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Chalet Hotels Ltd.

BSE: 542399 Sector: Services
NSE: CHALET ISIN Code: INE427F01016
BSE 00:00 | 20 Mar 322.50 -3.45
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326.00

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NSE 00:00 | 20 Mar 323.00 -0.50
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318.00

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OPEN 326.00
PREVIOUS CLOSE 325.95
VOLUME 4188
52-Week high 347.00
52-Week low 250.15
P/E 262.20
Mkt Cap.(Rs cr) 6,612
Buy Price 322.50
Buy Qty 200.00
Sell Price 322.50
Sell Qty 100.00
OPEN 326.00
CLOSE 325.95
VOLUME 4188
52-Week high 347.00
52-Week low 250.15
P/E 262.20
Mkt Cap.(Rs cr) 6,612
Buy Price 322.50
Buy Qty 200.00
Sell Price 322.50
Sell Qty 100.00

Chalet Hotels Ltd. (CHALET) - Auditors Report

Company auditors report

To the Members of

Chalet Hotels Limited

(formerly known as Chalet Hotels Private Limited)

REPORT ON THE AUDIT OF STANDALONE IND AS FINANCIAL STATEMENTS

We have audited the accompanying standalone Ind AS financial statements of ChaletHotels Limited (formerly known as Chalet Hotels Private Limited) (‘the Company')which comprise the standalone balance sheet as at March 31 2018 the standalone statementof profit and loss (including other comprehensive income) the standalone statement ofchanges in equity and the standalone statement of cash flows for the year then ended andsummary of the significant policies and other explanatory information (collectivelyreferred to as ‘standalone Ind AS financial statements').

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of the stateof affairs loss (including other comprehensive income) changes in equity and cash flowsof the Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (‘Ind AS') prescribed under Section 133 ofthe Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalone

Ind AS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those require thatwe comply with ethical requirements and plan accounting and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the preparation of the standalone Ind AS financial statements that give a trueand fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone IndASfinancial. statements

We are also responsible to conclude on the appropriateness of management's use of thegoing 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 entity's going concern. If we conclude that a material uncertainty exists weare required to draw attention in the auditor's report to the related disclosures in thestandalone Ind AS financial statements or if such disclosures are inadequate to modifythe opinion. Our conclusions are based on the audit evidence obtained up to the date ofthe auditor's report. However future events or conditions may cause an entity to cease tocontinue as a going concern.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

OPINION

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind

AS financial statements give the information required by the

Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2018 its loss (including other comprehensive income) changes in equityand its cash flows for the year ended on that date.

EMPHASIS OF MATTER

We draw attention to the following notes to the standalone Ind AS financial statements:

1. Note 43 (c) in respect of the entire building comprising of the hotel and apartmentstherein purchased together with a demarcated portion of the leasehold rights to land atVashi (Navi Mumbai) from K. Raheja Corp Private Limited on which the Company's FourPoints by Sheraton Hotel has been built. The allotment of land by City & IndustrialDevelopment Corporation of Maharashtra Limited (‘CIDCO') to K. Raheja Corp PrivateLimited has been challenged by two public interest litigations and the matter is currentlypending with the Honorable Supreme Court of India. Pending the outcome of proceedings anda final closure of the matter no adjustments have been made in the standalone Ind ASfinancial statements as at and for the year ended March 31 2018 to the carrying value ofthe leasehold rights (reflected as prepayments) and the hotel assets thereon aggregatingto Rs.506 million Rs. 535 million and Rs.574 million as at March 31 2018 March 31 2017and April 1 2016 respectively; and

2. Note 42 (b) in respect of the Scheme of Arrangement (‘the Scheme') betweenGenext Hardware & Parks Private Limited (‘Genext') and the Company for demergerof the Hotel undertaking and Retail undertaking (‘demerged undertaking') of Genextwhich has been approved by the National Company Law Tribunal (‘NCLT') at Mumbai andBengaluru and other regulatory authorities on September 11 2017 with effect from theAppointed date specified in the Scheme i.e. November 1 2016. The Scheme has beenaccounted in the manner prescribed by the NCLT order i.e. the book values of the assetsliabilities and reserves of the demerged undertaking of Genext as of November 1 2016 havebeen recorded by the Company and the identity of the reserves have been maintained. Theexcess of the book value of the net assets and reserves of the demerged undertaking ofGenext acquired over the face value of the shares issued by the Company amounting toRs.189.53 million has been debited to Goodwill in accordance with the Scheme. Thisaccounting treatment is different from that prescribed under Ind AS 103 on

Business Combination.

Our opinion is not qualified in respect of these matters.

OTHER MATTERS

The comparative standalone financial statements of the

Company as at and for the year ended March 31 2017 and the transition date standalonebalance sheet as at April 1 2016 included in these standalone Ind AS financialstatements are based on the previously issued standalone financial statements prepared inaccordance with Section 133 of the Act and audited by Deloitte Haskins & Sells LLPChartered accountants for the years ended March 31 2017 and March 31 2016 whose reportsdated July 27 2017 and August 3 2016 respectively expressed an unmodified opinion onthose standalone financial statements as adjusted for the differences in the accountingprinciples adopted by the Company on transition to Ind AS which have been audited by us.

Our opinion is not modified in respect of this matter.

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 ofSection 143(11) of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the said Order.

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 it appears from our examination of those books;

(c) the standalone balance sheet the standalone statement of profit and loss thestandalone cash flow statement and the changes in equity dealt with by this report are inagreement with the books of account;

(d) in our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards prescribed under Section 133 of the Act;

(e) on the basis of written representations received from the directors as on March 312018 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 from being appointed as a director in terms of Section 164(2) of theAct;

(f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and (g) with respect to the other matters to beincluded in the Auditors' Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us :

i. the Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - refer notes 37 and 43 to thestandalone Ind AS financial statements;

ii. the Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses on long-term contracts and derivative contracts- refer notes 12 28 and 30 to the standalone Ind AS financial statements;

iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company; and

iv. the disclosures in the standalone Ind AS financial statements regarding holdings aswell as dealings in specified bank notes during the period from November 8 2016 toDecember

30 2016 have not been made since they do not pertain to the financial year ended March31 2018. However amounts as appearing in the audited standalone financial statements asat and for the year ended March 31 2017 have been disclosed.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No : 101248W/W-100022
Aniruddha Godbole
Mumbai Partner
June 12 2018 Membership No: 105149

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT – MARCH 31 2018

With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone Ind AS financial statements for the year endedMarch 31 2018 we report the following:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets and investment property.

(b) The Company has a regular programme of physical verification of its fixed assetsand investment property by which all fixed assets and investment property are verified ina phased manner over a period of three years. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. In accordance with the above programme the Company has verified certain fixedassets and investment property during the year and no discrepancies were noticed inrespect of assets verified during the year.

(c) According to the information and explanations given to us and based on theexamination of the registered transfer deeds provided to us and based on confirmationsdirectly received by us from the lenders where the title deeds have been mortgaged assecurity for loans taken from Banks and financial institutions we report that the titledeeds of immovable properties comprising of freehold land and buildings as listed inNotes 2 and 4 of the standalone Ind AS financial statements are held in the name of theCompany except as stated in the table below:

Land / building Number of cases Freehold Notes in the standalone Ind AS financial statements Gross block (Rs. in million) Net block (Rs. in million) Remarks
Building 1 Freehold 2 958.78 449.27 Refer note 43 (c) in the standalone Ind AS financial statements in respect of the matter which is presently under litigation Acquired as part of Scheme of arrangement (Refer note 42
Land 1 Freehold 2 286.64 286.64
Building 1 Freehold 2 1978.10 1500.45 (b) to the standalone Ind AS financial statements) pending to be transferred in the name of the Company.
Land 1 Freehold 4 337.12 337.12
Building 1 Freehold 4 1779 1328.98
Land 1 Freehold 4 80.01 80.01 Acquired as part of Scheme of arrangement (Refer note 42
Building 1 Freehold 4 893.38 842.22 (a) to the standalone Ind AS financial statements) pending to be transferred in the name of the Company.

Further in respect of the leasehold land acquired by the Company attention is invitedto the table below:

Land Number of cases Lease- hold Note in standalone Ind financial statements Gross block (Rs. million) Net block (Rs. million) Remarks
Land 1 Leasehold 11 65.06 54.52 Refer note 43 (c) in the standalone Ind AS financial state - ments in respect of the matter which is presently under litigation

(ii) As explained to us the inventories have been physically verified during the yearby the management at reasonable intervals. The discrepancies noticed on verificationbetween the physical stocks and the book records were not material and have been dealtwith in books of accounts.

(iii) The Company has granted unsecured loans to four companies and one body corporatecovered in the register maintained under Section 189 of the Companies Act 2013 (‘theAct'). The Company has not granted any loans secured or unsecured to limited liabilitypartnerships firms or other parties covered in the register required to be maintainedunder Section 189 of the Act.

(a) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the rate of interest and otherterms and conditions of unsecured loans granted by the Company to companies and a bodycorporate covered in the register required to be maintained under Section 189 of the Actare not prima facie prejudicial to the interest of the Company.

(b) According to the information and explanations given to us and based on the auditprocedures conducted by us the unsecured loan granted to companies and a body corporateand interest thereon are repayable on demand. The borrowers have been regular in paymentof principal and interest as demanded.

(c) There are no overdue amounts of more than 90 days in respect of the unsecured loansgranted by the Company.

(iv) In our opinion and according to the information and explanation given to us andbased on the legal opinion obtained by the Company and the resolution passed by the Boardof directors of the Company the unsecured loans granted by the Company are in compliancewith the provisions of Section 185 of the Act. The Company has not provided any guaranteesor security to the parties covered under Section 185 of the Act. According to theinformation and explanations given to us the provisions of Section 186 of the Act inrespect of the loans given are not applicable to the Company since it is covered as acompany engaged in business of providing infrastructural facilities.

The Company has complied with the provisions of Section 186 of the Act in respect ofinvestments made during the year. The Company has not provided any guarantee or securityduring the year. Accordingly compliance under Section 186 of the Act in respect ofproviding guarantees and securities are not applicable to the Company.

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

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules prescribed by the Central Government for maintenance of cost records underSection 148(1) of the Act and are of the opinion that prima facie prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe records.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Duty of customsValue added tax Goods and Service tax Luxury tax Property tax Professional tax Cessand other material statutory dues have been regularly deposited during the year by theCompany with the appropriate authorities.

According to the information and explanations given to us and on the basis of ourexamination of records of the Company amounts deducted/accrued in the books of account inrespect of undisputed statutory dues including Employees' State Insurance Income-taxSales tax Service tax and Duty of excise dues have generally been regularly depositedduring the year by the Company with the appropriate authorities though there have beenslight delays in a few cases.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax Sales taxService tax Duty of customs Duty of excise Value added tax Goods and Service taxProperty tax Luxury tax Professional tax Cess and other material statutory dues were inarrears as at March 31 2018 for a period of more than six months from the date theybecame payable.

(b) According to the information and explanations given to us there are no dues ofIncome-tax Sales tax Duty of excise and Goods and Service tax which have not beendeposited with the appropriate authorities on account of any dispute. According to theinformation and explanations given to us the following dues of Service tax Duty ofcustoms and Value added tax have not been deposited as on March 31 2018 by the Company onaccount of disputes:

Name of the statute Nature of the dues Demand Rupees in million Amount deposited on account of demand Rupees in million Financial year (F.Y.) to which the amount relates Forum where dispute is pending
Finance Act 1994 (Service Tax) Denial of CENVAT credit of service tax paid for Marriott Executive Apartment. 53.62 - FY 2004-05 to FY 2010-11 Order-in-Appeal awaited from the CESTAT Mumbai
Finance Act 1994 (Service Tax) Demand for service tax under reverse charge mechanism on Expenditure in Foreign currency. 17.70 - April 2006 to March 2008 Order-in-Appeal awaited from the CESTAT Mumbai
Finance Act 1994 (Service Tax) Service tax demand on treating In- room dining and Mini-bar services as ‘Accommodation' instead of ‘Restaurant Services' by Service tax Department. 6.53 - FY 2012-13 to FY 2014-15 Order-in-Appeal awaited from the Commissioner (Appeals- Hyderabad)
Finance Act 1994 (Service Tax) Denial of input credit on services relating to rent a cab service 4.73 - FY 2012-13 to FY 2014-15 Commissioner (Appeals) Mumbai
Finance Act 1994 (Service Tax) Demand for service tax on Telephone services and Laundry wet cleaning service treated as accommodation services 3.89 - May 2011 to June 2012 Commissioner (Appeals) Hyderabad
Finance Act 1994 (Service Tax) Letter demanding Interest on Cenvat credit availed not utilised raised by the service tax department 3.20 - October 2006 to April 2008 Assistant Commissioner of Service Tax Hyderabad
Finance Act 1994 (Service Tax) Show cause letter on treating In- room dining and Mini-bar services as ‘Accommodation' instead of ‘Restaurant Services' by Service tax Department 3.07 - October 2014 to June 2017 Commissioner CGST Bangalore
Finance Act 1994 (Service Tax) Show cause notice on denial of cenvat credit on garden maintenance 1.98 - FY 2012-13 to FY 2015-16 Commissioner CGST Mumbai
Finance Act 1994 (Service Tax) Audit query letter received treating In- room dining and Mini-bar services as ‘Accommodation' instead of ‘Restaurant Services' by Service tax Department 1.44 - February 2013 to September 2014 Commissioner CGST Bangalore
Finance Act 1994 (Service Tax) Demand of penalty for non-payment of service tax on reimbursement of Travel Agent's Commission 0.41 - FY 2012-13 to FY 2014-15 Commissioner (Appeals) Hyderabad
Foreign Trade Policy (Duty of customs) Recovery of SFIS benefits granted to foreign brands 5.74 - FY 2016-17 Karnataka High Court
Maharashtra VAT Act2002 Joint Commissioner has included Service Tax in the Gross Turnover and charged VAT on the same. However the same demand is not included in the Demand Notice as the same is covered under Section 23(8) of MVAT Act. 9.35 - FY 2012-13 Joint Commissioner Appeals LTU-2
Andhra Pradesh VAT Demanding VAT on sale of cocktail 1.76 0.22 FY 2013-14 to 2015-16 Assistant Commissioner (CT) LTU
Andhra Pradesh VAT Demanding VAT on sale of cocktail 1.59 0.40 FY 2010-11 to 2012-13 Deputy Commissioner Hyderabad

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to a financialinstitution and banks. The Company did not have any outstanding loans or borrowings togovernment and dues to debenture holders during the year.

(ix) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) during the year.In our opinion and according to the information and explanations given to us the termloans taken by the Company have been applied for the purpose for which they are raised.

(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) The Company is a private limited company as at and for the year ended March 312018 and thus the provisions of Section 197 of the Act are not applicable to the Company.

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

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company as specified in Nidhi Rules 2014. Accordingly paragraph3(xii) of the Order is not applicable to the Company.

(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 Section 188 of the Act where applicable and details of such transactionshave been disclosed in the standalone Ind AS financial statements as required by theapplicable accounting standards. In our opinion and according to the information andexplanations given to us the Company is not a public company as at and for the year endedMarch 31 2018 and hence provisions with respect to Section 177 are not applicable.

(xiv) According to the information and explanations give 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 to the Company.

(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 any non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe 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.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No : 101248W/W-100022
Aniruddha Godbole
Mumbai Partner
June 12 2018 Membership No: 105149

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT – MARCH 31 2018

(Referred to in our report of even date)

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

We have audited the internal financial controls over financial reporting of ChaletHotels Limited (formerly known as Chalet Hotels Private Limited) ("the Company")as of March 31 2018 in conjunction with our audit of the standalone Ind AS financialstatements 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").

These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information as required under the Act.

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 deemed tobe prescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 standalone Ind AS financial statements whether due to fraudor error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of 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 reflect 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 authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 March 31 2018 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 of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No : 101248W/W-100022
Aniruddha Godbole
Mumbai Partner
June 12 2018 Membership No: 105149