We have audited the accompanying Standalone Financial
Statements of Elecon Engineering Company Limited ("the
Company"), which comprise the Standalone Balance Sheet
as at March 31,2025, the Standalone Statement of Profit and
Loss (including Other Comprehensive Income), Standalone
Statement of Changes in Equity and Standalone Statement
of Cash Flows 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 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 and 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 independence
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 ICAI's Code of Ethics. We believe that the audit
evidence obtained by us 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.
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Sr. Key Audit Matters
no.
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Auditor's Response
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1. Related party transactions
The Company has undertaken several transactions
with its related parties. These include sale of goods,
purchase of goods and availing / rendering of services
from / to related parties. We identified related party
transactions as a key audit matter due to significance
of related party transactions, increased regulatory
compliances and risk of such transactions remaining
undisclosed in the financial statements.
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We applied the following audit procedures among others, to
obtain sufficient and appropriate audit evidence:
• Obtained and read the Company's policies, processes
and procedures in respect of identifying related parties,
obtaining approval, determining whether the same are
at Arm's Length basis, recording and disclosure of
related party transactions;
• Read minutes of shareholder meetings, board
meetings, audit committee meetings and reports of
Internal Auditors regarding Company's assessment of
related party transactions being in the ordinary course
of business and at arm's length;
• Tested, on a sample basis, related party transactions
with the underlying contracts, confirmations and other
supporting documents;
• Verified the related party information disclosed in
the financial statements as per the relevant Indian
accounting standards with the underlying supporting
documents, on a sample basis.
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Sr.
no.
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Key Audit Matters
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Auditor's Response
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2.
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Allowance for Expected credit loss on trade
receivables.
Evaluation of trade receivables for impairment or
Expected Credit Loss (ECL) requires exercise of
judgement and involves consideration of various
factors. These factors include customer's ability and
willingness to pay the outstanding amounts, past due
receivables, financial and economic difficulties of
customers;
This assessment is done for each group of customers
resulting from possible defaults over the expected
life of the receivables. Based on this assessment,
credit loss rate is determined in provision matrix. The
credit loss rate is based on the experience of actual
credit losses over past years adjusted to reflect the
current economic conditions and forecasts of future
economic conditions. Based on such credit loss
rate, the Company records ECL allowance for trade
receivables.
In view of the above, we have considered measurement
of ECL on trade receivables (including retention
monies) as a key audit matter.
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We applied the following audit procedures among others, to
obtain sufficient and appropriate audit evidence:
• Evaluating the accounting policy for impairment
of trade receivables in terms of the relevant Indian
accounting standard;
• Testing the design, implementation and operating
effectiveness of the Company's key internal financial
controls. These controls relate to measurement of ECL
on trade receivables;
• Evaluated monitoring mechanism by the company
related to credit control, collection of trade receivables,
follow up for past due amounts and for identification
and recognition of corresponding impairment losses;
• For past due receivables, we examined the ageing of
receivables, impairment losses provided/ reversed
during the year and compared them to historical
experience;
• Evaluating the Company's assessment regarding
credit worthiness of such customers and identification
of the credit impaired customers;
• Balance confirmation requests were circulated to
some of the selected customers on random sampling;
• We evaluated the historical credit loss experience,
current observable data and forward-looking outlook
including subsequent realisation;
• Assessing the adequacy of the related disclosures in
the Standalone Financial Statements with reference to
the relevant Indian accounting standards.
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INFORMATION OTHER THAN THE STANDALONE FINANCIAL
STATEMENT AND AUDITOR'S REPORT THEREON
The Company's Management and the Board of Directors is
responsible for the other information. The other information
comprises the information included in the Management
Discussion and Analysis, Board's Report including
Annexures to that Board's Report, Business Responsibility
and Sustainability Report, Corporate Governance and
Shareholder's Information, but does not include the
Financial Statements and our auditor's report 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 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 during the course of
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. When we read the
other information, if we conclude that there is a material
misstatement therein, we are required to communicate the
matter to those charged with governance.
RESPONSIBILITIES OF MANAGEMENT AND THOSE
CHARGED WITH GOVERNANCE FOR THE STANDALONE
FINANCIAL STATEMENTS
The Company's Management and 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
state of affairs, profit/loss and other 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, including the
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 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
Management and 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 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'S RESPONSIBILITIES FOR THE AUDIT OF
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 financial controls
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 system 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 the Management and
Board of Directors.
• Conclude on the appropriateness of the Management
and Board of Directors use of the going concern basis
of accounting in preparation of standalone 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
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
financial statements that, individually or in aggregate,
makes it probable that the economic decisions of a
reasonably knowledgeable user of the 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
financial statements.
iv. a) The Management has represented,
that, to the best of its knowledge and
belief, as disclosed in note no - 46(h)
to the Standalone Financial Statement
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 entities ("Intermediaries"),
with the understanding, whether
recorded in writing or otherwise, that
the intermediary 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;
b) The Management has represented,
that, to the best of its knowledge and
belief, as disclosed in note no - 46(i)
to the Standalone Financial Statement
no funds (which are material either
individually or in the aggregate) have
been received by the company from
any person(s) or entity(ies), 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
c) 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 (i)
and (ii) of Rule 11(e), as provided under
a) and b) above, contain any material
misstatement.
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, to
the extent applicable.
2. 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 (Also refer our comments in para 2(h)(vi));
c) The Standalone Balance Sheet, the Standalone
Statement of Profit and Loss (including other
comprehensive income), the Standalone
Statement of Changes in Equity and the
Standalone Cash Flow Statement dealt with by
this Report are in agreement with the relevant
books of account;
d) In our opinion, the aforesaid Standalone Financial
Statements comply with the Indian Accounting
Standards 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) 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". Our
report expresses an unmodified opinion on
the adequacy and operating effectiveness of
the company's internal financial controls with
reference to Standalone Financial Statements;
g) With respect to the other matters to be included
in the Auditor's 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 Company to its
directors during the year is in accordance with the
provisions of section 197 of the Act; and
h) 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:
i. The Company has disclosed the impact of
pending litigations as on March 31, 2025
on its financial position in its Standalone
Financial Statements - Refer note no - 41 to
the Standalone Financial Statements;
ii. The Company has made provision,
as required under the applicable law
or accounting standards, for 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 Company.
v. The interim dividend declared and paid by
the company during the year is in accordance
with section 123 of the Act;
The final dividend paid by the company during
the year in respect of the same declared
for the previous year is in accordance with
section 123 of the Act to the extent it applies
to payment of dividend;
As stated in note no.- 16.2 to the 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 ensuring Annual
General Meeting. The dividend declared is
in accordance with section 123 of the Act,
to the extent it applies to declaration of
dividend;
vi. Based on our examination, which included
test checks, the company has used
accounting software for maintaining its
books of account which has the feature
of recording audit trail (edit logs) facility
and the same has operated throughout the
year for all relevant transactions recorded
in the respective software except Human
Resources Management System Software
implemented during the year in which audit
trail is not available at data base level.
Further, during the course of our audit we did
not come across any instances of audit trail
feature being tampered with. Additionally,
the audit trail has been preserved by the
company as per the statutory requirements
for record retention.
For C N K & Associates LLP
Chartered Accountants
Firm Registration Number 101961W/W-100036
Himanshu Kishnadwala
Partner
Membership No.037391
UDIN: 25037391BMLFTK2408
Place: Vallabh Vidyanagar
Date: April 24, 2025
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