annual-report-FY2021

287 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2020-21   Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Mahindra & Mahindra Limited (hereinafter referred to as the “Holding Company”) and its subsidiaries (Holding Company and its subsidiaries together referred to as “the Group”), its associates and its joint ventures, which comprise the consolidated balance sheet as at 31 March 2021, and the consolidated statement of profit and loss (including other comprehensive income), consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, 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, and based on the consideration of reports of other auditors on separate financial statements of such subsidiaries, associates and joint ventures as were audited by the other auditors, 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 accounting principles generally accepted in India, of the consolidated state of affairs of the Group, its associates and joint ventures as at 31 March 2021, of its consolidated profit and other comprehensive income, consolidated changes in equity and consolidated cash flows for the year then ended. 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 Consolidated Financial Statements section of our report. We are independent of the Group, its associates and joint ventures in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in terms of the Code of Ethics issued by the Institute of Chartered Accountants of India and the relevant provisions of the Act, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence obtained by us along with the consideration of audit reports of the other auditors referred to in sub-paragraph (a) of the “Other Matters” paragraph below, is sufficient and appropriate to provide a basis for our opinion on the consolidated 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 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. Description of Key Audit Matter 1. Bankruptcy filing by a material subsidiary The key audit matter How the matter was addressed in our audit The Group held an investment in a material foreign subsidiary. The Holding Company’s Board of Directors and management have concluded that admission of this subsidiary in the rehabilitation proceedings with the Seoul Bankruptcy Court under the Debtor Rehabilitation and Bankruptcy Act of South Korea on 28 December 2020 and uncertainty on outcome of the rehabilitation proceedings impacts the Holding Company’s ability to retain control of the subsidiary. The Holding Company´s Board of Directors and management determined that the Holding Company lost control as defined in Ind AS 10 Consolidated Financial Statements due to reasons which are described in the accounting policies on basis of consolidation. The business operations of the erstwhile subsidiary have been classified as discontinued operations in the consolidated financial statements. Our audit procedures include: • Read the documents in relation to admission of the subsidiary in the rehabilitation proceedings and made enquiries with the Company’s management to understand the implications of the rehabilitation proceedings; • Assessed the Group’s evaluation of degree of control/significant influence based on proceedings in the rehabilitation process and the requirements of the relevant accounting standards; • Obtained management’s best estimate of the recoverable amounts and tested the key assumptions with respect to discount rate and expectation of recovery of the assets. Performed sensitivity analysis of the key assumptions, such as discount rates, expected time and extent of the subsidiary’s ability to repay used in assessment of the recoverable value of the assets; • Inquired and assessed the tax impact of these matters with the management; Independent Auditors’ Report to the Members of Mahindra & Mahindra Limited