annual-report-FY2020

229 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2019-20  Report on the Audit of the Standalone Financial Statements Opinion We have audited the standalone financial statements of Mahindra & Mahindra Limited (“the Company”), which comprise the standalone balance sheet as at 31 March 2020, and 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 the significant accounting policies and other explanatory information. 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 (“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 31 March 2020, and 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 in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs 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 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. Description of Key Audit Matter 1. Impairment assessment of long-term investments in subsidiaries, joint ventures and associates The key audit matter How the matter was addressed in our audit The Company has long-term investments in subsidiaries, joint ventures and associates (collectively “the investments”) aggregating Rs. 17,748 crores as at 31 March 2020. The Company records the investments at cost less any provision for impairment loss. Changes in business environment, including the economic uncertainty created by the novel corona virus (COVID-19), could have a significant impact on the valuation of these investments. As such, the investments are tested for any triggers for impairment. If triggers are identified, the recoverable amounts of the investments are determined and if the amount is lower than the carrying value of the investments, impairment loss is recognised in the statement of profit and loss. The recoverable amount is determined as higher of value in use (VIU) or fair value less cost to sell the investment. Refer note 2(d)(iv) – significant accounting policy for impairment of investments. Our audit procedures included: • Assessed the design, implementation and operating effectiveness of key controls in respect of the Company’s impairment assessment process, including the approval of forecasts and valuation models; • Tested the key VIU assumptions used in estimating future cash flows such as sales volumes and prices, operating costs, inflation and growth rates by comparing these inputs with externally derived data, past performances, consistency with the Board approved investment plans and knowledge of the industry; • Involved our valuation specialists to evaluate the assumptions including the discount rates used in VIU calculations, through external market data; • Evaluated past performances where relevant, and assessed historical accuracy of the forecast used in the VIU calculations; and • Assessed the adequacy of disclosures in the financial statements on key judgements, assumptions and quantitative data with respect to impairment losses. Independent Auditors’ Report to the Members of Mahindra & Mahindra Limited