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Alkem Laboratories Ltd.

BSE: 539523 Sector: Health care
NSE: ALKEM ISIN Code: INE540L01014
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OPEN 3958.00
PREVIOUS CLOSE 3964.20
VOLUME 8264
52-Week high 4067.70
52-Week low 2544.25
P/E 27.52
Mkt Cap.(Rs cr) 47,842
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 3958.00
CLOSE 3964.20
VOLUME 8264
52-Week high 4067.70
52-Week low 2544.25
P/E 27.52
Mkt Cap.(Rs cr) 47,842
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Alkem Laboratories Ltd. (ALKEM) - Auditors Report

Company auditors report

To the Members of

Alkem Laboratories Limited

Report on the Audit of the Standalone Financial

Statements

Opinion

We have audited the standalone financial statements of Alkem Laboratories Limited("the Company") which comprise the standalone balance sheet as at 31 March2021 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2021 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) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the Standalonefinancial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Revenue from operations

The key audit matter description How the matter was addressed in our audit
• Revenue is recognized when the control of the products being sold has been transferred to the customer. There is a risk of revenue being overstated at period end as management to achieve its performance targets may recognise certain transactions as revenue though control may not have transferred to the customer as of the period end. This was an area of focus for us. In view of significance of the matter we applied following audit procedures in this area among others to obtain sufficient and appropriate audit evidence:
• Refer Note 2.9 of the standalone financial statements for details on accounting policy on revenue recognition. • Evaluated the Company's revenue recognition policies by assessing compliance with applicable accounting standards.
• Tested design implementation and operating effectiveness of the Company's general IT controls and key IT application/ manual controls over the Company's systems which governs recording of revenue creation of new customers and key controls over revenue cut-off in the general ledger accounting system.
• Performed substantive testing (including period end cut off testing) by selecting samples of revenue transactions recorded during the year-end by verifying the underlying documents which include testing contractual terms of sale contracts / invoices shipping documents and lag time to test evidence for transfer of control.
• Performed analysis such as sales trend one-off sales to customers during the year to identify any unusual fluctuations.
• Tested significant manual journals posted to revenue to identify unusual items.

Assessment of recoverability of the carrying value of investment in subsidiaries

The key audit matter description How the matter was addressed in our audit
• As at 31 March 2021 the carrying amount of investment in subsidiaries is Rs. 18770 million. The carrying value of investment in subsidiaries will be recovered through future cash flows and accordingly there is inherent risk that these assets may be impaired if these cash flows do not meet the Company's expectations. Refer Note 2.4 3.2 and 3.45 to the standalone financial statements for details of accounting policies on impairment of investment in subsidiaries and related disclosures. In view of significance of the matter we applied following audit procedures in this area among others to obtain sufficient and appropriate audit evidence:
• Annual impairment testing of investments is considered to be a key audit matter due to the significance of the carrying value of these investments in the standalone financial statements inherent complexity in auditing the forward-looking assumptions applied to determine recoverable value given the significant judgements involved. • Tested operating effectiveness of controls over Company's review of impairment analysis.
The key assumptions in the cash flow models include the forecast revenue margins terminal growth weighted average cost of capital (discount rate) and uncertainty in business across geographies arising from the impact of Covid-19 pandemic. • Compared the inputs with historical growth trends evaluating the forecast used in prior year models to its actual performance of the business.
• Compared current forecasts to the business plan approved by the Board of Directors. Using our knowledge of the Company and industry challenged significant assumptions and judgements used by the Company in its impairment assessment specifically in relation to forecast revenue margins terminal growth rate consideration of impact of economic slowdown caused by Covid 19 pandemic and discount rates with the assistance of our valuation specialists.
• Performed sensitivity analysis of the key assumptions including revenue growth rates projected gross margins and the discount rate applied in determining the recoverable value and considering the resulting impact on the impairment testing and whether there were any indicators of management bias in the selection of these key assumptions;
• Evaluated adequacy of disclosures including disclosures of key assumptions judgements and sensitivities and impairment adjustment recorded during the year under audit.

Minimum Alternate Tax credit asset

The key audit matter description How the matter was addressed in our audit
• The Company pays minimum alternate tax (MAT) under section 115JB of the Income Tax Act 1961 and has recognised deferred tax asset (DTA) aggregating Rs. 10174 million as at 31 March 2021 in relation to unutilized MAT credit. In view of significance of the matter we applied following audit procedures in this area among others to obtain sufficient and appropriate audit evidence:
• The MAT paid is available as an offset over a period of 15 years. The MAT credit is recognized as a deferred tax asset to be available for offset when the Company pays taxes under the normal provision of Income Tax Act 1961. Refer note 2.12 for accounting policies and note 3.7 for disclosures related to DTA on Mat credit asset in the standalone financial statements. • Evaluated the Company's accounting policy in respect of DTA by comparing compliance with applicable accounting standards
Period-end assessment of recoverability of DTA in relation to MAT credit asset is considered to be a key audit matter due to the significance of carrying value of MAT credit asset in the standalone financial statements. The assessment of recoverability of DTA on account of MAT credit asset requires significant judgment regarding the Company's estimation of future profitability and taxable income which will result in utilization of the MAT credit within the time limits available under the applicable Income tax laws. • Evaluated Company's controls over the assumptions and judgments used in the projections of taxable future income.
• Assessed Company's ability to estimate future taxable income by comparing the prior year forecasts to actual results.
• Performed a sensitivity analysis over the key assumptions to assess their impact on the reasonability in Company's determination that MAT credit asset were realizable.
• In respect of DTA on account of MAT credit asset we evaluated the Company's assessment and conclusion in relation to its utilization within the period allowed for carry forward and set off against forecasted taxable income streams.
• Evaluated adequacy of disclosures in relation to DTA on account of MAT credit asset made in the standalone financial statements.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's and Board of Directors' Responsibility for the Standalone FinancialStatements

The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Management and Board of Directorsare responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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 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 standalonefinancial 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 Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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 financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. (A) As required by Section 143(3) ofthe Act 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 have been kept by theCompany so far as it appears from our examination of those books

c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2021 onits financial position in its standalone financial statements - Refer Note 3.26 to thestandalone financial statements;.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

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

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2021.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

Annexure A to the Independent Auditor's Report

The annexure referred to in independent auditors' report to the members of theCompany on the standalone financial statements for the year ended 31 March 2021. Wereport that:

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

(b) The Company has a regular program of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this program a portion of the fixed assets have been physically verifiedby the management during the year and no material discrepancies were noticed on suchverification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and nature of its assets.

(c) In our opinion and 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 theimmovable properties are held in the name of the company.

(ii) The inventory except goods-in-transit has been physically verified by themanagement during the year. In our opinion the frequency of such verification isreasonable. The discrepancies noticed on verification between the physical stocks and bookrecords were not material.

(iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act. Accordingly paragraph 3 (iii) of the Order is not applicable to theCompany.

(iv) In our opinion and according to information and explanations given to us theCompany has not granted any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act during the year. The Company has complied with theprovisions of Section 186 of the Act with respect to the investments made loansguarantees given to subsidiaries and securities given in respect of loan taken by thesubsidiaries.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits in terms of directives issued by the Reserve Bank ofIndia or under the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the rules framed there under. Accordingly paragraph 3(v) of the Order is notapplicable to the Company.

(vi) We have broadly reviewed the records maintained by the Company pursuant to therules made by the Central Government for the maintenance of cost records under section148(1) of the Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on thebasis of our examination of the records of the Company amounts deducted/ accrued in thebooks of account in respect of undisputed statutory dues of employees' state insuranceprofession tax income-tax goods and services tax duty of custom cess and othermaterial statutory dues have been regularly deposited with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance profession taxincome-tax goods and services tax duty of custom cess and other material statutory dueswere in arrears as at 31 March 2021 for a period of more than six months from the datethey became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax service tax goods and service tax duty of customs duty of exciseand value added tax as at 31 March 2021 which have not been deposited with the appropriateauthorities on account of any dispute other than those mentioned in Enclosure I to thisreport.

(viii) In our opinion and according to information and explanations given to us theCompany has not defaulted in repayment of dues to its bankers. There are no dues todebenture holders during the year.

(ix) In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer (including debtinstruments) and term loans during the year. Accordingly paragraph 3 (ix) of the Order isnot applicable.

(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 material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

(xi) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the Company has paid / providedfor managerial 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 explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is in compliance with Section 177and 188 of the Act were applicable. The details of such transactions have been disclosedin the standalone financial statements as required by the applicable Indian AccountingStandards.

(xiv) According to the information and explanations given to us and based on ourexamination of records of the Company the Company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the

year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of records of the Company the Company has not entered into any non-cashtransactions with its directors or persons connected with them. Accordingly paragraph3(xv) of the Order is not applicable to the Company.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

Enclosure I to Annexure A to the Independent Auditor's Report - 31 March 2021

Name of the Statute Nature of dues Amount under dispute (Rs. in million) Amount paid under protest (Rs. in million) Financial year / year (s) Forum where dispute is pending
Central Excise Act 1944 Excise Duty and Penalty 128.6 8.6 2006-2014 CESTAT
Central Excise Act 1944 Excise Duty and Penalty 53.1 4.0 2015 Joint Secretary
Maharashtra VAT Act 2002 Value Added Tax 107.0 12.0 2006-2015 Joint Dy. Commissioner of Sales Tax (Appeals)
Maharashtra VAT Act 2002 Value Added Tax 65.4 4.6 2012-2014 Joint Commissioner of Sales Tax (Appeals)
Maharashtra VAT Act 2002 Value Added Tax 46.8 - 2016-2017 Deputy Commissioner of Maharashtra State Tax
Jharkhand-VAT Act 2005 Value Added Tax 6.7 4.2 2014-2016 Dy. Commissioner of Sales Tax (Appeals)
West Bengal VAT Act 2005 Value Added Tax 3.2 0.3 2015-2016 Senior Joint Commissioner Corporate Division (Appellate Authority)
West Bengal VAT Act 2005 Value Added Tax 2.8 0.3 2017-2018 Additional Commissioner of Sales Tax
Gujarat VAT Act 2003 Value Added Tax 0.1 - 2006-2007 Commissioner of Commercial Taxes Gujarat
Odisha Entry Tax Act 1999 Entry Tax 0.2 0.1 2012-2014 Odisha Sales Tax Tribunal Cuttack
Odisha VAT Act 2004 Value Added Tax 1.3 0.1 2012-2018 Odisha Sales Tax Tribunal Cuttack
Odisha VAT Act 2004 Value Added Tax 1.0 0.0 2014-2016 Joint Commissioner of Commercial Tax
Bihar VAT Act 2005 Value Added Tax 0.7 0.2 1999-2001 Sales Tax Special circle for Re assessment
Bihar VAT Act 2005 Value Added Tax 13.4 3.2 2010-2012 Joint commissioner of Commercial taxes Appeals
Central Sales Tax Act 1956 Central Sales Tax 12.0 - 2016-2017 Deputy Commissioner of Maharashtra State Tax
Central Sales Tax Act 1956 Central Sales Tax 0.5 - 2014-2015 Dy. Commissioner of Sales Tax (Appeals)
Central Sales Tax Act 1956 Central Sales Tax 0.3 0.0 2014-2017 Joint commissioner of Commercial Tax
Central Sales Tax Act 1956 Central Sales Tax 3.1 0.2 2009-2011 & 2014-2015 Joint Dy. Commissioner of Sales Tax (Appeals)
Central Sales Tax Act 1956 Central Sales Tax 4.2 1.7 2002-2005 Sales Tax Special Circle
Income Tax Act 1961 Income Tax 560.5 123.7 2011-2015 & 2016-2017 Commissioner of Income Tax (Appeals)
Customs Act 1962 Customs Duty 52.96 3.96 2013-2015 Commissioner of Customs Appeals

Annexure B to the Independent Auditors' report on the standalone financialstatements of Alkem Laboratories Limited for the year ended 31 March 2021

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013

(Referred to in paragraph (1) under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statementsof Alkem Laboratories Limited ("the Company") as of 31 March 2021 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2021 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation 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's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

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 withreference to financial statements.

Meaning of Internal Financial controls with Reference to Standalone FinancialStatements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include 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 financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations 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 with Reference to StandaloneFinancial Statements

Because of the inherent limitations of internal financial controls with reference tothe standalone 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 standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degreeof compliance with the policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No.101248W/W-100022
Sadashiv Shetty
Partner
Mumbai Membership No. 048648
25 May 2021 UDIN: 21048648AAAABB4812

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