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Coffee Day Enterprises Ltd.

BSE: 539436 Sector: Services
NSE: COFFEEDAY ISIN Code: INE335K01011
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OPEN 42.80
PREVIOUS CLOSE 42.10
VOLUME 305793
52-Week high 50.30
52-Week low 19.55
P/E
Mkt Cap.(Rs cr) 866
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 42.80
CLOSE 42.10
VOLUME 305793
52-Week high 50.30
52-Week low 19.55
P/E
Mkt Cap.(Rs cr) 866
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Coffee Day Enterprises Ltd. (COFFEEDAY) - Auditors Report

Company auditors report

To

Members of

Coffee Day Enterprises Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Disclaimer of Opinion

We have audited the standalone financial statements of Coffee Day Enterprises Limited('the Company') which comprise the standalone balance sheet as at March 31 2020 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us on account of the matters described in the Basis for Disclaimer of Opinionparagraph we are unable to obtain sufficient appropriate audit evidence to provide abasis for conclusion of the statement and hence we don't express a conclusion on thestatement.

Basis for Disclaimer of Opinion

1. We have not been provided with sufficient evidence with respect to recoverability ofdues from group companies amounting to INR 1751 Crore (refer note 32 of the standalonefinancial statements). Further we have not been provided appropriate evidence about anyrecognition of fair value of the estimated loss allowance on corporate guarantee given toits subsidiary (as detailed in note 26 of the standalone financial statement) as requiredby Ind AS 109 'Financial Instruments'. We are therefore unable to comment on therecoverability of the stated balance from group companies fair value of estimated lossallowance on corporate guarantee given to a subsidiary and the impact on the standalonefinancial statement.

2. It is observed that there has been a change in the percentage of shares held by theCompany in two of its subsidiaries and one step down subsidiary (as detailed in note 6 ofthe standalone financial statements) as of March 31 2020 vis-a-vis March 31 2019 due toinvocation of shares by the lenders of the subsidiaries. However while considering theamount invested in the subsidiaries the Management of the Company has considered theerstwhile shareholding pattern prior to dilution as the Management believes that thechange in shareholding is temporary in nature and the shares pledged will be redeemed backby the Company (as detailed in note 6 of the standalone financial statement).

However these shares have been transferred to such lenders before March 31 2020.Consequently the impact of the said transfer of Rs.156 crores on the value ofinvestments loan balances and the profit/loss on such a transfer has not been reflectedcorrectly the standalone financial statements of the Company. Accordingly the saidtreatment by the Company is not in line with the provisions of the Companies Act 2013 andthe requirements of the Indian Accounting Standards applicable on the Company.

3. The Management of the Company has determined that no impairment is required to berecognized on its investments in subsidiaries associates and joint ventures with acarrying value of INR 1866 Crore as at March 31 2020 as required by Ind AS 36'Impairment of Assets' particularly consequent to developments during this period (asdetailed in note 6 of the standalone financial statement). However we have not beenprovided with the indicators used and the assessment performed by the Management in orderto arrive at this decision. We are therefore unable to comment on whether the value ofinvestments recognized in the standalone financial statement of the Company isappropriate.

4. The Standalone Financial Statements of the Company has been prepared by theManagement and Board of Directors using the going concern assumption (Refer note 38 of thestandalone financial statement). The matters detailed in the above paragraphs may have aconsequential implication on the Company's ability to continue as a going concern. We aretherefore unable to comment on whether the going concern basis for preparation of theStatement is appropriate.

Emphasis of Matter

a. In a letter dated July 27 2019 signed by late Mr. V. G. Siddhartha the Promoterand then Chairman and Managing Director of the Company which has come to light it wasinter-alia stated that the Management and auditors were unaware of all his transactions.The Board of Directors had initiated an investigation into the circumstances leading tothe statements made in the letter and to scrutinize the books of accounts of the Companyand its subsidiaries.

The investigation report submitted to the Board of Directors on July 24 2020 hasconcluded that Mysore Amalgamated Coffee Estates Limited ('MACEL') a related entity owes asum of INR 3535 Crore to the subsidiaries of CDEL as on July 31 2019 of which a sum ofINR 842 Crore was due to the subsidiaries as of March 31 2019 leaving a balance of INR2693 Crore as incremental outstanding which needs to be addressed. Further the Board ofthe Company in the board meeting on August 21 2020 appointed Retired Hon'ble Justice SriK L Manjunath former Judge of Hon'ble High Court of Karnataka to suggest and overseeactions for recovery of the dues from MACEL and to help on any other associated matters.The future course of action will be decided by the Management based on the decision takenby the Hon'ble Justice Sri K L Manjunath.

b. Attention is drawn to Note No. 14 of the standalone financial statements on defaultof interest amount to lenders to INR 33 Crores on the borrowings outstanding as of March31 2020.

c. The Company has also received a notice from Registrar of Companies Karnatakacalling for information in connection with a proposed enquiry under Section 206 of theCompanies Act 2013. The Company has responded to the inquiry and has furnished theinformation called for. Pending the outcome of the enquiry and related proceedings we areunable to comment on the impact of the same on this Statement.

d. As detailed in note 37 of the Statement the Company has filed an applicationseeking a onetime exemption from registering itself as a Non-Banking Financial Company(NBFC) as required by Section 45-IA of the Reserve Bank of India Act 1934 and otherrelated provisions. As at the date of this Statement a response from the Reserve Bank ofIndia is awaited. In the absence of such exemption we are unable to comment on thecompliance with the aforesaid regulations and consequential impact if any on thisStatement.

Key Audit Matters

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

Key Audit Matter How the matter was addressed in our audit
Impairment of investments In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:-
As at March 31 2020 the Company has investment in subsidiaries as detailed in note 6 of the standalone financial statements. These subsidiaries have reported losses in the current and some in prior financial years Management
• Evaluated the design and implementation of the processes and internal controls relating to
has assessed that there is an indication that the asset may be impaired and hence has estimated its recoverable amount and basis such estimation has concluded that there is no impairment required to be recorded. We focused on this area due to the magnitude of the carrying amount of the asset and the fact that significant judgements were required by management (i) to identify whether any impairment indicators existed; identification / assessment of impairment indicators and performing the related impairment analysis;
• Evaluated management's identification of CGU's the carrying value of each CGU and the methodology followed by management for the impairment assessment in compliance with the prevailing accounting standards;
(ii) to determine the appropriate impairment approaches i.e. fair value less costs of disposal or value in use; and • We enquired with the management to provide us with the valuation report from a independent valuation expert. We were not provided with the valuation reports and hence we are unable to comment on the same.
(iii) to select key assumptions to be adopted in the valuation models including estimating future cash flows growth rates and discount rates. • Evaluated the appropriateness of the disclosure in the financial statements and assessed the completeness and mathematical accuracy.
Assets held for sale In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence.
On 8 January 2020 the Board of Directors of the Parent Company provided an in principal approval to sell the shares of Way2Wealth Securities Private Limited held by the Parent Company and its subsidiaries. Subsequently on 23 January 2020 the Parent Company entered into a definitive agreement to sell Way2Wealth Securities Private Limited including its certain subsidiaries to Shriram Ownership Trust subject to the closing conditions and required statutory approvals. • We independently read the share purchase agreement entered into between the Group and the purchaser and assessed the key conditions precedent for consummation of the sale transaction as documented in the agreement.
• Evaluating the criteria required under Ind AS 105 for classification of a non-current asset as held for sale and an independent assessment of
As at March 31 2020 though the consummation of the sale of the shares was not completed Management's evaluation of how each of such criteria is met.
pending approval from the regulator Management has classified the investment in shares of Way2Wealth Securities Private Limited as "Non currents assets held for sale" as it believes that the necessary criteria for such classification as required under Ind-AS 105 - Non-current Assets Held for Sale and Discontinued Operations have been met. • Evaluated Management's specific assessment of why they believe that the approval from the regulator is probable as at March 31 2020 and also reviewed the independent external legal opinion obtained by Management to validate such a conclusion.
We focused on this area as there is uncertainty as to the likely outcome of the regulatory approval and involves significant management's judgement on the classification as such asset must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets and its sale must be highly probable. • We have validated the appropriateness of the related disclosures in note 28 to the financial statements.

Other Matters

We further draw your attention to the Note No. 39 to the standalone financialstatement which describes the extent to which the COVID-19 pandemic will impact thecompany's financial results. The same will depend on future developments which are highlyuncertain.

Information other than the Standalone Financial Statements and Auditor's Report thereon

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

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

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

Responsibilities of Management and those charged with Governance for the StandaloneFinancial Statements

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

In preparing the standalone financial statements management and Board of Directors areresponsible 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.

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

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

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher thanfor one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.

• 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

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

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. 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 anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

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

Report on Other Legal and Regulatory Requirement

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. 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 except as statedin Basis for Qualified Opinion section.

b. Except for the possible effects of the matters described in the Basis of Disclaimeropinion section above in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

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

d. Except for the effects of the matter described in the Basis for Disclaimer Opinionand the Emphasis of Matter Section above in our opinion the aforesaid standalonefinancial statements comply with the Ind AS specified under section 133 of the Act.

e. On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 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 tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

3. With respect to the matter to be included in the Auditors' Report under section197(16) in our opinion and according to the information and explanations given to us theCompany has not paid any remuneration to its directors during the current year inaccordance with the provisions of Section 197 of the Act. The Ministry of CorporateAffairs has not prescribed other details under Section 197(16) which are required to becommented upon by us.

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

a. The Company has disclosed the impact of pending litigations as at March 31 2020 onits financial position in its standalone financial statements - Refer Note 26 to thestandalone financial statements;

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

c. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Venkatesh & Co.
Chartered Accountants
Firm registration number: 004636S
CA Dasaraty V
Partner
Membership Number: 026336
Chennai November 25 2020
UDIN:

Annexure A to Independent Auditors Report

As referred to in our Independent Auditor's Report to the members of Coffee DayEnterprises Limited

('the Company') on the Standalone Ind AS financial statements of the Company for theyear ended March 31 2020 we report that:

i)

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified every year. In our opinion the periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. In accordance with the programme physical verification of fixed assets wascarried out during the year and no material discrepancies were noted.

c. According to the information and explanations given to us and on the basis of ourexamination of the records the Company does not have any immovable properties except fora parcel of land held on long term lease. We have verified the lease agreement in the nameof the Company for the land taken on lease duly registered with the appropriate authority.

ii) According to the information and explanations given to us and on the basis of ourexamination of the records the inventories of consumables have been physically verifiedby the Management during the year. In our opinion the frequency of verification isreasonable. The discrepancies identified on physical verification of inventories betweenphysical stocks and book records were not material. However as at the year-end there is nomaterial value of physical inventory.

iii) According to the information and explanations given to us and on the basis of ourexamination of the records the Company has granted unsecured loans to four subsidiarycompanies covered in the register maintained under Section 189 of the Act and;

a. In our opinion the rate of interest and other terms and conditions on which loanshad been granted to the wholly owned subsidiaries listed in the register maintained underSection 189 of the Act are not prejudicial to the interest of the Company except for thoseas detailed in Note 32 of the standalone financial statement.

b. In case of loans granted to the wholly owned subsidiaries listed in the registermaintained under Section 189 of the Act the loans and interest are repayable on demand.

c. There are no overdue amounts in respect of the loan granted to the wholly ownedsubsidiaries listed in the register maintained under section 189 of the Act.

iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respect toloans advanced and investments made and securities and guarantees given.

v) The Company has not accepted any deposits from public.

vi) According to the information and explanation given to us the Central Government ofIndia has not prescribed the maintenance of cost records under Section 148(1) of the Actfor any of the services rendered and goods sold by the Company.

vii)

a. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Income tax duesGoods and Service tax and other material statutory dues have generally been regularlydeposited during the year by the Company with the appropriate authorities. As explained tous the Company did not have any dues on account of Employees' State Insurance Duty ofCustoms and Cess during the year. According to the information and explanations given tous no undisputed amounts payable in respect of Provident Fund Goods and Service taxIncome tax dues and other material statutory dues were in arrears as at March 31 2020for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us there are no dues ofGoods and Service tax and other material statutory dues which have not been deposited withthe appropriate authorities on account of any dispute except those referred to in note 26to the financial statements. As explained to us the Company did not have any dues onaccount of Employees' State Insurance Duty of Customs and Cess during the year. TheCompany however disputes the following Income-tax dues which are as follows:

Name of the statute Nature of dues Amount (Rs. in Crore) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Tax and interest 4.64 (0.62)* AY 2011-12 Income Tax Appellate Tribunal Bangalore
Income Tax Act 1961 Tax and interest 5.69 (Nil)* AY 2011-12 CIT (Appeals)

*Amount in parenthesis represents taxes paid under protest

viii) According to the information and explanations given to us the Company hasdelayed in repayment of dues to Financial Institutions/ Banks/ Government and there is anoverdue of Rs. 33 Crores outstanding for payment as at the year-end. The period and amountof default including lender wise details for the same is stated in Note No. 14 of theStandalone Financial Statements.

ix) According to the information and explanations given to us and on the basis of ourexamination of the records the Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments) during the year. In our opinionand according to the information and explanations given to us the term loans taken by theCompany were applied for the purposes for which they were raised.

x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.

xi) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the Company has not paid any ManagerialRemuneration during the year. Accordingly paragraph 3(xi) of this Order is notapplicable.

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) In our opinion and according to the information and explanations given to us andbased on an examination of the records of the Company all transactions with the relatedparties are in compliance with sections 177 and 188 of Companies Act 2013 whereapplicable and the details have been disclosed in the financial statements as required bythe applicable accounting standards.

xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or convertible debenturesduring the year. Accordingly paragraph 3(xiv) of the Order is not applicable.

xv) According to the information and explanations given to us the Company has notentered into any non-cash transaction with directors or person connected with him asreferred to in Section 192 of Companies Act 2013. Accordingly paragraph 3(xv) of theOrder is not applicable.

xvi) In our opinion and according to the information and explanations given to us asdetailed in note 37 of the Standalone financial statements the Company is required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934.

For Venkatesh & Co.
Chartered Accountants
Firm registration number: 004636S
CA Dasaraty V
Partner
Membership Number: 026336
Chennai November 25 2020
UDIN:
Chennai November 25 2020

Annexure B to the Independent Auditors' report on the standalone financial statementsof Coffee Day Enterprises Limited for the year ended March 31 2020

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

We have audited the internal financial controls with reference to financial statementsof Coffee Day Enterprises Limited ("the Company") as of March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

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

Meaning of Internal Financial Controls with reference to Financial Statements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Basis for Disclaimer of Opinion

Due to the possible effects of the matters described in the Basis for Disclaimer ofOpinion paragraph in our main audit report we are unable to obtain sufficient andappropriate evidence to provide a basis for our opinion on whether the Company hasadequate internal financial controls over financial reporting with reference to these IndAS financial statements as at March 31 2020 and whether such internal financial controlswere operating effectively. Accordingly we do not express an opinion on the internalfinancial controls over financial reporting with reference to the standalone financialstatements of the Company.

Disclaimer of Opinion

Due to the possible effects of the matters described in the "Basis for Disclaimerof Opinion" paragraph above we are unable to obtain sufficient and appropriateevidence to provide a basis for our opinion on whether the Company has adequate internalfinancial controls over financial reporting with reference to these Ind AS financialstatements as at March 31 2020.

For Venkatesh & Co.
Chartered Accountants
Firm registration number: 004636S
CA Dasaraty V
Partner
Membership Number: 026336
Chennai November 25 2020
UDIN:

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