To the Members of Titan Company Limited Basis for Opinion
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of Titan Company Limited (the "Company"), its ESOP trust (the "Trust") which comprise the standalone balance sheet as at 31 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, and notes to the standalone financial statements, including material 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 2025, and its profit and other comprehensive loss, changes in equity and its cash flows for the year ended on that date.
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 Matter(s)
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.
|
Revenue recognition
See Note 2(ix) and Note 19 to standalone financial statements
|
|
The key audit matter
|
How the matter was addressed in our audit
|
|
The Company and its external stakeholders focus on revenue as a key performance indicator and considering there are performance targets, this increases the risk of misstatement of revenue recognized.
The Company recognizes revenue when the control of goods being sold is transferred to the customer. A substantial part of Company's revenue relates to jewellery and watches which involves large number of transactions with retail customers and sales contracts having varied contractual terms with distributors and franchisees.
|
In view of the significance of the matter, we applied the following audit procedures in this area, among others, to obtain sufficient appropriate audit evidence:
• We assessed the appropriateness of the accounting policy for revenue recognition as per relevant accounting standard.
• We evaluated the design and implementation of key financial controls and their operating effectiveness with respect to revenue recognition transactions selected on a sample basis. These included general IT controls and key application controls over the IT system which govern revenue recognition, including access controls, controls over program changes and interfaces between different system.
|
|
The key audit matter
|
How the matter was addressed in our audit
|
|
Hence, there is risk of misstatement of timing and existence
|
•
|
We reviewed key contracts with distributors and
|
|
of revenue being recognized inappropriately for sales made
|
|
franchisees selected using statistical sampling to
|
|
through retail outlets on cash and carry basis and risk of
|
|
understand terms and conditions particularly relating to
|
|
misstatement of existence of revenue in case of non-retail
|
|
acceptance of goods.
|
|
sales.
|
•
|
For retail sales, we performed substantive testing using
|
|
In view of the above, we have identified existence (retail and non-retail sales) and completeness (retail sales only) of revenue as a key audit matter.
|
|
statistical sampling on sales made on a particular day and tested the underlying documents, which include tracing day sales of the retail outlet to the collection reports and bank statements.
|
| |
•
|
Additionally, we tested the underlying invoices of the selected samples, verifying attributes such as price, quantity, discount, weight, customer acknowledgement and making charges.
|
| |
•
|
We tested credit notes issued to retail customers selected using statistical sampling on sales return during the year and subsequent to the year end.
|
| |
•
|
For sales (other than retail sales), we performed substantive testing using statistical sampling on sales invoices and tested the underlying documentation including verification of invoices, proof of delivery and collections thereon.
|
| |
•
|
We tested sales transactions using statistical sampling on sales (where applicable) made immediately pre and post year end, agreed the period of revenue recognition to the underlying documents.
|
|
Inventories
|
|
|
|
See Note 2(x) and Note 10 to standalone financial statements
|
|
|
|
The key audit matter
|
How the matter was addressed in our audit
|
|
The Company's inventories primarily comprise high value
|
In
|
view of the significance of the matter we applied the
|
|
items like jewellery (gold, diamonds, gemstones etc.) and
|
following audit procedures in this area, among others, to
|
|
watches. The Company holds inventory at various locations
|
obtain sufficient appropriate audit evidence:
|
|
including factories, stores (retail outlets) and third-party locations.
|
•
|
We evaluated. and tested the design, implementation and the operating effectiveness of key controls that the Company has in relation to the safeguarding and physical verification of inventory including the appropriateness of the Company's standard operating
|
|
There is a significant risk of loss of inventory given the high value and nature of the inventory involved.
|
|
In view of the above, we have identified existence of physical
|
|
procedures for conducting, recording and reconciling
|
|
inventories as a key audit matter.
|
|
physical verification of inventories and tested the implementation thereof.
|
| |
•
|
We evaluated the design, implementation and operating effectiveness of general IT controls and key application controls over the Company's IT systems including those relating to recording of inventory quantities on occurrence of each transaction, including access controls, controls over program changes, interfaces between different systems.
|
|
The key audit matter
|
How the matter was addressed in our audit
|
| |
• For the locations selected using statistical sampling we attended physical verification of inventory conducted by the Company and tested roll-forward/roll-backward working provided by the management as at the year end, where applicable. We also performed physical verification of inventory selected using statistical sampling and checked reconciliation of inventories as per physical inventory verification and book records for the locations.
|
| |
• We performed surprise stock count at stores selected using random sampling.
|
| |
• We obtained independent confirmations of inventories held with third parties for samples selected using statistical sampling.
|
| |
• We verified the purity of gold content using Karatmeter along with hallmarking embossed in the jewellery items and originality of solitaires and small diamonds using diamond tester of the samples selected as part of year end physical verification process, as applicable.
|
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 Company's annual report, but does not include the financial statements and auditor's report(s) thereon. The Company's 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 e press 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 Company's 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'/Board of Trustees' 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/Board of Trustees 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/Board of Trustees either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors/Board of Trustees is also responsible for overseeing the Company's/Trust'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:
• I dentify 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)
• 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.
(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.
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 on various dates taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2025 from being appointed as a director in terms of Section 164(2) of the Act.
f. the modification 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 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 31 March 2025 on its financial position in its standalone financial statements - Refer Note 29 to the standalone financial statements.
b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
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 its knowledge and belief, as disclosed in the Note 39 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 39 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 13.3 to the standalone financial statements, the Board of Directors of the Company has 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 the instances mentioned below, the Company has used accounting softwares for maintaining its books of account which have a feature of audit trail (edit log) facility, and the same has operated throughout the year for all relevant transactions recorded in the respective softwares:
(i) The feature of audit trail at the application as well as the database layer of the accounting software relating to general ledger, account receivable and account payable was not enabled for few tables. Additionally, based on our examination, where the audit trail (edit log) facility was enabled and operated at application and database layer in the previous year, the audit trail has not been preserved by the Company as per the statutory requirements for record retention.
(ii) The feature of audit trail was not enabled at the application layer of the accounting software for data changes performed by users having privileged access relating to revenue, accounts payable, accounts receivable, fixed assets and general ledger. Additionally, based on our examination, where the audit trail (edit log) facility was enabled and operated at database layer in the previous year, the audit trail has not been preserved by the Company as per the statutory requirements for record retention.
(iii) In the absence of sufficient and appropriate reporting on compliance with audit trail requirements in the independent auditor's report of a service organization for the accounting software relating to revenue of spares and service (for the watches & wearable division), we are unable to comment whether the audit trail feature and its preservation at database layer as per the statutory requirements of the record retention for the said software was enabled and operated throughout the year for all relevant transactions recorded in such software.
(iv) In the absence of sufficient and appropriate reporting on compliance with audit trail requirements in the independent auditor's report of a service organization for the accounting software relating to interface system between front end billing system and accounting software, we are unable to comment whether the audit trail feature and its preservation at application and database layer as per the statutory requirements of the record retention for the said software was enabled and operated throughout the year for all relevant transactions recorded in such software.
Further, where audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting software, we did not come across any
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
Arjun Ramesh
Partner
Membership No.: 218495 ICAI UDIN:25218495BMOPAY8227
Place: Bengaluru Date: 08 May 2025
instance of the audit trail feature being tampered with. Additionally, where the audit trail (edit log) facility was enabled in the previous year, the audit trail (edit log) has been preserved by the Company as per the statutory requirements for record retention except for the instances mentioned above.
C. With respect to the matter to be included in the Auditor's Report under Section 197(16) of the Act:
I n our opinion and according to the information and explanations given to us, the remuneration paid/payable 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/payable to any director is not in
|