TO THE MEMBERS OF 3I INFOTECH LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of 3I INFOTECHLIMITED ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date andnotes to financial statements including a summary of significant accounting policies andother explanatory information (hereinafter referred to as the "the Standalone Ind ASfinancial statements"). In our opinion and to the best of our information andaccording to the explanations given to us the aforesaid Standalone Ind AS financialstatements 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 IndianAccounting Standards prescribed under section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended ("Ind AS") and otheraccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2021 and its profit and total comprehensive income changes in equity andits cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone Ind AS financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence obtained by us is sufficient and appropriateto provide a basis for our audit opinion on the Standalone Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report:
|Sr.No. Key Audit Matter ||How was the matter addressed in our audit |
|1 Revenue recognition - Fixed Drice development contracts ||Principal Audit Procedures: |
|Our audit procedures on revenue recognized from fixed price development contracts included: |
|The Company inter alia engages in Fixed-price development contracts where revenue is recognized using the percentage of completion computed as per the input method based on management's estimate of contract costs (Refer Note 2(d) and Note 20 to the standalone financial statements) || Obtaining an understanding of the systems processes and controls implemented by management for recording and calculating revenue and the associated contract assets unearned and deferred revenue balances. |
|We identified revenue recognition of fixed price development contracts as a KAM considering - || On selected samples of contracts we tested that the revenue recognized is in accordance with the accounting standard by- |
| There is an inherent risk around the accuracy of revenues given the customized and complex nature of these contracts and significant involvement of IT systems* ||- Evaluating the identification of performance obligation; |
| Application of revenue recognition accounting standard is complex and involves a number of key judgments and estimates including estimating the future cost-to-completion of these contracts which is used to determine the percentage of completion of the relevant performance obligation; ||- Testing management's calculation of the estimation of contract cost and onerous obligation if any. We: |
| These contracts may involve onerous obligations on the Company that require critical estimates to be made by management; and ||HI Observed that the estimates of cost to complete were reviewed and approved by appropriate levels of management; |
| At year-end a significant amount of work in progress (Contract assets and liabilities) related to these contracts is recognised on the balance sheet. ||HI Performed a retrospective review of costs incurred with estimated costs to identify significant variations and verify whether those variations have been considered in estimating the remaining costs to complete the contract; |
| ||HI Assessed the appropriateness of work in progress (contract assets) on balance sheet by evaluating the underlying documentation to identify possible delays in achieving milestones which may require change in estimated costs to complete the remaining performance obligations; and |
| ||HI Performed test of details including analytics to determine reasonableness of contract costs. |
| || |
|2 Evaluation of uncertain tax Dosition and contingent liability ||Principal Audit Procedures: |
|Our audit procedures include the following substantive procedures: |
|The Company is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including transfer pricing and direct and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions consequently having an impact on related accounting and disclosures in the standalone Ind AS financial statements. Refer Notes 2(t) and 31 to the standalone financial statements. || Obtained understanding of key uncertain tax positions; and |
| || We along with our internal tax experts- |
| || Read and analysed select key correspondences external legal opinions / consultations by management for key uncertain tax positions; |
| || Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and |
| || Assessed management's estimate of the possible outcome of the disputed cases; |
| || |
|3 Assessment of impairment on investment in subsidiaries and Joint Ventures As described in note 5 to the standalone financial statements the carrying amount of investments in subsidiaries and joint ventures recorded in the separate financial statements is Rs.1219.86 crores (net of impairment) as of March 31 2021. The Company recognized impairment loss on investments in subsidiaries and joint ventures amounted to Rs.1146.85 Crores in previous years. ||Principal Audit Procedures: We understood evaluated and validated management's key controls over the impairment assessment process. |
|The Company identifies whether an impairment indication occurs every year and performs impairment test over investments in subsidiaries and joint venture compares the carrying amount with the greater of the calculated value-in-use and fair value used to determine whether it is impaired. || We compared the methodology used (value-in-use calculations based on future discounted cash flows) by the Company to market practice. |
|In estimating the value-in-use management's judgment is involved in determining the key assumptions such as sales growth rate gross profit margin net profit margin cash flows discount rate and terminal growth rate that have a significant impact on the estimated value-inuse. Considering significant degree of judgment in estimating value-in-use and likelihood of management bias we identified assessment of impairment on investments in subsidiaries and joint ventures as a key audit matter. || We obtained management's future cash flow forecasts tested the mathematical accuracy of the underlying value-in-use calculations and compared the same to the approved budget and future forecasts. We also compared historical actual results to those budgeted to assess the quality of management's forecasts. |
| || We also assessed the reasonableness of key assumptions used in the calculations comprising sales growth rates gross profit margin net profit margin perpetual growth rate and discount rates. When assessing these key assumptions we discussed them with management to understand and evaluate management's basis for determining the assumptions and compared them to external industry outlook reports and economic growth forecasts from a number of sources. |
| || We also obtained from management valuation report from external valuation expert. |
| || We obtained and tested management's sensitivity analysis around the key assumptions to ascertain that selected adverse changes to key assumptions both individually and in aggregate would not cause the carrying amount of investment to exceed the recoverable amount. |
| || We evaluated management's assessment on whether any events or change in circumstances indicate there may be a change in the expected useful lives of intangible assets. |
| || We found the Company's estimates and judgments used in the impairment assessment and useful life to be supported by the available evidence. |
Emphasis of Matter
We draw attention to Note No 43 of the Standalone Ind AS financial statements whichrelates to differences in balances with the subsidiary 3i Infotech Saudi Arabia LLCamounting to INR 74.05 crores relating to various previous financial years for which thecompany is in the process of passing the entries and eliminating the differences.
Our Opinion is not modified in respect of this matter Other Information
The Company's Board of Directors is responsible for the other information. The otherinformation comprises information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholders information but does not include the standalone IndAS financial statements and our auditor's report thereon. The above stated reports areexpected to be made available to us after the date of this auditor's report.
Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone Ind AS financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Ind AS financialstatements that give a true and fair view of the financial position financialperformance including total comprehensive income changes in equity and cash flows of theCompany in accordance with the standalone Ind AS and other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the Standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Ind AS financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the Ind AS financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the standalone Ind AS financialstatements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central
Government of India in terms of sub-section (11) of section 143 of the Companies Act2013 we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law relating to preparationof the aforesaid Standalone Ind AS financial statements have been kept by the Company sofar as it appears from our examination of those books.
c) The company has a branch office although no separate books of accounts are preparedby the Branch and hence section 143(8) does not apply to the company.
d) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and the Statement of Cash Flow dealt with bythis Report are in agreement with the books of account.
e) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act.In our opinion thereare no financial transactions or matters which have any adverse effect on the functioningof the company
f) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct.
i) There is no adverse remark relating to the maintenance of accounts and other mattersconnected therewith.
j) With respect to adequacy of internal financial controls over financial reporting ofthe Company and the operating effectiveness of such controls refer to our separate reportin "Annexure B". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting.
k) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 as amended in our opinion and to the best of our information and according to theexplanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition as referred to Note 31 to the Standalone Ind AS financial statement.
(ii) The Company has made provision as required under the applicable law or accountingstandard for material foreseeable losses if any on long term contracts.
(iv) There has been no delay in transferring amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.
l) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
For GMJ & Co Chartered Accountants FRN: 103429W CA Sanjeev Maheshwari
Partner M. No.: 038755
Place : Mumbai
Date : May 17 2021
Annexure A' to the Independent Auditor's Report
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report to the members of "The Company" of even date)
i. In respect of the company's Property plant and equipment:
a. The company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.
b. During the year the Company in accordance to a phased programme has physicallyverified Furniture & Fixtures Office equipment Plant & Machinery and Computerswhich in our opinion is reasonable considering the size of the company and the nature ofits assets. No material discrepancies were noticed on such physical verification.
c. Based on the information and explanations given to us the title deeds of immovableproperties are held in the name of the Company except in respect of immovable propertiesof Land & Building that have been taken on lease and disclosed as fixed assets in NoteNo.3 to the Standalone and Ind AS financial statements title deeds of the same are inerstwhile name of the company.
ii As the Company is a service company primarily rendering software services.Accordingly it does not hold any physical inventories during the year. Accordinglyparagraph 3(ii) of the Order is not applicable to the Company.
iii. The Company has granted loans (taking over of lenders liability of wholly ownedsubsidiary in terms of DRS Scheme) to a body corporate covered in the register maintainedunder section 189 of the companies act 2013 which are outstanding as on the date offinancial statements.
a. During the year the company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Accordingly paragraph 3(iii)(a)of the order is not applicable.
b. In respect of existing loans outstanding the schedule of repayment of principal andinterest has been stipulated and the parties are repaying the principal amounts asstipulated and also regular in payment of interest.
c. In respect of existing loans outstanding as on March 31 2021 there is no amountwhich was overdue during the year.
iv. In our opinion and according to the information and explanations given to us theCompany has not advanced any loan provided guarantee and security covered in Section 185of the Act. The Company has complied with the provisions of Section 186 of the Act to theextent applicable with respect to the loans and investments made guarantees given andsecurity provided.
v. The Company has not accepted deposits from public within the meaning of directivesissued by RBI (Reserve Bank of India) and Sections 73 to 76 or any other relevantprovisions of the Act and rules framed there under.
vi. The Central Government has not prescribed the maintenance of cost records underSection 148 (1) of the Companies Act 2013 for any of the services rendered by theCompany. Accordingly paragraph 3(vi) of the Order is not applicable.
vii. a) According to the information and explanations given to us and on the basis ofexamination of records the
Company has generally been regular in depositing amounts deducted/ accrued in respectof undisputed statutory dues including provident fund Employees' State insurance incometax goods and service tax duty of customs cess and other material statutory duesapplicable to it with the appropriate authorities.
According to the information and explanations given to us and on the basis ofexamination of records of the Company no undisputed amounts payable in respect ofprovident fund Employees' State insurance income tax goods and service tax duty ofcustoms cess and other material statutory dues were in arrears as at March 31 2021 for aperiod more than six months from the date they became payable except as mentioned below.
|Particulars ||Amount |
|Professional Tax ||2450 |
|Maharashtra Labour Welfare Fund ||3292 |
b) According to the books of accounts and records as produced and examined by us inaccordance with the generally accepted auditing practices in India as at March 312021the following are the particulars of the dues that have not been deposited on the accountof dispute.
(Amount in INR Crores)
|Name of Statute ||Nature of Demand ||Period to which amount Relates ||Amount of Dispute ||Amount Paid/ Adjusted ||Amount Unpaid ||Forum where dispute is pending |
|MVAT Act2002 ||Sales Tax ||Assessment Order u/s 23 of MVAT 2002. ||0.50 ||- ||0.50 ||Sales Tax Officer |
|AP VAT Act2005 ||Sales Tax ||Financial Year 2009- 10 and 2010- 11 ||0.68 ||- ||0.68 ||Appellate deputy Commissioner |
|Income Tax Act 1961 ||Income Tax ||Assessment Year 2004-05 ||1.00 ||- ||1.00 ||Commissioner of Income Tax- appeals) |
| || ||Assessment year 2007-08 ||25.25 ||25.25 || ||Income Tax Appellate Tribunal |
| || ||Assessment year 2007-08 ||5.64 ||5.64 || ||Income Tax Appellate Tribunal |
|Income Tax Act 1961 ||Income Tax ||Assessment year 2007-08 ||2.83 || ||2.83 ||Income Tax Appellate Tribunal |
| || ||Assessment year 2006-07 ||0.18 || ||0.18 || |
| || ||Assessment year 2006-07 ||0.18 || ||0.18 |
| || ||FY 04-05 to FY 10-11 ||178.49 || ||178.49 ||Supreme Court |
|Finance Act 1994 ||Service ||FY 2012-13 ||1.58 ||0.12 ||1.46 ||Commissioner (Appeal) |
|Tax ||FY 2014-15 & 2016-17 ||1.81 || ||1.81 ||Additional Commissioner of GST & C. Ex |
| || ||Financial Year 2004-05 & 200506 ||0.16 ||0.03 ||0.13 ||Commissioner of Service Tax |
viii. As per clause 3.4 of the Supp ement Restructuring Agreement in terms of DRS tothe Master Restructuring Agreement dated 30th March 2012 with the lenders and as per therevised terms of the Foreign Currency Convertible Bonds (FCCB) there is no default inrepayment of dues to the banks financial institutions and debenture holders.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year or in the recent past. Based onthe information and explanations given to us by the management term loans were appliedfor the purpose for which the loans were obtained.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by or on the Company by its officers or employees noticed or reportedduring the year nor have we been informed of such case by the management.
xi. According to the information and explanations given to us and based on ourexamination of the records during the year the Company has paid managerial remunerationas per the limits prescribed under Section 197 of the Act.
xii. According to the information and explanations given to us the Company is not aNidhi Company. Therefore the provisions of clause 3(xii) of the Order are not applicableto the Company.
xiii. According to information and explanations given us and based on our examinationof the records of the Company all transactions with the related parties are in compliancewith sections 177 and 188 of Companies Act 2013 and details of such transactions havebeen disclosed in the standalone Ind AS financial statements as required by Ind AS 24Related Party Disclosures specified under section 133 of the Act read with the relevantrules issued thereunder. Refer Note 32 to the standalone Ind AS financial statements.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Therefore the provisions ofclause 3(xiv) of the Order are not applicable to the Company.
xv. According to information and explanations given to us and based on our examinationof records of the Company the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3 (xv) of the Order is notapplicable.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable.
For GMJ & Co Chartered Accountants FRN: 103429W CA Sanjeev Maheshwari Partner M.No.: 038755
UDIN: 21038755AAAACH3020 Place : Mumbai Date : May 172021
Re: 3I INFOTECH LIMITED
Annexure - 'B' to the Independent Auditor's Report
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of 3i Infotech Limited of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
(Referred to in paragraph 2(i) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of 3i Infotech Limited of even date)
We have audited the internal financial controls over financial reporting of "3iinfotech Limited" ("the Company") as of March 31 2021 in conjunction withour audit of the Standalone Ind AS financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable
to an audit of internal financial controls both applicable to an audit of InternalFinancial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For GMJ & Co Chartered Accountants
FRN: 103429W CA Sanjeev Maheshwari
Partner M. No.: 038755
Place : Mumbai
Date : May 172021