TO THE MEMBERS OF PIDILITE INDUSTRIES LIMITED
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
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Revenue Recognition - Variable Considerations
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See Note 31 to the standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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Revenue is measured net of any trade discounts and
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Our audit procedures included:
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schemes to customers
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a) Understanding the process followed
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("variable consideration”).
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by the Company to determine the amount of accrual for variable
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The variable consideration represents the portion of
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consideration.
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discounts and schemes
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b) Evaluating on sample basis, the
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which are not directly
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design and implementation and
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deducted on the invoice
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testing the operating effectiveness
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and involves estimation
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of Company's general IT controls
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by the Company
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and key manual controls for variable
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in recognition and
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consideration computations, variable
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measurement of such
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consideration payments / settlements
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discounts and schemes.
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and Company's examination over the
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In addition, the value and timing of promotions
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variable consideration accruals.
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for products varies from
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c) Performing substantive testing by
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period to period, and
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selecting samples, using statistical
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the activity can span
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sampling approach, of variable
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beyond the year end. The
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consideration transactions recorded
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unsettled portion of the variable consideration
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during the year and as at period end,
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results in discounts
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to reconcile the parameters used in
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and schemes due to
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the computation with the relevant
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customers as at
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source documents.
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year end.
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d) Examining historical variable
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Therefore, there is a risk of
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consideration accrual together with
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revenue being overstated
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our understanding of current year
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due to fraud through
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developments to form an expectation
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estimation of variable
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of the variable consideration
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consideration accruals
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accrual as at year end. Comparing
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recognised, resulting from
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this expectation against the actual
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pressure the Company
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variable consideration accrual,
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may feel to achieve
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completing further inquiries and
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performance targets at
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obtaining underlying documentation,
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the year end.
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on a sample basis. Further, we
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We identified the
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have also performed retrospective
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evaluation of accrual for
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examination to evaluate the precision
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variable consideration as
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with which Company makes
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a key audit matter.
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estimates.
e) Ensuring completeness of variable consideration accrual by checking subsequent settlement (i.e. payments and credit notes) made after year end.
f) Checking completeness and accuracy of the data used by the Company for accrual of variable consideration.
g) Critically assessing manual journal entries posted to revenue (variable consideration), on a sample basis, to identify unusual items and examined the underlying documentation.
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Impairment of Investments in subsidiaries
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See Note 7 to the standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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The Company has significant
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Our audit procedures included:
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investments in subsidiaries. The carrying amount of the investments in subsidiaries held at cost less impairment as at 31st March 2025 is
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a)
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Understanding the process followed by the Company in respect of the annual impairment analysis for investments in subsidiaries.
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? 1,054.05 crores, net of
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b)
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Evaluating on sample basis, the
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impairment of ? 71.29 crores.
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design and implementation and testing the operating effectiveness
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The Company has
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of key controls placed around the
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investments in subsidiaries
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impairment assessment process of
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which are considered to be
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the recoverability of the investments
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associated with significant
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made, including the estimation of
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risk in respect of valuation of
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future cash flows forecasts, the
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such investments. Changes
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process by which they were produced
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in business environment
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and discount rates used.
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could also have a significant
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c)
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Assessing the indicators for
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impact on the valuation of
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impairment of investments in
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these investments. These
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subsidiaries and understanding the
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investments are carried at
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Company's assessment of those
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cost less any accumulated
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indicators.
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impairment losses. The investments are examined for
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d)
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Focussing on the sensitivity in the
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impairment at each reporting date. These investments
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difference between the estimated recoverable value and book values
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are unquoted and hence it
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of the subsidiaries, where change in
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is difficult to measure the
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assumptions could cause the carrying
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realisable amount of these
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amount to exceed its estimated
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investments.
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recoverable value. Further, we have:
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The Company performs an
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- Compared the carrying amount
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of investments with the relevant
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annual assessment of its
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subsidiaries balance sheet to
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investments in subsidiaries,
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identify their net assets, being an
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to identify any indicators of
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approximation of their minimum
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impairment. The recoverable amount of these investments
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recoverable amount.
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which is based on the higher
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- For the investments where the
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of the value in use or fair
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carrying amount exceeded the net
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value less costs to sell, has
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asset value, compared the carrying
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been derived from discounted
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amount of the investments with
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forecast cash flow models.
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the estimated recoverable value based on discounted cash flow
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These models use several
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analysis.
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key assumptions, concerning estimates of revenue growth, near and long-term growth
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e)
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Challenging and assessing the work performed by management's external valuation expert, including the
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rate, operating margins and the discount rate.
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valuation methodology and the key assumptions used such as estimated
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The Company's assessment
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revenue growth, near and long-term
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of the remaining 'value in use'
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growth rate, and operating margins.
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is judgmental because it is
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We also assessed the competence,
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based on forecast results and
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capabilities and objectivity of the
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uncertain outcomes. Further,
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expert used by the management
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determining these estimates
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in the process of evaluating
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may be subject to a degree of
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impairment models.
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management bias.
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f)
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Testing data used to develop the estimate for completeness and
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accuracy.
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g)
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Involving valuation specialist, where appropriate, to evaluate the reasonability of the methodology, approach and assumptions used in the valuation carried out
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for determining the estimated recoverable value of investments.
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h)
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Evaluating the adequacy of the Company's disclosures in the standalone financial statements in
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respect of impairment testing of investments in subsidiaries.
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Opinion
We have audited the standalone financial statements of Pidilite Industries Limited (the "Company”), which comprise the standalone balance sheet as at 31st March 2025, 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 31st March 2025, and notes to the standalone financial statements, including material accounting policies and other explanatory information, which includes financial information of five branches in Egypt, Sri Lanka, Bangladesh, Dubai and Tanzania (hereinafter referred to as "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 ("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 31st March 2025, and its profit and other comprehensive loss, 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.
Other Information
The Company's Management and 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 financial statements and 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 will 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 and take necessary actions, as applicable under the relevant laws and regulations.
Management's and Board of Directors' Responsibilities for the Standalone Financial Statements
The Company's Management and Board of Directors are 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 accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) 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 are 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is 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 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.
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 Section 143(11) 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 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 the paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
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 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.
e. On the basis of the written representations received from the directors between 31st March 2025 to 25th April 2025 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 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 2(A)(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 financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B”.
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, 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 as at 31st March 2025 on its financial position in its standalone financial statements - Refer Note 40 to the standalone financial statements.
b. The Company did not have any long-term contracts for which there were any material foreseeable losses. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on 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-Refer note 25 to the standalone financial statements.
d (i) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the Note 54 (a) and (b) 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 person(s) or entity(ies), including foreign entities ("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 55 (h) to the standalone financial statements, no funds 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 directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Parties ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(iii) Based on the 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 (i) and (ii) above, contain any material misstatement.
' e. 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 21 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. Based on our examination which included test checks, except for instances mentioned below, the Company has used accounting softwares for maintaining its books of accounts which have a feature of recording audit trail (edit log) facility and the same has operated throughout the
year for all relevant transactions recorded in the respective softwares:
(i) In the absence of an independent auditor’s report in relation to controls at service organization for accounting software used for maintaining the books of account relating to scheme master, which is operated by third-party software service provider, we
are unable to comment whether audit trail feature at the database level of the said software was enabled to log any direct data changes and operated throughout the year for all relevant transactions recorded in the software.
(ii) Audit trail was not enabled at the database level to log any direct data changes for accounting software used for consolidation from 1st April 2024 to 1st July 2024.
Further, where audit trail (edit log) facility was enabled and operated throughout the year for the accounting software, we did not come across any instance of the audit trail feature being tampered with. Additionally, except where audit trail was not enabled in the prior year, the audit trail has been preserved by the Company as per the statutory requirements for record 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 and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us.
For B S R & Co. LLP
Chartered Accountants Firm’s Registration No.:101248W/W-100022
Sudhir Soni
Partner
Membership No.: 041870 ICAI UDIN:25041870BMOMLC3916
Place: Mumbai Date: 8th May 2025
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