the Act, 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 purposes of our audit of the aforesaid
Consolidated Financial Statements; b. In our opinion, proper books of account as required
by law relating to preparation of the aforesaid Consolidated Financial Statements have
been kept so far as it appears from our examination of those books and the reports of the
other auditors; c. The Consolidated Balance Sheet, the Consolidated Statement of Profit
and Loss (including Other
Comprehensive Income), the Consolidated Statement of Changes in Equity and the
Consolidated Statement of Cash Flows dealt with by this Report are in agreement with the
books of account maintained for the purpose of preparation of the Consolidated Financial
Statements; d. In our opinion, the aforesaid Consolidated Financial Statements comply with
the Ind AS; e. On the basis of the written representations received from the directors of
the Holding Company as on 31st March, 2023 taken on record by the Board of Directors of
the Holding Company and the reports of the statutory auditors of its subsidiary companies
incorporated in India, none of the directors of the Group companies incorporated in India
is disqualified as on 31st March, 2023 from being appointed as a director in terms of
Section 164 (2) of the Act. f. There is no qualification, reservation or adverse remark
relating to the maintenance of accounts and other matters connected therewith; g. With
respect to the adequacy of the internal financial controls with reference to these
consolidated Ind AS financial statements of the Holding Company and its subsidiary company
incorporated in India and the operating effectiveness of such controls, refer to our
separate Report in "Annexure I" to this report h. With respect to the other
matters to be included in the Auditors Report in accordance with the requirements of
section 197 (16) of the Act, as amended: In our opinion and to the best of our information
and according to the explanations given to us, the remuneration paid by the companies of
the Group, incorporated in India, to its directors during the year is in accordance with
the provisions of section 197 of the Act.; i. With respect to the other matters to be
included in the Auditors 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 consolidated financial statements
disclose the impact of pending litigations on the consolidated financial position of the
Group Refer to Note No 46 to Consolidated Financial Statements; ii. The Group did not have
any material foreseeable losses on long-term contracts including derivative contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the
Investor Education and Protection Fund by the Holding Company, its subsidiary company
incorporated in India; iv. (a) The respective Managements of the Holding Company and its
subsidiaries which are companies incorporated in India, whose financial statements have
been audited under the Act, have represented to us and to the other auditors of such
subsidiaries respectively that, to the best of their knowledge and belief, no funds (which
are material either individually or in the aggregate) have been advanced or loaned or
invested (either from borrowed funds or share premium or any other sources or kind of
funds) by the Holding Company or any of such subsidiaries to or in any other person(s) or
entity(ies), including foreign entities ("Intermediaries"), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall,
directly or indirectly lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Holding Company or any of such subsidiaries,
associate and joint venture ("Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries. (b) The respective
Managements of the Holding Company and its subsidiaries which are companies incorporated
in India, whose financial statements have been audited under the Act, have represented to
us and to the other auditors of such subsidiaries respectively that, to the best of their
knowledge and belief, no funds (which are material either individually or in the
aggregate) have been received by the Holding Company or any of such subsidiaries from any
person(s) or entity(ies), including foreign entities ("Funding Parties"), with
the understanding, whether recorded in writing or otherwise, that the Holding Company or
any of such subsidiaries, shall, 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 the audit procedures that have been
considered reasonable and appropriate in the circumstances performed by us and those
performed by the auditors of the subsidiaries, which are companies incorporated in India
whose financial statements have been audited under the Act, nothing has come to our or
other auditors notice that has caused us or the other auditors to believe that the
representations as provided under (a) and (b) above, contain any material misstatement v.
(a) The final dividend paid during the year by the Holding company which pertains to
previous year 2021-22 is in accordance with Section 123 of the Act, to the extent it
applies to payment of dividend; As stated in Note 49 to the Consolidated Financial
Statements, the Board of Directors of the Holding Company has proposed final dividend for
the year 2022-23 which is subject to the approval of the Members of the Holding Company at
the ensuing Annual General Meeting. The dividend declared is in accordance with section
123 of the Act to the extent it applies to declaration of dividend.
No dividend has been declared or paid during the year by the Holding Companys
subsidiaries incorporated in India.
For M/s R. Subramanian and Company LLP,
Chartered Accountants
ICAI Firm Regn. No. 004137S/S200041
Kumarasubramanian R
Partner
M No. 021888
UDIN: 23021888BGSROW9207
Place : Chennai
Date: May 29, 2023
+91-9892691696
