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ABB India Ltd.

BSE: 500002 Sector: Engineering
NSE: ABB ISIN Code: INE117A01022
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VOLUME 19799
52-Week high 1699.90
52-Week low 722.45
P/E 123.44
Mkt Cap.(Rs cr) 29,557
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1405.00
CLOSE 1403.50
VOLUME 19799
52-Week high 1699.90
52-Week low 722.45
P/E 123.44
Mkt Cap.(Rs cr) 29,557
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

ABB India Ltd. (ABB) - Auditors Report

Company auditors report

To the Members of ABB India Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of ABB India Limited("the Company") which comprise the balance sheet as at 31 December 2019 andthe statement of profit and loss (including other comprehensive income) statement ofchanges in equity and statement of cash flows for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and in the contextof the overriding effect of the provision in the scheme of arrangement as approved by theNational Company Law Tribunal (‘NCLT’) regarding accounting of demerger ofPower Grid Segment from the specified retrospective appointed date give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 December 2019 and profit and other comprehensiveincome 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 arefurther described in the Auditor’s Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Emphasis of matter

We draw attention to Note 32 to the financial statements regarding theScheme of Arrangement (‘Scheme’) for demerger of the power grid business of theCompany to ABB Power Products and Systems India Limited. The Scheme has been approved bythe National Company Law Tribunal (‘NCLT’) vide its order dated 27 November 2019and a certified copy has been filed by the Company with the Registrar of CompaniesBangalore on 1 December 2019. In accordance with the scheme approved by NCLT the Companyhas given effect to the Scheme from the retrospective appointed date specified thereini.e. 1 April 2019.

Our opinion is not modified in respect of this matter.

 

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

The key audit matter How the matter was addressed in our audit
Revenue recognition See note 2.6 23 and 43 to the financial statements
A significant portion of the Company’s business comprises long- term fixed price projects. Revenue from these contracts is recognized in accordance with the principles laid down in Ind AS 115 Revenue from Contracts with Customers and as detailed in "significant accounting policies" in the financial statements. 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:
The first time application of Ind AS 115 with effect from 1 January 2019 was of relevance for our audit as it required the Company- wide assessment of contracts in relation to the new accounting criteria. In accordance with this guidance the Company classifies its various contracts with customers and determines whether revenue should be recognized at "point in time" or "over the time" basis. 1. We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
There are various areas involving complexities judgements and estimates involved in accounting for revenue recognized on "over the time" basis including: 2. We tested key controls (both design and operating effectiveness) with respect to revenue recognition.
• Estimation of total contract costs at inception and remaining costs to completion which is a critical factor in measuring progress of a contract and amounts of revenue to be recognized; and 3. We carried out analytical procedures on revenue recognised during the year to identify unusual variances.
• Assessment of various risks emanating from operational delays contract terms changes in estimations technical legal external environment etc. This requires the Company to estimate various costs to capture such risks including liquidated damages and warranties. 4. We performed substantive testing by selecting samples of revenue transactions recorded during the year by testing the underlying documents using statistical sampling.
In view of the above and because the Company and its external stakeholders focus on revenue as a key performance indicator we determined this area to be an area involving significant risk an area of audit focus and accordingly a key audit matter. 5. We evaluated management’s estimates (contract costs and risk provisions) by performing analytical procedures on such estimates.
6. We performed a retrospective review for contracts completed during the current year by comparing the final outcome of the contracts with previous estimates made for those contracts to assess the reliability of the management’s estimation process.
7. We performed tests for completeness and appropriateness of actual cost booked in the correct period by testing the underlying documents for samples selected using statistical sampling.
Recoverability of trade receivables See note 2.13(a) 11 and 36(iii)(i) to the financial statements 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:
Trade receivables including retention money with customers forms a significant part of the financial statements. Customer contracts typically involve time consuming and complex conditions around closure of contracts including technical acceptances. This generally leads to longer and significant time for realization of receivables. As a result of the above management's assessment of recoverability of trade receivables involves critical evaluation of all factors impacting recoverability including impact of external environment capability of customers to pay etc. 1. We obtained an understanding of the processes implemented by management to estimate impairment provision against trade receivables.
Management makes an impairment allowance for trade receivables on the basis of it's assessment of recoverability of specific customers and on the basis of expected credit loss model for the remaining customers in accordance with Ind AS 109 Financial Instruments. For the purposes of impairment assessment significant judgements and assumptions are made including assessing credit risk timing and amount of realization etc. 2. We tested key controls (both design and operating effectiveness) over management’s estimate of impairment loss.
3. We obtained and tested the correctness of ageing of trade receivables on a sample basis using statistical sampling.
4. We evaluated the model adopted by management to estimate the expected credit loss and tested related computations. We challenged management in respect of the various judgements and estimates made in the model. We corroborated management’s estimates on the basis of past trends and historical evidences.
5. We obtained and discussed management assessment of impairment for specific customer balances and understood reasons for the determination.
In view of above we determined this area to be an area of audit focus and accordingly a key audit matter. 6. We have circulated direct confirmations on a sample basis using statistical sampling. In case of non- receipt of such confirmations alternate test procedures such as testing subsequent receipts and underlying documents have been performed.
Discontinued operations See note 2.23 and 32 to the financial statements 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:
During the year the Company has carved out and transferred its Power Grid segment to another entity. The said transaction has been accounted for in the financial statements of the entity as a common control transaction under Ind AS 103 - Business Combinations and in accordance with the order of National Company Law Tribunal (NCLT) dated 27 November 2019. We have identified this transaction relating to discontinued operations as a key audit matter because of significant complexities in its accounting and disclosure requirements.
1. We tested the design of key controls and operating effectiveness of the relevant key controls around the accounting and disclosure of discontinued operations and transfer of the segment during the year.
2. We obtained and read the key documents relating to the transfer of the segment (scheme of arrangement and approval granted by NCLT). We have evaluated whether the method of accounting followed by the Company is in accordance with the scheme approved by NCLT and the relevant accounting guidelines. 3. We tested the correctness of assets and liabilities transferred to the buyer.
4. We tested the reconciliations between the trial balance and the details of assets/liabilities transferred carried out by management to check completeness of assets and liabilities transferred to the buyer.
5. We assessed the adequacy and appropriateness of the disclosures in the financial statements relating to the discontinued operations and the transfer of segment as required by the accounting standards.

Other Information

The Company's Management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and our auditor'sreport thereon. The annual report is expected to be made available to us after the date ofthis auditor's report.

Our opinion on the financial statements does not cover the otherinformation and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.

When we read the annual report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take necessary actions as applicable under the applicable laws andregulations.

Management's Responsibility for the Financial Statements

The Company's management and Board of Directors are responsible for thematters stated in section 134(5) of the Act with respect to the preparation of thesefinancial statements that give a true and fair view of the state of affairs profit/ lossand other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so Board of Directors isalso responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether thefinancial 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 financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thefinancial 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 theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the 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 thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' 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 (Auditors’ Report) Order 2016("the Order") issued by the Central Government in terms of section 143 (11) ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

(A) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The balance sheet the statement of profit and loss (including othercomprehensive income) the statement of changes in equity and the statement of cash flowsdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements read with note32 therein and the Emphasis of Matter paragraph above comply with the Ind AS specifiedunder section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 December 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 December 2019 from being appointed as a director interms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in theAuditors’ 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 theexplanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31December 2019 on its financial position in its financial statements - Refer Note 39 to thefinancial statements;

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts- Refer Note 36 to the financial statements;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company; and

iv. The disclosures in the financial statements regarding holdings aswell as dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these financial statements since they do not pertainto the financial year ended 31 December 2019.

(C) With respect to the matter to be included in the Auditors' Reportunder section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

For BS R& Co.LLP

Chartered Accountants

Firm's Registration No. 101248W/W - 100022

Amit Somani

Partner

Membership number. 060154

UDIN: 20060154AAAACB5408

Place: Bengaluru

Date: February 12 2020.

Annexure - A to the Independent Auditors’ Report

The Annexure referred to in Independent Auditors' Report to the membersof the Company on the financial statements for the year ended 31 December 2019 we reportthat:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of itsfixed assets by which fixed assets are verified every year. In accordance with thisprogramme fixed assets were verified during the year and no material discrepancies werenoticed on such verification. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company except for freehold land aggregating to 5acres and 31 guntas acquired by the Company on a slump sale basis in 2011. As explainedto us registration of the title deeds for this land is in process.

(ii) The inventory except goods-in-transit and stocks lying with thirdparties has been physically verified by the Management during the year. In our opinionthe frequency of such verification is reasonable. The discrepancies noticed on suchverification between the physical stock and book records were not material. For stockslying with third parties at the year-end written confirmations have been obtained by theManagement.

(iii) According to the information and explanation given to us theCompany has granted loan to a company covered in the register maintained under section 189of the Companies Act 2013 ('the Act").

(a) In our opinion and according to the information and explanationgiven to us the terms and conditions on which the loan had been granted to the companylisted in the register maintained under section 189 of the act are not prejudicial to theCompany's interest.

(b) According to the information and explanation given to us the loangranted along with interest thereon is repayable on the date of maturity. We are informedthat the loan granted along with interest thereon has not yet become due and thus therehas been no default on the part of the company to whom the money has been lent.

(c) There are no amounts of loans granted to companies firms limitedliability partnerships or other parties listed in the register maintained under section189 of the Act which are overdue for more than ninety days.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 186 of the Act withrespect to the loans given. There are no investments made guarantees given and securitiesgiven in respect of which section 186 of the Act are applicable. Further there are noloans guarantees and securities given in respect of which the provisions of section 185of the Act are applicable.

(v) According to the information and explanations given to us theCompany has not accepted any deposits from the public. Accordingly paragraph 3(v) of theOrder is not applicable.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules prescribed by the Central Government of India formaintenance of cost records under Section 148(1) of the Act and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. Howeverwe have not made a detailed examination of the records.

(vii) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company amounts deducted/ accruedin the books of account in respect of undisputed statutory dues including provident fundemployees' state insurance income-tax duty of customs goods and services tax cess andother material statutory dues have been regularly deposited during the year by the Companywith the appropriate authorities. As explained to us the Company did not have any dues onaccount of sales tax value added tax service tax and excise duty.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees’ state insuranceincome-tax duty of customs goods and services tax cess and other material statutorydues were in arrears as at 31 December 2019 for a period of more than six months from thedate they became payable.

(b) According to information and explanations given to us thefollowing dues of income tax sales tax duty of excise duty of customs service tax andvalue added tax have not been deposited by the Company on account of disputes:

Name of the Statute Nature of dues

Amount (Rs. in Crores)*

Period to which it relates

Forum where dispute is pending
Faridabad Development Act (Octroi) Product Classification

3.04

1986-1994

High Court
Customs Act 1962 Tax interest and penalty

15.80

2008-2018

Commissioner of Customs/ Custom Excise and Service Tax Appellate Tribunal
Income Tax Act 1961 Tax interest and penalty

75.55

2011-2015

Commissioner of Income Tax (Appeals)
Central Excise Act 1944 Tax interest and penalty

70.11

1996-2015

Commissioner (Appeals)/Commissioner (LTU)/Ministry of Finance (Department of Revenue)/ Custom Excise and Service Tax Appellate Tribunal
Finance Act 1994 Tax interest and penalty

31.05

2006-2015

Commissioner (Appeals)/ Custom Excise & Service Tax Appellate Tribunal/ Supreme Court
Sales Tax Act Tax interest and penalty

239.05

1994-2019

Additional Commissioner (Appeals)/Assistant Commissioner of Commercial Taxes/Commissioner of Commercial Taxes/Deputy Commissioner of Commercial Taxes (Appeals)/Deputy Commissioner (Appeals)/Joint Commissioner of Commercial Taxes (Appeals)/Taxation Board/ High Court/ Sales Tax Appellate Tribunal

* Net of amounts paid under protest.

(viii) According to the information and explanations given to us theCompany did not have any outstanding loans or borrowings from any financial institution orbank or government or dues to debenture holders during the year.

(ix) The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) and term loans during the year.Accordingly paragraph 3 (ix) of the Order is not applicable.

(x) According to the information and explanations given to us no fraudby the Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit.

(xi) According to the information and explanations give to us and basedon our examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.

(xiv) According to the information and explanations give to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

for B S R & Co. LLP

Chartered Accountants

Firm’s registration number: 101248W/W-100022

Amit Somani

Partner

Membership number: 060154

UDIN: 20060154AAAACB5408

Place: Bengaluru

Date: February 12 2020

Annexure B to the Independent Auditors’ report on the financialstatements of ABB India Limited for the year ended 31 December 2019.

Report on the internal financial controls with reference to theaforesaid financial statements under Clause (i) of Subsection 3 of Section 143 of theCompanies Act 2013

(Referred to in paragraph 1(A)(f) under ‘Report on Other Legal andRegulatory Requirements’ section of our report of even date)

Opinion

We have audited the internal financial controls with reference tofinancial statements of ABB India Limited ("the Company") as of 31 December 2019in conjunction with our audit of the financial statements of the Company for the yearended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 December 2019 based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India (the "Guidance Note").

Management’s Responsibility for Internal Financial Controls

The Company’s management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company’spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to financial statements were established and maintained andwhether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor’s judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

A Company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements include those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial controls with Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

for B S R & Co. LLP

Chartered Accountants

Firm's registration number: 101248W/W-100022

Amit Somani

Partner

Membership number: 060154

UDIN: 20060154AAAACB5408

Place: Bengaluru

Date: February 12 2020.

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