We have audited the accompanying standalone financial statements of Sharda Motor Industries Limited (“the
Company”), which comprise the balance sheet as at March 31, 2025, and the Statement of Profit and Loss
(including Other Comprehensive Income), Statement of Changes in Equity and Statement of Cash Flows for
the year then ended, and notes to the standalone financial statements, including a summary of material
accounting policy information and other explanatory information (hereinafter referred to as “the standalone
financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid
standalone 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
prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015,
as amended, (“Ind AS”) and accounting principles generally accepted in India, of the state of affairs of the
Company as at March 31, 2025, the Profit (financial performance including other comprehensive income),
changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements 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 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 made thereunder, and we
have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion on the standalone financial statements.
Key Audit Matters
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. We have determined the matters described below to be the
key audit matters to be communicated in our report w.r.t the Company:
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S.
No.
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Key Audit Matters
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How our audit addressed the key audit matter
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1.
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Evaluation of uncertain tax positions and
disputed matters
(Refer note no.40 "Contingent liabilities
and commitments” in the Standalone
Financial Statements)
The Company is involved in certain claims/
matters relating to direct taxes and indirect
taxes that are pending with various
authorities
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Our audit procedures included, but were not limited
to, the following:
(i) Test of Controls-
Obtained an understanding from the Management
with respect to process and controls followed by
the Company for identification and monitoring of
significant developments in relation to the litigations,
including completeness thereof.
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S.
No.
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Key Audit Matters
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How our audit addressed the key audit matter
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and courts in India. The Company has
disclosed contingent liabilities of '
16,336.56 lakh related to these litigations
as at March 31, 2025.
Whether a claim against the Company
is recognized as a provision or
disclosed as a contingent liability in
the standalone financial statements is
inherently judgmental and dependent on
certain assumptions and management
assessment. These include assumptions
relating to the likelihood and/or timing of
the cash outflows and the interpretation
of applicable rules and regulations. The
amounts involved are significant and due
to the range of possible outcomes and
considerable uncertainty around these
litigations, the determination of the need
for recording a provision or disclosure
as contingent liability in the standalone
financial statements is inherently
subjective/ judgmental and therefore is
considered to be a key audit matter in the
current year.
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(ii) Test of Details-
a) Obtained the list of litigations from the
management and reviewed their assessment
of the likelihood of the outflow of economic
resources being probable, possible or remote in
respect of the litigations. This involved assessing
the probability of an unfavorable outcome of a
given proceeding and the reliability of estimates
of related amounts based on documents /
communications from the tax authorities and
explanations given by the Management.
b) Verified the demand notices received during the
year from various tax authorities and evaluated
Company’s response to those matters.
c) Obtained and evaluated the independent
confirmations from the consultants representing
the Company before the various authorities
and assessed the same vis-a-vis management’s
conclusions through discussions held with
the in-house legal counsel and understanding
precedents in similar cases.
d) Tested the completeness of the litigations list
by performing inquiries with key management
personnel and tax team. Comparing the same
with prior year’s disclosures and current year’s
board meeting minutes.
e) Verified the accounting treatment of each case
under Ind AS 37 i.e. Whether appropriately
classified as a provision or contingent liability.
f) Evaluated the appropriateness of disclosures
made relating to provisions and contingent
liabilities in terms of the applicable Ind AS and
obtained a management representation letter
confirming that all known contingent liabilities
have been disclosed.
Conclusion: Based on the procedures above, we
did not identify any significant exception to the
management’s assessment of the ongoing direct and
indirect tax litigations.
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2
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Recognition of Revenue
(Refer Note 3.1 to the accompanying
standalone financial statements as at
March 31, 2025)
In accordance with the requirements
of Ind AS 115 - Revenue from Contracts
with Customers, an entity shall recognize
revenue when the entity satisfies a
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Our audit procedures included, but were not limited
to, the following:
(i) Test of Controls-
a) Obtained an understanding and assessed
the design, implementation and operating
effectiveness of key internal controls over
recognition and measurement of revenue in
accordance with customer contracts, including
correct timing of revenue recognition.
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S.
No.
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Key Audit Matters
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How our audit addressed the key audit matter
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2.
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performance obligation by transferring a
promised good or service to a customer.
Revenue is one of the key measures of
performance and is identified as an area of
significant risk, mainly on account of:
i) As per its accounting policy, the
Company primarily derives revenue from
the sale of automotive parts, with revenue
recognized at a point in time when control
of the goods is transferred to the customer.
The Company exercises judgment in
determining the timing and amount of
revenue recognition for such transactions.
This involves assessing the nature of the
sales and the appropriate revenue cut-off.
Accordingly, there is a risk that revenue
may be recognized in the incorrect period
or that revenue and the associated profit
may be misstated.
ii) In determining the transaction price
for the sale of products, the Company
considers the effects of various factors such
as price adjustments to be passed on and/
or recovered to/from the customers based
on various parameters like negotiations-
based savings on cost of materials, rebates
etc. provided to the customers. There is
a risk that revenue could be recognized
at an incorrect amount on account of
the significant judgement and estimate
involved in calculation of index based and
other price variation conditions occurring
during the year and around the year end.
Accordingly, Revenue Recognition is
identified as a Key Audit Matter.
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b) Performed test of controls of management’s
process of recognizing the revenue from sales
of goods with regard to the timing of the
revenue recognition as per the sales terms with
the customers and management’s process
& assumptions used in calculation of price
variations.
(ii) Test of Details-
a) Assessed the appropriateness of the Company's
revenue recognition accounting policy as
per Ind AS 115- Revenue from contracts with
customers and understood revenue recognition
process including identification of performance
obligations and determination of transfer of
control of the asset underlying the performance
obligation to the customer.
b) Performed substantive testing (including year-
end cut-off testing) by selecting samples of
revenue transactions recorded during the year,
verifying with the underlying documents i.e
sales invoices, dispatch documents, customer
contracts, & purchase orders, sales order, and
proof of delivery.
c) Performed cut-off testing, on a sample basis to
ensure that the revenue from the sale of goods is
recognized in the appropriate period.
d) Reviewed significant contracts with customers
and assessed pricing clauses, including
tooling charges, price revisions. compared the
management’s post-year-end credit notes or
settlements.
e) Assessed the adequacy and accuracy of the
Company’s disclosures related to revenue
recognition in the financial statements, as
required by Ind AS 115.
Conclusion: Based on our procedures as mentioned
above, we did not identify any findings that are
significant for the financial statements as a whole in
respect of accounting, presentation and disclosure of
revenue recognition.
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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 other information comprises
the information included in the annual report but does not include the standalone financial statements and
our auditor’s report thereon. The annual report is expected to be made available to us after the date of this
auditor’s report.
Our opinion on the standalone 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 standalone 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 standalone financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated.
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.
Responsibility of Management and Those Charged with Governance for the Standalone
Financial Statements
The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with
respect to the preparation of these standalone financial statements that give a true and fair view of the
financial position, financial performance, total comprehensive income, changes in equity and cash flows of
the Company in accordance with the Ind AS 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.
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 Board of Directors either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Standalone Financial Statements
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 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
standalone 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 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 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.
• Conclude on the appropriateness of management’s 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.
• 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.
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.
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 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
1. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”), issued by the Central
Government of India in terms of sub-section (11) of section 143 of the Act, we give in “Annexure A” a
statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2A. As required by Section 143(3) of the Act, based on our audit we report 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.
(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 the paragraph 2B (f)
below on reporting under Rule 11(g) of the Companies (Audit & Auditors) Rules 2014.
(c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income),
Statement of Change in Equity and the Statement of Cash Flows dealt with by this Report are in
agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under
Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on March 31, 2025 taken on
record by the Board of Directors, none of the directors is disqualified as on March 31, 2025 from being
appointed as a director in terms of Section 164 (2) of the Act.
(f) The modifications relating to the maintenance of accounts and other matters connected therewith
are as stated in the paragraph 2A (b) above on reporting under Section 143(3)(b) of the Act and
paragraph 2B (f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules,
2014.
(g) With respect to the adequacy of the internal financial controls with reference to standalone financial
statements of the Company and the operating effectiveness of such controls, refer to our separate
Report in “Annexure B”.
2B. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
(a) The Company has disclosed the impact of pending litigations on its financial position in its standalone
financial statements- Refer Note No. 40 to the standalone financial statements.
(b) The Company did not have any long-term contracts including derivative contracts for which there
were any material foreseeable losses.
(c) There has been no delay in transferring amounts, required to be transferred, to the Investor Education
and Protection Fund by the Company.
(d) i. The Management has represented that, to the best of its knowledge and belief, as disclosed in the
Note 51 to the accounts, 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 Company to or in any other person or entity, including foreign
entity (“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 Company (“Ultimate Beneficiaries”) or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
ii. The Management has represented, that, to the best of its knowledge and belief, as disclosed in
the Note 51 to the accounts, no funds (which are material either individually or in the aggregate)
have been received by the Company from any person or entity, including foreign entity (“Funding
Parties”), with the understanding, whether recorded in writing or otherwise, that the Company
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
iii. Based on such audit procedures that has been considered reasonable and appropriate in
the circumstances, nothing has come to our notice that has caused us to believe that the
representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (i) & (ii) above,
contain any material misstatement.
(e) i. The final dividend proposed in the previous year, declared and paid by the Company during the
year is in compliance with section 123 of the Act to the extent it applies to payment of dividend;
and
ii. As stated in note 48 to the standalone financial statements, the Board of Directors of the Company
have proposed final dividend for the year which is subject to the approval of the members 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.
(f) In respect of reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014:
i. The Company has used an accounting software for maintaining its books of account. It has a
feature of recording audit trail (edit log) at application level for all relevant transactions, which
has been examined by us on test check basis. However, the feature of recording audit trail (edit
log) was not enabled at the database level to log any direct data changes. Further, audit trail
(edit log) facility operated throughout the year, we did not come across any instance of this
being tampered with. The audit trail has been preserved by the Company as per the statutory
requirements for record retention.
ii. The Company has used payroll software for maintaining payroll records which is operated by
a third-party service provider. We have relied upon the report of independent service auditors
report for compliance & operating effectiveness of audit trail (edit log and backup) feature
in the said payroll software, that operated throughout the year for all relevant transactions
recorded their in. The audit trail has been preserved by the service provider as per the statutory
requirements for record retention.
3. 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 explanation given to us, 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 of the Act.
For S.R. Dinodia & Co. LLP
Chartered Accountants,
Firm Registration Number 001478N/N500005
(Sandeep Dinodia)
Partner
Membership Number 083689
UDIN: 25083689BMIUEU1258
Place of Signature: New Delhi
Date: May 24, 2025
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