To the Members of Cholamandalam Investment and Finance Company Limited
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statements ofCholamandalam Investment and Finance Company Limited ("the Company") whichcomprise the Balance sheet as at March 31 2021 the Statement of Profit and Lossincluding the statement of Other Comprehensive Income the Cash Flow Statement and theStatement of Changes in Equity for the year then ended and notes to the Standalone Ind ASfinancial statements including a summary of significant accounting policies and otherexplanatory information. In our opinion and to the best of our information and accordingto the explanations given to us the aforesaid Standalone Ind AS financial statements givethe information required by the Companies Act 2013 as amended ("the Act") inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 its Profit including other comprehensive income its cash flows and the changesin equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the Standalone Ind AS financial statements.
Emphasis of Matter
We draw attention to Note 2.2 of the Standalone Ind AS financial statements whichdescribes the impact of COVID-19 pandemic and its possible consequential implications onthe Company's operations and financial metrics including the Company's estimates ofimpairment of loans and that such estimates may be affected by the severity and durationof the pandemic. Our opinion is not modiffed in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS financial statements for the financialyear ended March 31 2021. These matters were addressed in the context of our audit of theStandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context. We havedetermined the matters described below to be the key audit matters to be communicated inour report. We have fulfilled the responsibilities described in the Auditor'sresponsibilities for the audit of the Standalone Ind AS financial statements section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Standalone Ind AS financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying Standalone Ind AS financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Impairment of Financial Assets based on Expected Credit Loss (ECL') (as described in Note 3.5 of the Standalone Ind AS Financial Statements) || |
|As at March 31 2021 the Company has made a provision for impairment loss aggregating Rs 244441 Lakhs against the loans outstanding. Due to the significance of the judgments used in both classification of loans into various stages as well as the computation of expected credit losses on such financial assets as per Ind AS 109 this has been considered as a key audit matter. || Read and assessed the Company's impairment provision policy and their compliance with Ind AS 109 and the governance framework approved by the Board of Directors pursuant to Reserve Bank of India guidelines issued on 13 March 2020. |
|Financial instruments which include loans to customers represent a significant portion of the total assets of the Company. || Read and assessed the Company's policy with respect to moratorium and one-time restructuring pursuant to the RBI circular and tested the implementation of such policy on a sample basis. |
|The Company has loans aggregating 6828375 lakhs as at March Rs 31 2021. || |
|Estimates regarding the impairment provision against loans are based on the expected credit loss model developed by the Company based on the guiding principles prescribed under Ind AS 109. As stated in the notes to the financial statements for the year ended March 31 2021 the impairment provision is based on the expected credit loss model requires the management of the Company to make significant judgments in connection with related computation. These include: || Understood the Company's key credit processes comprising granting recording and monitoring of loans as well as impairment provisioning. |
| || Read and assessed the Company's impairment provisioning policy as per Ind AS 109; |
| || Obtained an understanding of the Company's Expected Credit Loss (ECL') methodology the underlying assumptions and performed sample tests to assess the staging of outstanding exposures; |
|(a) Segmentation of the loan portfolio into homogenous pool of borrowers; || Tested the ECL model including assumptions and underlying computation. |
|(b) Identification of exposures where there is a significant increase in credit risk and those that are credit impaired; || Assessed the Exposure at Default used in the impairment calculations on a test basis; |
|(c) Determination of the 12 month and life-time probability of default for each of the segments identified; and || Obtained an understanding of the basis and methodology adopted by management to determine 12 month and life-time probability of defaults for various homogenous segments and performed test checks; |
|(d) Loss given default for various exposures based on past trends / experience management estimates etc. Additionally the economic and business consequences of the COVID 19 pandemic as described in Note 2.2 to the Standalone Ind AS financial statements slowdown of economic activity moratoriums granted to borrowers the related regulatory directives and also the applicable accounting directions further affect provisioning under the ECL approach. || Obtained an understanding of the basis and methodology adopted by management to determine Loss Given Defaults for various homogenous segments based on past recovery experience qualitative factors etc. and performed test checks; |
| || Assessed the items of loans credit related contingent items as at the reporting date which are considered in the impairment computation as at the reporting date; |
|Note 3.5 to the Standalone Ind AS Financial Statements explains the various matters that the management has considered for developing this expected credit loss model. || Assessed and tested the inputs used in the impairment computation (including the data integrity of information extracted from the Company's IT systems); |
| || Enquired with the management regarding significant judgments and estimates involved in the impairment computation and additional management overlay provision arising from the effects of the COVID-19 pandemic and evaluated the reasonableness thereof; |
| || Performed analytical reviews of disaggregated data to observe any unusual trends warranting additional audit procedures; and |
| || Read the financial statement disclosures in respect of impairment losses on financial assets including the specific disclosures made with regard to the impact of COVID-19 on the ECL estimation. |
|Audit in an Information Technology (IT) enabled environment including considerations on exceptions identified in IT environment || |
|The Company has information technology applications which are used across various class of transactions in its operations including automated and IT dependent manual controls that are embedded in them. ||In assessing the reliability of electronic data processing we involved our specialized IT auditors in our audit team. Our audit procedures focused on the IT infrastructure and applications relevant to financial reporting: |
|Due to the pervasive nature and complexity of the Company's IT environment we place significant emphasis on the information systems the controls and process around such information systems and the usage of information from such systems for the purpose of financial reporting by the management for our audit. || Assessing the information systems and the applications that is available in the Company in two phases: (i) IT General Controls and (ii) Application level embedded controls; |
|Accordingly this has been considered as a key audit matter. || The aspects covered in the IT systems General Control audit were (i) User Access Management (ii) Change Management (iii) Other related ITGCs; - to understand the design and the operating effectiveness of such controls in the system; |
| || Understanding of the changes that were made to the IT landscape during the audit period and assessing changes that have impact on financial reporting; |
| || Performed tests of controls (including over compensatory controls wherever applicable) on the IT Application controls and IT dependent manual controls in the system. |
| || Wherever applicable we also assessed through direct sample tests the information produced from these systems which were relied upon for our audit. |
|Pending litigations with tax authorities (as described in Note 38(a) of the Standalone Ind AS Financial Statements) || |
|The Company operates in a complex tax environment and is required to discharge direct and indirect tax obligations under various legislations such as Income Tax Act 1961 the Finance Act 1994 Goods and Services Tax Acts and VAT Acts of various states as may be applicable. ||In assessing the exposure of the Company for the tax litigations we have performed the following procedures: |
|The tax authorities under these legislations have raised certain tax demands on the Company in respect of the past periods. The Company has disputed such demands and has appealed against them at appropriate forums. As at March 31 2021 the Company has an amount of Rs 66928 Lakhs pertaining to various pending tax litigations. || Obtained an understanding of the process laid down by the management for performing their assessment taking into consideration past legal precedents changes in laws and regulations expert opinions obtained from external tax / legal experts (as applicable); |
| || Assessed the processes and entity level controls established by the Company to ensure completeness of information with respect to tax litigations; |
| || Along with our tax experts we undertook the following procedures: |
|Ind AS 37 requires the Company to perform an assessment of the probability of economic outflow on account of such disputed tax matters and determine whether any particular obligation needs to be recorded as a provision in the books of account or to be disclosed as a contingent liability. Considering the significant degree of judgement applied by the management in making such assessments and the resultant impact on the financial statements we have considered it to be a key audit matter. || Reading communications with relevant tax authorities including notices demands orders etc. relevant to the pending litigations as made available to us by the management; |
| || Testing the accuracy of disputed amounts from the underlying communications received from tax authorities and responses filed by the Company; |
| || Considered the submissions made to appellate authorities and expert opinions obtained by the Company from external tax / legal experts (wherever applicable) which form the basis for management's assessment; |
| || Assessed the positions taken by the management in the light of the aforesaid information and based on the examination of the matters by our tax experts. |
| ||Read the disclosures included in the Standalone Ind AS Financial Statements in this regard. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe Standalone Ind AS financial statements and our auditor's report thereon Our opinion onthe Standalone Ind AS financial statements does not cover the other information and we donot express any form of assurance conclusion thereon. In connection with our audit of theStandalone Ind AS financial statements our responsibility is to read the otherinformation and in doing so consider whether such other information is materiallyinconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated. If based on the work we have performed weconclude that there is a material misstatement of this other information we are requiredto report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. 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 the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the Standalone Ind AS financial statements managementis 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Those Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Ind AS financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the 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 made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 Standalone IndAS financial statements including the disclosures and whether the Standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant defficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Ind AS financialstatements for the financial year ended March 31 2021 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestBenefits of such communication.
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 ofthe Act we give in the "Annexure_1" a statement on the matters specified inparagraphs 3 and 4 of the 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 Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid Standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct;
(f) With respect to the adequacy of the internal financial controls with reference toStandalone Ind AS financial statements and the operating effectiveness of such controlsrefer to our separate Report in "Annexure 2" to this report;
(g) In our opinion the managerial remuneration for the year ended March 31 2021 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;
(h) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Ind AS financial statements Refer Note 38(a) to theStandalone Ind AS financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts Refer Note 7 and 9 to the Standalone Ind AS financialstatements;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company
For S.R. BATLIBOI & ASSOCIATES LLP
ICAI Firm Registration Number: 101049W/E300004
per Aravind K
Membership Number: 221268
Place of Signature: Chennai
Date: May 7 2021
Annexure 1 referred to in our report of even date
Re: Cholamandalam Investment and Finance Company Limited ("the Company")
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) Property plant and equipment have been physically verified by the managementduring the year and no material discrepancies were identified on such verification.
(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment are held in thename of the company. Immovable properties of land and buildings whose title deeds havebeen pledged in favour of Trustees for the Benefit of debenture holders as security forthe Redeemable Non-convertible Debentures are held in the name of the Company based onthe Trust Deed executed between the Trustees and the Company.
(ii) The Company's business does not involve inventories and accordingly therequirements under paragraph 3(ii) of the Order are not applicable to the Company.
(iii) (a) The Company has granted loans to one subsidiary Company and one associatecovered in the register maintained under Section 189 of the Companies Act 2013. In ouropinion and according to the information and explanations given to us the terms andconditions of the grant of such loans are not prejudicial to the Company's interest.
(b) The schedule of repayment of principal and payment of interest has been stipulatedfor the loans granted and the repayment/receipts are regular.
(c) According to the information and explanations given by the management there are noamounts of loans which are overdue for more than ninety days from a Company covered in theregister maintained under Section 189 of the Companies Act 2013.
(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities granted in respect of whichprovisions of Sections 185 of the Act have not been complied by the Company and in ouropinion provisions of Section 186 of the Act are not applicable to the Company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 (asamended) during the year. Accordingly the provisions of clause 3(v) of the Order are notapplicable.
(vi) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under Section 148(1) of the Companies Act 2013for the services of the Company.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees' state insurance income-tax salestax service tax value added tax goods and services tax duty of custom cess and othermaterial statutory dues applicable to it. The provisions relating to wealth tax and dutyof excise are not applicable to the Company.
(b) 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 value added tax goods and services tax duty of custom cess and othermaterial statutory dues were outstanding at the year end for a period of more than sixmonths from the date they became payable.
(c) According to the records of the Company the dues outstanding of Income tax SalesTax Value Added Tax and Service Tax which have not been deposited on account of anydispute are as follows:
Rs in lakhs
|Name of the statute ||Nature of dues ||Amount* ||Period to which the amounts relate ||Forum where the dispute is pending |
|Income Tax Act 1961 ||Tax and interest ||21898 ||1990-91 1991-92 2009-10 & 2010-11 ||Income Tax Appellate Tribunal |
| || ||1505 ||2010-112011-12 2012-13 & 2016-17 ||ITAT |
| || ||6746 ||2013-14 to 2015-16 & 2017-18 ||CIT(Appeal) |
|Bihar Finance Act 1981 ||Sales Tax ||2 ||1992-93 & 1993-94 ||Sales Tax Appellate Tribunal |
|Gujarat Sales Tax Act 1969 ||Sales Tax ||2 ||1997-98 ||Sales Tax Appellate Tribunal |
|Rajasthan Sales Tax Act ||Sales Tax ||14 ||2012-13 2016-17 2017-18 ||Tribunal/ Assessing officer |
|Karnataka Sales Tax Act ||Sales Tax ||357 ||2007-08 to 2013-14 ||Karnataka High court |
|Delhi Sales Tax Act 1975 ||Sales Tax ||8 ||1991-92 ||Deputy Commissioner of Sales Tax |
|Odisha Value Added Tax Act 2004 ||Sales Tax ||303 ||2007-08 to 2013-2014 ||Sales Tax Appellate Tribunal/ Joint Commissioner |
|Tamil Nadu Value Added Tax Act 2006 ||Sales Tax ||1029 ||2007-08 to 2013-14 ||Supreme Court |
|Tamil Nadu General Sales Tax Act 1959 ||TNGST & CST ||999 ||1995-96 ||High Court of Madras |
|Finance Act 1994 ||Service Tax ||19690 ||2005-06 to 2017-18 ||CESTAT |
*net of tax paid under protest/ refund adjusted
(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowing to afinancial institution bank or government or dues to debenture holders.
(ix) According to the information and explanations given by the Management the Companyhas not raised any money by way of initial public offer or further public offer. Furthermonies raised by the Company by way of term loans were applied for the purpose for whichthose were raised though idle/surplus funds which were not required for immediateutilisation were gainfully invested in liquid assets payable on demand.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no material fraud onthe Company by the officers and employees of the Company has been noticed or reportedduring the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.
(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with Sections 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in Section 192 of Companies Act 2013.
(xvi) According to the information and explanations given to us we report that theCompany has registered as required under Section 45-IA of the Reserve Bank of India Act1934.
For S.R. BATLIBOI & ASSOCIATES LLP
ICAI Firm Registration Number: 101049W / E300004
per Aravind K
Membership Number: 221268
Place of signature: Chennai
Date: May 7 2021
Annexure 2 to the Independent Auditor's Report of even date on the Standalone Ind ASFinancial Statements of Cholamandalam Investment and Finance Company Limted
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 with reference to Standalone Ind ASfinancial statements of Cholamandalam Investment and Finance Company Limited ("theCompany") as of March 31 2021 in conjunction with our audit of the Standalone Ind ASfinancial 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 effcientconduct of its business including adherence to the Company's policies the safeguardingof its 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to these Standalone Ind AS financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both issued by ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to these Standalone Ind AS financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls with reference to these Standalone Ind ASfinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to Standalone Ind AS financial statements included obtaining anunderstanding of internal financial controls with reference to these Standalone Ind ASfinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to these Standalone Ind AS financial statements.
Meaning of Internal Financial Controls With Reference to these Standalone Ind ASFinancial Statements
A company's internal financial controls with reference to Standalone Ind AS financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to Standalone Ind AS financial statements includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.
Inherent Limitations of Internal Financial Controls With Reference to Standalone Ind ASFinancial Statements
Because of the inherent limitations of internal financial controls with reference toStandalone Ind AS 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 Ind AS financial statements to future periods aresubject to the risk that the internal financial control with reference to Standalone IndAS financial statements may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to Standalone Ind AS financial statements and such internalfinancial controls with reference to Standalone Ind AS financial statements were operatingeffectively as at March 31 2021 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the ICAI.
For S.R. BATLIBOI & ASSOCIATES LLP
ICAI Firm Registration Number: 01049W/E300004
per Aravind K
Membership Number: 221268
Place of Signature: Chennai
Date: May 7 2021