We have audited the accompanying Ind-AS financial statements of GILLETTE INDIA LIMITED (“the Company”), which comprise the Balance Sheet as at June 30, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity, the Statement of Cash Flows, for the year then ended and the Notes to the Ind-AS financial statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as ‘Ind-AS financial statements’).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind-AS 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 with other accounting principles generally accepted in India, of the state of affairs of the Company as at June 30, 2024, the profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
We conducted our audit of the Ind-AS 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 Ind-AS 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 ethical requirements that are relevant to our audit of the Ind-AS 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.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Ind-AS financial statements of the current period. These matters were addressed in the context of our audit of the Ind-AS 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.
Sr.
Key Audit Matter
Auditor’s Response
1.
Revenue Recognition - Discounts and Promotions (note no. 2.3(a) and 20 to the Ind-AS financial statements)
Revenue is measured net of discounts, rebates, incentives and promotions (‘discounts and promotions’).
The estimation of discounts and promotions related to sales made during the year is material and it involves Management exercising significant judgement owing to the varying terms of agreements with customers. In addition, the value and timing of promotions for products varies from period to period, and the activity can span over a financial reporting period end.
Past experience is used to estimate the provision for discounts and promotions considering the terms of the underlying schemes and arrangements with customers.
Our audit procedures included:
(a) Assessing the appropriateness of the revenue recognition accounting policies, including those relating to discounts and promotions, by comparing the same with applicable accounting standards.
(b) Reviewing the Company’s general IT controls including review of the independent service auditor’s report and other relevant information.
(c) Testing the design, implementation and operating effectiveness of key controls including those at the third-party service organization by reviewing the independent service auditor’s report and other relevant information with respect to discounts and promotions.
(d) Performing substantive procedures by selecting samples of discounts and promotions recorded during the year, including year end accruals by verifying underlying supporting documentation.
Sr. Key Audit Matter
Considering the materiality of amounts
(e)
Performing an analysis of past accrual and actual
involved and significant judgements related
expenses incurred there against.
to estimation of discounts and promotions,
(f)
Considering the adequacy of the Company’s
the same has been considered as a key audit matter.
disclosures as per the requirements of IND AS 115.
2. Provisions and Contingent Liabilities
Our
audit procedures included:
relating to taxation matters. (note no 3.2, 27
(a)
Understanding the process followed by the Company
and 36 to the Ind - AS financial statements)
in estimating the quantum of provisions for taxation
The Company is subject to a range of tax
matters and disclosure of contingent liabilities where
risks and periodic assessments by local
it is considered that there could be a possibility that
tax authorities on various tax matters.
the obligation may arise.
Applicable tax laws and regulations are
(b)
Discussing the status and potential exposures
subject to differing interpretations and
in respect of significant tax litigations with the
the resolution of a final tax position can
Management including their views on the likely
take several years to complete. Where the
outcome of each assessment / litigation and
amount of tax payable is uncertain, the Company estimates provisions based on
magnitude of potential exposure.
Management’s judgement of the likelihood
Evaluating the impact of change in tax regulations,
of settlement being required.
Given the complexity of judgements involved
which could materially impact the amounts recorded in the Ind-AS financial statements.
in estimating the relevant provisions
(c)
Involving our tax specialists to evaluate and challenge
required, including assessments previously
the appropriateness of Management's assessment
made by authorities, this was considered as
and judgements to estimate the provisions held in
a key audit matter.
respect of the open tax assessments. We also reassessed the provisions made in the Ind-AS financial statements based on the outcome of prior and ongoing tax assessments.
(d)
We have also assessed the adequacy of the Company's disclosures in the Ind-AS financial statements in respect of provisions and contingent liabilities relating to taxation matters.
The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the annual report but does not include the Ind-AS financial statements and our 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 Ind-AS 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 Ind-AS financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the Ind-AS 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 describe actions applicable under the applicable laws and regulations.
Responsibilities of Management and Those Charged with Governance for the Ind-AS Financial Statements
The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Ind-AS financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the 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 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 Ind-AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Ind-AS financial statements, the 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 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.
Our objectives are to obtain reasonable assurance about whether the Ind-AS 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 Ind-AS 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 Ind-AS 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) the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system with reference to the Ind-AS 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 Management.
• Conclude on the appropriateness of Management’s use of the going concern basis of accounting 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 Ind-AS 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 Ind-AS financial statements, including the disclosures, and whether the Ind-AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Ind-AS financial statements that, individually or in aggregate, makes it probable that the economic decisions of the users of the Ind-AS 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 Ind-AS financial statements.
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 Ind-AS 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.
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 the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.
2. As required by Section143(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 purpose of our audit.
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books, except for the matter stated in paragraph 2(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. As stated in Note 44 of the Notes to the Ind-AS financial statements, the Company had maintained periodic backups of relevant information extracted from its ERP on servers physically located in India upto December 17, 2023. The Company has commenced maintaining daily backups from December 18, 2023.
c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid Ind-AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with relevant rules issued thereunder.
e) On the basis of the written representations received from the Directors of the Company as on June 30, 2024, and taken on record by the Board of Directors, none of the Directors of the Company are disqualified as on June 30, 2024, from being appointed as a Director in terms of Section 164(2) of the Act.
f) The observation relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 2(b) above on reporting under Section 143(3)(b) and paragraph 2(h)(vi) 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 the Ind-AS financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.
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 (“the Rules”), 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 on its financial position in its Ind-AS financial statements - Refer Note 36 to the Ind-AS financial statements.
ii) The Company did not have any longterm contracts including derivative contracts for which there were any material foreseeable losses.
iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except to the extent as stated in Note 17 to the Ind-AS financial statements.
iv) The Management has represented that:
a) to the best of its knowledge and belief, 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 entity(ies) (“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) to the best of its knowledge and belief, 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, 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;
Based on such audit procedures performed by us which are 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) of the Rules, as provided under (a) and (b) above, contain any material misstatement.
v) As per information and explanation furnished by Management and based on the records of the Company, the dividend proposed in the previous year, as well as the interim dividend declared and paid by the Company during the year is in accordance with Section 123 of the Act.
The Board of Directors of the Company have proposed a final dividend for the year ended June 30, 2024, which is subject to the approval of the members at the ensuing Annual General Meeting. The proposed dividend is in accordance with Section 123 of the Act.
vi) As detailed in Note No. 45: Notes to the Ind -AS financial statements, the Company uses certain third-party Software-as-a-Service (SaaS) applications as well as certain applications hosted on Procter & Gamble Group's global servers which have a feature of recording audit trail (edit log) facility at the application level. The audit trail data for direct access to the database available with the third-party software service providers has been validated through review of Service Organisation Controls (SOC) Reports. However, these SOC Reports do not cover the full period under audit. For the period not covered by the SOC Reports, Management has obtained and relied on Bridge Letters from the SaaS vendors. In case of the 'Employee Lifecycle and Compensation' application and the 'Leave, Workforce and Overtime' application, the 'Vendor Master Management' application the Bridge Letters are for the period October 1, 2023 to June 30, 2024; in case of the 'Purchasing and Customer Pricing Terms Management' application and the 'Product Price Approval and Management' application, the Bridge Letter is for the period April 1, 2024 to June 30, 2024; and in case of the 'International Freight and Logistics Management' application, the Bridge Letter is for the period May 1, 2024 to June 30, 2024. Accordingly, we are unable to comment whether the audit trail feature for direct access to the database of the said SaaS applications was enabled and operated throughout the year for all relevant transactions recorded in the software for the period for which Bridge Letters were obtained.
The audit trail records for direct access to the database for one of the Inventory Management applications hosted on the Group's global servers was available only from May 15, 2023, onwards, while for the other Inventory Management application, the audit trail records were available only from March 31, 2024, onwards. Accordingly, we are unable to comment whether the audit trail feature of the said applications was enabled and operated throughout the year for all relevant transactions recorded in the software.
Except as stated above, the audit trail at application level as well as at database level for other software programs have operated throughout the year for all relevant transactions recorded in the software programs. We have also not observed instances of the audit trail feature having been tampered with during the period for which these records were available.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014,
is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, on preservation of audit trail as per the statutory requirements for record retention is not applicable for the year ended June 30, 2024.
3. According to information and explanations given to us and based on our examination of the records of the Company, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act.
Firm Regn. No.: 104607W / W100166
M. No.: 42454 UDIN:24042454BKBKFB6530
Mumbai: August 29, 2024.