We have audited the accompanying standalone financial statements of
Somany Ceramics Limited ("the Company"), which comprise the Balance
sheet as at March 31, 2025, the Statement of Profit and Loss including
Other Comprehensive Income, the Statement of Changes in Equity and
the Statement of Cash Flow for the year then ended, and notes to the
standalone financial statements, including a summary of material
accounting policies 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 accounting principles generally accepted in India, of the state of
affairs of the Company as at March 31, 2025, its profit including other
comprehensive income, the 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), as 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 together with the ethical requirements
that are relevant to our audit of the standalone financial statements under
the provisions of the Act and the Rules thereunder, and we have fulfilled
our other ethical responsibilities in accordance with these requirements
and the Code of Ethics. We believe that the audit evidence obtained by us
is sufficient and appropriate to provide a basis for our audit 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 for the financial year ended March 31, 2025. 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.
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S.N.
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Key Audit Matter
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Auditor's Response
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1.
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Valuation of trade receivables, loans and other financial assets
The carrying amount of trade receivables, loans and other financial
assets of the Company was Rs. 42,984.53 Lakhs as at March 31,
2025.
(Refer Note no. 2.16, 5, 6, 10, 13 and 14 to the standalone financial
statements.)
The Company assesses periodically and at each financial year end, the
expected credit loss associated with its trade receivables, loans and
other financial assets. When there is expected credit loss impairment,
the amount and timing of future cash flows are estimated based on
historical, current and forward-looking loss experience for assets
with similar credit risk characteristics.
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How our audit addressed the key audit matter.
We obtained an understanding of the Company’s credit policy for trade
receivables, process of approvals and terms and conditions for granting inter
corporate deposits (ICD) and business exigencies for other financial assets
and evaluated the processes for identifying impairment indicators. We have
reviewed and tested the ageing of trade receivables and other financial
assets and management’s assessment on the credit worthiness of selected
customers for trade receivables and recoverability of other receivables.
We have obtained year-end balance confirmations for inter corporate
deposits and obtained confirmation from selected customers as on date
determined by us. In case of confirmations not received from the customers,
we have verified the subsequent realization, wherever received. We further
discussed with the key management on the adequacy of the allowance
for credit losses recorded by the Company and reviewed the supporting
documents provided by management in relation to their assessment.
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S.N.
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Key Audit Matter
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Auditor's Response
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We focused on this area because of its significance and the degree
of judgment required to estimate the expected credit loss and
determining the carrying amount of trade receivables, loans and
other financial assets as at the reporting date. Accordingly, due to
complexity/ judgement involved in identification of expected credit
loss, valuation of trade receivables, loans and other financial assets
were determined to be a key audit matter in our audit of the standalone
financial statements.
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We have also reviewed adequacy and appropriateness of allowance for
credit losses based on available information. Based on our audit procedures
performed, we found management’s assessment of the recoverability of
trade receivables, loans and other financial assets to be reasonable.
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2.
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Valuation of inventories
As at March 31,2025, the total carrying amount of inventories was Rs.
19,089.04 Lakhs (Refer Note 2.13 and 8 to the standalone financial
statements)
The assessment of impairment of inventories involves significant
estimation uncertainty, subjective assumptions and the application
of significant judgment.
Reviews are made periodically by management on inventories
for obsolescence and decline in net realizable value below cost.
Allowances are recorded against the inventories for any such
declines based on historical obsolescence and slow-moving history.
Key factors considered include the nature of the stock, its ageing and
turnover rate. Accordingly, due to complexity/ judgement involved in
inventory valuation, inventory valuation was determined to be a key
audit matter in our audit of the standalone financial statements.
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How our audit addressed the key audit matter.
We have analyzed the ageing of the inventories, reviewed the historical trend
on whether there were significant inventories written off or reversal of the
allowances for inventory obsolescence. We conducted a detailed discussion
with the key management and considered their views on the adequacy of
allowances for inventory obsolescence considering the current economic
environment. We have also reviewed the subsequent selling prices in the
ordinary course of business and compared against the carrying amounts
of the inventories on a sample basis at the reporting date. We found
management’s assessment of the allowance for inventory obsolescence to
be reasonable based on available evidence.
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OTHER INFORMATION
The Company’s Board of Directors are responsible for the other
information. The other information comprises the information included
in the Annual Report, but does not include the, consolidated financial
statements, standalone financial statements and our auditor’s reports
thereon.
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 and, in doing so, consider
whether the such other information is materially inconsistent with the
standalone financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to
report in this regard.
RESPONSIBILITIES OF MANAGEMENT FOR THE STANDALONE
FINANCIAL STATEMENTS
The Company’s Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("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 including
other comprehensive income, cash flows and statement of changes
in equity of the Company in accordance with the accounting principles
generally accepted in India, including the Indian Accounting Standards
specified under Section 133 of the Act. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding 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, management 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 management
either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company’s
financial reporting process.
AUDITOR'SRESPONSIBILITIESFORTHEAUDITOFTHESTANDALONE
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 standalone
financial statement 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.
Materiality is the magnitude of misstatements in the standalone
financial statements that, individually or in aggregate, makes it probable
that the economic decisions of a reasonably knowledgeable user of
the standalone 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 standalone
financial statements.
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 the "Annexure A"
a statement on the matters specified in paragraphs 3 and 4 of the
Order.
2. A. 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 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 paragraph 2B(f) below on reporting under Rule
11(g) of the Companies (Audit and Auditors) Rules, 2014.;
(c) The Balance Sheet, the Statement of Profit and Loss
including Other Comprehensive Income, the Statement of
Change in Equity and the Statement of Cash Flow 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 Indian Accounting Standards
(Ind AS) specified under Section 133 of the Act;
(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" to
this report;
B. With respect to the other matters to be included in the Auditor’s
Report in accordance with Rule 11 of the Companies (Audit and
Auditors) Rules, 2014, as amended, in our opinion and to the
best of our information and according to the explanations given
to us:
(a) The Company has disclosed the impact of pending
litigations on its financial position in its standalone
financial statements - Refer Note 37 to the standalone
financial statements;
(b) The Company did not have any material foreseeable losses
in long term contracts including derivative contracts;
(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 it’s knowledge and belief, as disclosed in the Note
59(vii)(a) to the standalone financial statements, no
funds 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 persons or entities, including foreign
entities ("Intermediaries"), with the understanding,
whether recorded in writing or otherwise, that the
Intermediaries shall, whether, directly or indirectly
lend or invest in other persons or entities identified
in any manner whatsoever by or on behalf of the
Company ("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 it’s knowledge and belief, as disclosed in the Note
59(vii)(b) to the standalone financial statements,
no funds have been received by the Company from
any persons or entities, including foreign entities
("Funding Parties"), with the understanding, whether
recorded in writing or otherwise, that the Company
shall, whether, directly or indirectly, lend or invest in
other persons or entities identified in any manner
whatsoever by or on behalf of the Funding Party
("Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate
Beneficiaries; and
iii. Based on such audit procedures that have 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 (d)(i) and (d)(ii) above contain any
material mis-statement.
(e) As stated in Note 49 to the standalone financial statements
i. The dividend proposed in the previous year, declared
and paid by the Company during the year is in
accordance with Section 123 of the Act, as applicable.
ii. The Board of Directors of the Company have
proposed dividend for the year which is subject to
the approval of the members at the ensuing Annual
General Meeting. The amount of dividend proposed
is in accordance with Section 123 of the Act, as
applicable.
(f) Based on our examination, which included test checks, the
Company has used accounting softwares for maintaining
its books of account which have a feature of recording
audit trail (edit log) and that has operated throughout the
year for all relevant transactions recorded in the softwares,
except that:
i. the feature of recording audit trail (edit log) facility at
database level in SAP the ERP accounting software
used for maintaining general ledger and other
accounting module was not enabled for a part of the
year.
ii. the feature of recording audit trail (edit log) facility
at database level of a software provided by a third
party which is used by the Company for maintaining
payroll was not enabled throughout the year. We
were informed by the management that audit trail
(edit log) facility at database level in respect of this
software has been enabled on April 05, 2025.
During the course of performing procedures, we did not
notice any instance of the audit trail feature tampered
with. Further, the audit trail, to the extent maintained in
the prior year, has been preserved by the Company as per
statutory requirements for records retention.
C. With respect to the matter to be included in the Auditor’s Report
under Section 197(16) of the Act:
In our opinion, the Company has paid/ provided for managerial
remuneration in accordance with the requisite approvals
mandated by the provisions of Section 197 read with Schedule
V to the Act.
For Singhi & Co.
Chartered Accountants
Firm Reg. No. 302049E
Shubham Dutta
Partner
Place: Noida (Delhi-NCR) Membership No. 500580
Date: May 07, 2025 UDIN: 25500580BMOYZE8873
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