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Can Fin Homes Ltd.

BSE: 511196 Sector: Financials
NSE: CANFINHOME ISIN Code: INE477A01020
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OPEN 535.00
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VOLUME 16809
52-Week high 619.00
52-Week low 264.65
P/E 15.44
Mkt Cap.(Rs cr) 6,864
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 535.00
CLOSE 511.50
VOLUME 16809
52-Week high 619.00
52-Week low 264.65
P/E 15.44
Mkt Cap.(Rs cr) 6,864
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Can Fin Homes Ltd. (CANFINHOME) - Auditors Report

Company auditors report

To

The Members

Can Fin Homes Limited

Report on the Audit of Ind AS Financial Statements

Opinion

We have audited the accompanying Ind AS financial statements of Can Fin Homes Limited("the Company") which comprise the Balance Sheet as at 31st March 2020 theStatement of Prot and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that dateincluding summary of the signi_cant accounting policies and other explanatory informationin which are included the Returns for the year ended on that date audited by the branchauditors of the Company's 165 branches located at various locations across India(hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2020 the Prot and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion:

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) speci_ed under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave ful_lled our other ethical responsibilities in accordance with these requirements andthe ICAI's Code of Ethics. We believe that the audit evidence we have obtained issuf_cient and appropriate to provide a basis for our audit opinion on the financialstatements.

Emphasis of Matter

We draw your attention to Note 45 to the financial statements which describes theimpact of the COVID-19 pandemic on the Company's operations and financial positionincluding the Company's estimates of the possible increase in impairment losses and thecontinuing uncertainties which may require changes in such estimates in the future.

Our opinion is not modi_ed in respect of this matter.

Key Audit Matters:

Key audit matters are those matters that in our professional judgment were of mostsigni_cance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Sr. No. Key Audit Matter Auditor's response
1. Expected credit loss allowances:
Ind-AS accounting framework was implemented on April 1st 2018. Accordingly Ind-AS 109 is a new and complex standard that requires the Company to recognise We evaluated management's process and tested key controls around the determination of expected credit loss allowances including controls relating to:
Expected Credit Loss (ECL) on financial instruments. This is a signi_cant departure from the earlier rule based provisioning. Expected credit loss allowances relating to loans and advances are determined on a portfolio basis with the use of impairment models. These models are based on historical loss experience and use a number of key assumptions including probability of default loss given default (including propensity for possession and forced sale discounts for mortgages) and valuation of recoveries. Our work therefore focused on the appropriateness of modelling methodologies adopted and the signi_cant judgements required. • The identi_cation of events leading to a signi_cant increase in risk and credit impairment events; and
Refer to Note 2(i) to the financial statements accounting policy on accounting for the impairment of financial assets and Note 40(i) to the financial statements for credit risk disclosures and for Credit impairment charges and other provisions. • The review challenge and approval of the expected credit loss allowances including the impairment model outputs and key management judgements applied.

 

We found that these key controls were designed implemented and operated effectively and therefore determined that we could place reliance on these key controls for the purposes of our audit.
We understood and assessed the appropriateness of the impairment models developed and used by the management at the entity level.

This included assessing and challenging the appropriateness of key modelling judgements (e.g. the transfer criteria used to determine signi_cant increase in credit risk). We tested the formula applied within the calculation _les the completeness and accuracy of key data inputs sourced from underlying systems that are applied in the calculation. We also tested the reconciliation of loans and advances between underlying source systems and the expected credit loss models.

2. Recognition Measurement Presentation and
Disclosure of leases under Ind AS 116: We have evaluated the application of Ind AS 116 and tested the resulting impact on the Ind AS financial statements.
Ind AS 116 replaces the existing standard Ind AS 17 and speci_es how an entity will recognize measure present and discloses leases. The standard provides a single lessee accounting model requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. We have veri_ed the lease agreements and assessed various terms and conditions of the lease arrangements including factors such as non-cancellable lease period discount rate and other measurement principles.
The management of the Company has adopted Ind AS 116 ‘Leases' with effect from April 1 2019 and applied to the lease contract existing on April 1 2019 using the modi_ed retrospective method and has taken the cumulative adjustment to retained earnings as per the guidelines provided in Ind AS 116. The implementation of Ind AS 116 is considered a key audit matter due to _rst time adoption of the standard and the related judgments needed in establishing the underlying key assumptions. Also we have considered the management's judgement of reasonable certainty to exercise the option to extend or terminate the lease arrangement to ensure whether the lease is consistent with the de_nitions of Ind AS 116.
Refer to Note 2(h) to the financial statements for the accounting policy and Note 43 on transition to Ind AS 116. Furthermore we have assessed the modi_ed retrospective application and veri_ed whether this is consistent with the de_nition and expedients of Ind AS 116.
3. Information Technology (‘IT') systems and controls: Our audit procedures included verifying testing and reviewing the design and operating effectiveness of the IT system by verifying the reports and other financial and non-financial information generated from the system on a test check basis. Our audit procedures included:
The Company's key financial accounting and reporting processes are highly dependent on information systems including automated controls in information systems such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being misstated. • We have evaluated the design and tested the operating effectiveness of certain automated controls that were considered as key internal controls over financial reporting including the completeness and accuracy of data feeds and automated calculations.
We have identi_ed ‘IT systems and controls' as key audit matter because of signi_cant use of IT system and the scale and complexity of the IT architecture. • Ensuring that de_ciencies noticed in our veri_cation were informed to the management for corrective action which is already been done;
• Carrying out independent alternative audit procedures like substantive testing in areas where de_ciencies were noticed;
We have considered the report given by IT audit specialists appointed by the management on design and operating effectiveness of the General IT Controls and assessed its impact on the key financial accounting and reporting systems;
Our audit procedures also included the consideration of the observations noted by the branch statutory auditors on the assessment of IT controls over the monitoring of loans and reviewing the logic and assumptions used in the operating systems and other related IT system controls.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors are responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis but does not include the financial statements and our auditor'sreport thereon which we obtained prior to the date of this auditor's report and theReport of Directors including Annexures to Directors Report Corporate Governance andInformation to Shareholders which is expected to be made available to us after that date.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon. In connection with our audit of thefinancial statements our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the 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 on the other information that we obtained priorto the date of this auditor's report we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

When we read the reports which we are expected to be made available to us after thedate of this auditor's report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance. Incase of uncorrected material misstatements we are required to communicate to otherstakeholders as appropriate as well as to take action under the applicable laws andregulations if any.

Management's Responsibility for the Financial Statements

The Company's Board of Directors are responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards speci_ed under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

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

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to in_uence the economic decisions of users taken on thebasis of these financial statements.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be in_uenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidenti_ed misstatements in the 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is suf_cient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany 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 signi_cant 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and signi_cant audit _ndings including anysigni_cant de_ciencies 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 signi_cance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.

Other Matter

1. We did not audit the financial statements of 165 branches included in the financialstatements of the Company whose financial statements re_ect total assets of H 1490523lacs as at 31st March 2020 and total revenues of H 143595 lacs for the year ended onthat date as considered in the financial statements. The financial statements of thesebranches have been audited by the branch auditors whose reports have been furnished to usand our opinion in so far as it relates to the amounts and disclosures included in respectof these branches is based solely on the report of such branch auditors.

2. Statutory auditors of 25 branches whose financial statements re_ect total assets ofH 202834.40 lacs as at 31st March 2020 and total revenues of H 18288.57 lacs for theyear ended on that date as considered in the financial statements could not visit thebranches to perform the audit due to the restrictions imposed by the COVID 19 outbreak. Asinformed they have relied on scanned copies of accounting records and documents includingloan agreements and valuation reports for carrying out their audit. They also could notperform physical cash veri_cation and _xed assets veri_cation at those branches.

Our opinion is not modi_ed in respect of these matters.

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 theAct we give in the Annexure (Annexure A) a statement on the matters speci_ed inParagraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the 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 appears from our examination of those books and proper returns adequatefor the purposes of our audit have been received from branches not visited by us.

c) The report on the accounts of 165 branch of_ces audited under section 143 by aperson other than the Company's principal auditor have been forwarded to us as required bysub-section (8) of section 143 and have been properly dealt with in preparing our reportin the manner considered necessary by us;

d) The Balance Sheet the Statement of Prot 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 relevant books of account;

e) In our opinion the aforesaid financial statements comply with the Ind AS speci_edunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014;

f) On the basis of written representations received from the directors as on 31st March2020 and taken on record by the Board of Directors none of the directors is disquali_edas on 31st March 2020 from being appointed as a director in terms of Section 164(2) ofthe Act;

g) With respect to the adequacy of the internal financial control over financialreporting of the Company and the operating effectiveness of such control refer to ourseparate report in "Annexure B"; h) With respect to the other matters to beincluded in the Auditor's Report in accordance with the requirements of section 197(16) ofthe 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 iswithin the limit laid down under the provisions of section 197 of the Act.

i) With respect to the other matters to be included in the Auditor's 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 pending litigations as contingent liabilities in Note 36to the financial statements the impact if any on the _nal settlement of the litigationsis not ascertainable at this stage.

ii. The Company has not entered into any long-term contracts including derivativecontracts which require provision for foreseeable losses as per law or applicableaccounting standards and

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company. Refer Note 16.2 to theFinancial Statements.

Annexure – A to the Auditors' Report

Annexure referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our Independent Auditors Report of even date on theFinancial Statement of M/s Can Fin Homes Limited for the year ended 31st March 2020.

i. In respect of Fixed Assets:

a. The Company is maintaining proper records showing full particulars includingquantitative details and situation of _xed assets. In our opinion the records requirefurther improvement with respect to situation of _xed assets.

b. We are informed that the _xed assets of the located at the 184 branches includingthe Centralised Processing Centre and the Head Of_ce have been physically veri_ed afterthe year end due to the economic lockdown imposed by government on account of COVID 19outbreak but before the date of our report by the persons in-charge except in the case ofseven branches and no major discrepancies were noticed on such veri_cations. In ouropinion the frequency of veri_cation of _xed assets of the company is adequate.

c. The title deeds of the immovable property of the Company are held in its name.

ii. The nature of the Company's business is such that it is not required to hold anyinventories and hence reporting under paragraph 3 (ii) of the order is not applicable tothe Company.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies _rms limited liability partnershipsor other parties covered in the register maintained under section 189 of the Act. Hencereporting under paragraph 3 (iii) (a) (b) and (c) of the Order is not applicable to theCompany.

iv. According to the information and explanations given to us and based on the auditprocedures conducted by us the Company has not given Loans guarantees investments orsecurities which fall under the purview of Sections 185 & 186 of the Companies Act2013.

v. As per the Ministry of Corporate Affairs noti_cation dated 31st March 2014 theprovisions of Sections 73 to 76 or any other relevant provisions of the Act and theCompanies (Acceptance of Deposits) Rules 2014 as amended with regard to the depositsaccepted are not applicable to the Company and hence reporting under Clause 3(v) of theOrder is not applicable.

vi. As per the information and explanation given to us the Central Government has notprescribed the maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013 for any of the services rendered by the Company.

vii. In respect of statutory dues:

a. According to the information and explanation given to us and as per our veri_cationof the records of the Company the Company has been generally regular in depositingundisputed statutory dues including provident fund employees‘ state insuranceincome-tax goods and services tax cess and any other statutory dues with the appropriateauthorities and no material statutory dues have been outstanding for more than six monthsfrom the due date as at the year end.

b. According to the information and explanation given to us and as per our veri_cationof the records of the Company the following are the disputed amounts of tax/ duty alongwith the details of amounts that have been deposited with appropriate authorities as at31st March 2020:

Statute Nature of dues Amount (In Lacs) Amount paid (in Lacs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 3.55 3.55* AY 2003-2004 Commissioner of Income Tax -Appeals
Income Tax Act 1961 Income Tax 15.61 Nil AY 2004-2005 Deputy Commissioner Income Tax
Income Tax Act 1961 Income Tax 568.55 568.55* AY 2006-2007 High Court of Karnataka
Income Tax Act 1961 Income Tax 446.27 446.27* AY 2007-2008 High Court of Karnataka
Income Tax Act 1961 Dividend Distribution Tax-u/s 115-O 16.44 Nil AY 2011-2012 Commissioner of Income Tax –Appeals
Income Tax Act 1961 Income Tax 36.94 7.39* AY 2017-2018 Commissioner of Income Tax –Appeals

* Includes amount paid under protest and amounts adjusted against refunds due to theCompany.

viii. According to information and explanation given to us and as per our veri_cationof the records of the Company the Company has not defaulted in repayment of its dues tobank/ financial institution/government/debenture holders during the year.

ix. The Company has not raised moneys by way of Initial Public offer or further publicoffer. The term loans raised have been applied for the purposes for which they wereraised. The Company has also raised working capital loans with no repayment schedule andbeing working capital loans the reporting requirements of utilization is not commentedupon.

x. According to the information and explanations given to us and as per our veri_cationof the records of the Company no fraud either on or by the Company has been noticed orreported by its of_cers or employees during the year.

xi. According to the information and explanations given to us the managerialremuneration has been paid or provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with Schedule V to the Companies Act 2013.

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.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

Annexure – B to the Auditors' Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of M/s Can FinHomes Limited ("the Company") as of 31st March 2020 in conjunction with ouraudit of the financial statements of the Company for the year ended on 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'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and ef_cientconduct 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.

Auditors' Responsibility

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 ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 suf_cient 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly re_ect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

Other Matters

Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting insofar as itrelates to 165 branches is based on the corresponding auditors' reports of the auditors ofsuch branches.

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