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Container Corporation Of India Ltd.

BSE: 531344 Sector: Others
NSE: CONCOR ISIN Code: INE111A01025
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OPEN 378.15
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VOLUME 251039
52-Week high 665.05
52-Week low 263.20
P/E 22.62
Mkt Cap.(Rs cr) 23,129
Buy Price 379.60
Buy Qty 125.00
Sell Price 379.60
Sell Qty 50.00
OPEN 378.15
CLOSE 377.10
VOLUME 251039
52-Week high 665.05
52-Week low 263.20
P/E 22.62
Mkt Cap.(Rs cr) 23,129
Buy Price 379.60
Buy Qty 125.00
Sell Price 379.60
Sell Qty 50.00

Container Corporation Of India Ltd. (CONCOR) - Auditors Report

Company auditors report

TO THE MEMBERS OF

CONTAINER CORPORATION OF INDIA LIMITED

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the accompanying standalone financial statements of CONTAINERCORPORATION OF INDIA LIMITED ("the Company") which comprise the BalanceSheet as at 31st March 2019 the statement of Profit and Loss (including othercomprehensive income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the standalone financial statements") in which are included the Returns forthe year ended on that date audited by the branch auditors of the Company’s regionslocated at Mumbai (western region) Chennai (Southern region) Kolkata (Eastern region)Noida(North central region) Nagpur(Central region) New Delhi (Northern region)Secunderabad (South Central region) & Ahmedabad (North West region).

In our opinion and to the best of our information and according to theexplanations given to us except for the effects of the matter described in the Basisfor Qualified Opinion section of our report the aforesaid standalone financialstatements give the information required by the Companies Act 2013 ("the Act")in the 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 2019 its profit (including other comprehensive income) changes in equity and itscash flows for the year ended on that date.

Basis for Qualified Opinion

Refer note no. 55 regarding non provision for impairment loss/fairvalue reduction in the value of investment amounting to INR 160.07 Crores in equity of M/sFresh & Fiealthy Enterprises Limited (FHEL) & amounting to INR 56.24 Crores indebts including interest and other receivables from FHEL. FHEL is a wholly ownedsubsidiary company whose net worth has been fully eroded. FHEL has not achieved theprojected cash inflows and has reported a loss of INR 8.39 crores for the Financial Year18-19. Further the management projections provided to us with regard to future cash flowsof FHEL are not supported by credible evidence and are inconsistent with the pastperformance. Accordingly the carrying amount of the investment of INR 160.07 Crores anddebt including interest and other receivables of INR 56.24 Crores of FHEL shall exceed itsRecoverable Amount/ Fair Value resulting in Impairment Loss and Reduction in Fair Valuein accordance with Ind AS-36 "Impairment of Assets" (IND AS 36) and Ind AS-109"Financial lnstruments"(IND AS 109).

Accordingly impairment loss for the carrying amount of investment ofINR 160.07 Crores has not been recognized in accordance with IND AS 36 and Fair ValueReduction in Debt and Other Receivables amounting to INR 56.24 Crores has not beenprovided in accordance with IND AS 109. Accordingly the provision towards impairment andfair value reduction is understated by INR 216.31 Crores investment is overstated by INR160.07 Crores Loans given including interest are overstated by INR 55.44 Crores and Otherreceivable are overstated by INR 0.80 Crores and profit before tax is overstated by INR216.31 Crores.

We conducted our audit of standalone financial statements in accordancewith the Standards on Auditing ("SAs") specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the Auditor’sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our qualified opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. In addition to the matter described in the Basisfor Qualified Opinion section we have determined the matters described below to bethe key audit matters to be communicated in our report:

1. Recoverability and Recognition of Receivables w.r.t ExportIncentives under Service Export from India Scheme (SEIS)

Linder the Foreign Trade Policy (FTP) 2015-20 of Government of Indiathe Company has claimed export benefits under Service Export from India Scheme (SEIS).Company recognizes these benefits in the period in which the right to receive the same isestablished i.e. the year during which the services eligible for grant of SEIS benefitsare performed.

Company has recognized income under the said scheme of INR 704.81Crores till 31.03.2018 and INR 339.22 Crores in the financial year 2018-19 amounting to atotal of INR 1044.03 Crores till 31.03.2019 against which no amount has been realized till31.03.2019. SEIS claims filed by the Company for past years amounting to INR 704.81

Crores have not yet been approved even for first year 2015-16 by theconcerned department of Government of India and decision thereof is long pending. Concernshave been raised regarding fair value of the amount receivable. Refer Note 56 to thestandalone financial statements.

This has been considered as a key audit matter given the involvement ofmanagement judgement and estimate and any variation may have consequential impact on therecognised revenue.

The status of such claims has been reviewed on regular basis. Based onexpert's opinion on eligibility of the company for the benefits under SEIS under the FTP201520 legal opinion obtained by the management on this matter and management’sassessment based on discussions and follows up with the authorities the Management of theCompany is of the view that there is no reduction in the fair value of the claimoutstanding in the books.

2. Advance Given to Railways and Loan Taken Thereof

During the Financial year 2018-19 the Company has entered into anagreement with the Indian Railways wherein the Company agrees to pay INR 4500 Crores inadvance in two instalments towards payment of freight charges for the Financial Year2019-20 and paid INR 3000 crores as advance rail freight towards first instalment. Tofulfil this commitment the company has liquidated its investment and borrowed INR 700Crores as working capital loan from bank. As per management assessment the benefit offixed base rail freight for the financial year 2019-20 would not only offset the cost offund and sacrifice of income on investments but will also give competitive advantage andhelp in growth of business of the company. Refer Note 58 to the standalone financialstatements.

We have reviewed the scheme minutes of the board and the agreemententered into and we have relied on the management’s assumptions and estimates in thisregard.

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the Management Discussion and AnalysisDirector's Report including annexures to Director's Report Business ResponsibilityReport Corporate Governance Ten years Financial/physical performance and data and letterfrom CMD included in the annual report of the company but does not include the standalonefinancial statements and our auditor’s report thereon. The annual report is expectedto be made available to us after the date of this auditor's report.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

When we read the Annual report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take necessary actions as per applicable laws and regulations.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is 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 financial position financial performance(including other comprehensive income) changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards specified in the Companies (Indian Accounting Standards)Rules 2015 (as amended) under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible 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 are also responsible for overseeing theCompany’s financial reporting process.

Auditor’s Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3) (i) of the Act we are also responsible for expressingour opinion on whether the company has adequate internal financial controls system inplace and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• 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 Company’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor’sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law of regulation precludes publicdisclosure

about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Emphasis of Matter

1. We draw attention to the Note no. 54 to the standalone financialstatement which describes investment of INR 54.60 Crore in equity of India GatewayTerminal Private Limited a jointly controlled entity in which the Company holds 11.87%equity whose net worth has been fully eroded. Management has not recognized anyimpairment in the value of the assets as in the opinion of the management the expectedpresent value of future cash flows exceeds the carrying amount of the asset.

2. We further draw attention to the Note no. 56 to the standalonefinancial statements which describe that cost of monetization of Scrips receivable underService Export from India Scheme (SEIS) will not be material in the view of the managementand therefore the same will be accounted for in the year of monetization.

Our opinion is not modified in respect of the above stated matters.

Other Matter

We did not audit the financial statements/ information of 8 regionsincluded in the standalone financial statements of the Company whose financialstatements/financial information reflect total assets of Rs. 3449.45 Crores as at 31stMarch 2019 and the total revenue of Rs. 6594.29 Crores for the year ended on that dateas considered in the standalone financial statements. The financial statements/information of these regions have been audited by the branch auditors whose reports havebeen furnished to us and our opinion in so far as it relates to the amounts anddisclosures included in respect of these regions is based solely on the report of suchbranch auditors.

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 of sub-section(11) of section 143 of the Act we give in the "Annexure A" a statementon the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. The Comptroller and Auditor General of India has issued Directionsindicating the areas to be examined in terms of sub section (5) of section 143 of the Actcompliance of which are set out in "Annexure B".

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

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) 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 andproper returns adequate for the purposes of our audit have been received from the regionsnot visited by us.

(c) The reports on the accounts of regions of the Company audited underSection 143(8) of the Act by branch auditors have been sent to us and have been properlydealt with by us in preparing this report.

(d) The Balance Sheet the Statement of Profit and Loss (includingother comprehensive income) the Cash Flow Statement and the Statement of Changes inEquity dealt with by this Report are in agreement with the books of account and thereturns received from the regions not visited by us.

(e) In our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards specified in the Companies (Indian AccountingStandards) Rules 2015 (as amended) under Section 133 of the Act except IND AS 36 ‘Impairmentof Assets’ and IND AS 109 ‘Financial Instruments' as described in Basisfor Qualified Opinion section of our report and also with the exception of IND AS- 8 ‘AccountingPolicies Changes in Accounting Estimates and Errors’ to the extent of Disclosurerequired for impact on financial statements w.r.t. IND AS- 116 ‘Leases’made applicable on the Company from 01.04.2019 by MCA notification dated 30.03.2019.

(f) As per notification number G.S.R. 463(E) dated 5th June 2015issued by Ministry of Corporate Affairs section 164(2) of the Act regarding thedisqualifications of Directors is not applicable to the Company since it is a GovernmentCompany;.

(g) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure C". Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company’sinternal financial controls over financial reporting.

(h) With respect to the other matters to be included in theAuditor’s Report as per notification number G.S.R. 463(E) dated 5th June 2015issued by Ministry of Corporate Affairs section 197(16) of the Act regarding theManagerial remuneration is not applicable to the Company since it is a Government Company

(i) With respect to the other matters to be included in theAuditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 (as amended) in our opinion and to the best of our information and accordingto the explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements - Refer Note 42 to thestandalone financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

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

For Arun K Agarwal & Associates

Chartered Accountants

(Firm's Registration No. 003917N)

Arun Kumar Agarwal

(Partner)

M. No. 082899

Place; New Delhi

Date: 30 April 2019

Annexure A to Independent Auditors' Report

Referred to Paragraph 1 under the heading of "Report on OtherLegal and Regulatory

Requirements" of our report of even date

i. In respect of the Company's fixed assets:

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

(b) The Company has a programme of physical verification of fixedassets on a yearly basis which in our opinion is reasonable having regards to the size ofthe Company and nature of its business. Fixed assets were physically verified by themanagement during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company except for items mentioned below:

(Amount in Rs. Crores)

Details of Property Net Amount
RO Premises at Egmore Chennai 1.72
Staff Quarters at Chennai 1.03
Residential Flats Kolkata 0.51
Jangpura-Building 0.83
Leasehold Land-MMLP Vishakhapatnam 93.91
Freehold land Krishnapatnam Port 31.21
Land at Village Bhavri 0.04
Land at Vatera 0.64
Jangpura-Land 0.44
Leasehold Land at Kadakola 18.99
Land at White Field 13.11

ii. The Company has carried out physical verification of inventory atreasonable intervals. As per the information and explanations given to us no materialdiscrepancies were noticed during such verification.

iii. The Company has granted unsecured loans to 2 wholly ownedsubsidiary companies i.e. M/s Fresh & Healthy Enterprises Limited (FHEL) and M/sCONCOR Air Limited:

(a) In our opinion and according to the information and explanationsgiven to us the terms and conditions of the grant of such loans are not prejudicial tothe Company’s interest.

(b) The borrower entity (FHEL) is not in a capacity to pay interest andprincipal as per stipulated terms. The due date of the loan and interest has been extendedperiod after period to avoid default in the account.

(c) Interest amounting to INR 17.36 Crore is overdue in relation toloan to FHEL for more than ninety days. According to the information and explanationsgiven to us the company is following up the recovery of overdue amount.

iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 185 and 186 of theAct with respect to the loans investments guarantees and securities as applicable.

v. The Company has not accepted any deposits from the public within themeaning of Sections 73 74 75 and 76 of the Companies Act 2013 and Rules framed thereunder.

vi. As per the information and explanations given to us themaintenance of cost records has not been prescribed by the Central Government undersection 148(1) of the Companies Act 2013 for services rendered by the Company.

vii. (a) According to the information and explanations given to us andon the basis of

our examination of the books of account of the Company except Building& Other Construction Worker Cess of Rs. 1.44 Crores outstanding as on 31stMarch 2019 for a period of more than six months from the date it became payable amountdeducted/accrued in the books of account in respect of undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Goods and Services Tax Sales tax.Service Tax Custom Duty Value Added Tax Cess and any other statutory dues have beenregularly deposited during the year by the Company with appropriate authorities.

(b) According to the information and explanations given to us thefollowing dues of Income tax and Service tax have not been deposited by the company onaccount of disputes:

S. No Name of Statue Nature of Dues Forum where dispute is pending Period to which amount relates Amount
1 Finance Act 1994 Service tax CESTAT

Bangalore

September 2002 to June 2008 1.48*
CCE 2004-05 0.11
CCE(Appeals) January 2004- March 2004 0.02
CCE 2005-06 0.20

 

S. No Name of Statue Nature of Dues Forum where dispute is pending Period to which amount relates Amount
2 Income Tax Act 1961 Income Tax ITAT Delhi A.Y. 2008-09 96.59
A.Y. 2011-12 165.80
A.Y. 2012-13 159.27
A.Y. 2013-14 107.31
A.Y. 2014-15 132.13
CIT(Appeals) A.Y. 2013-14 48.46
ITO (Income Tax Officer) AY 2006-07 0.69
ITO (Income Tax Officer) AY 2010-11 1.20

* one third share of the total disputed amount

viii. The Company has not defaulted in repayment of loans or borrowingto a financial institution bank Government or dues to debenture holders during the year.

ix. The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) and term loans during the year.Accordingly paragraph 3 (ix) of the Order is not applicable.

x. According to the information and explanation given to us by themanagement and based on our examination of the records of the company no material fraudby the company or on the Company by its officers or employees has been noticed or reportedduring the year.

xi. As per Notification dated 05.06.2015 Section 197 of the Act is notapplicable in case of a Government Company. Accordingly paragraph 3 (xi) of the Order isnot applicable.

xii. In our opinion and according to the information and explanationsgiven to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.

xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act wherever applicable anddetails of such transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.

xiv. According to the information and explanations give to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicableto the Company.

xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable to the Company.

xvi. The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

For Arun K Agarwal & Associates

Chartered Accountants

(Firm’s Registration No. 003917N)

Arun Kumar Agarwal

(Partner)

M. No. 082899

Place: New Delhi

Date: 30 April 2019

Annexure B to Independent Auditor's Report

Referred to Paragraph 2 under the heading of "Report on OtherLegal and Regulatory Requirements" of our report of even date

According to the information and explanations given to us we report asunder:

S. No. Areas Examined Observations/Findings
1. Whether the company has system in place to process all the accounting transactions rough IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. The Company has system in place to process all the accounting transactions through IT System i.e. Oracle. The operational entries of the Company like revenue customer ledger account pre-deposit accounts etc. have been recorded in a separate IT system (viz. ETMS DTMS and CCLS) other than the financial reporting IT system (viz. Oracle). At each month end a consolidated entry is being posted in ‘Oracle’ based on the summary generated in DTMS ETMS and CCLS systems Further payroll of the company is maintained through RAMCO system. However the Company has adequate internal control system to verify correctness of the entries collated and posted in Oracle.
2. Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by a lender to the company due to the company's inability to repay the loan? If yes the financial impact may be stated. According to the information and explanations give to us and based on our examination of the records of the Company there has been no restructuring/ waiver/write off of any existing loan taken by the Company.
3. Whether funds received/receivable for specific schemes from central/ state agencies were properly accounted for/ utilized as per its term and conditions? List the cases of deviation. Funds received/receivable for specific schemes from central/state agencies were properly accounted for/utilized as per its term and conditions except grant received in 2010 of which INR 646278 remains unutilized till date.

For Arun K Agarwal & Associates

Chartered Accountants

(Firm’s Registration No. 003917 N)

Arun Kumar Agarwal

(Partner)

M. No. 082899

Place: New Delhi

Date: 30 April 2019

Annexure C to Independent Auditor’s Report

Referred to Paragraph 3(g) under the heading of "Report on OtherLegal and Regulatory Requirements" of our report of even date

Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls over financialreporting of CONTAINER CORPORATION OF INDIA LIMITED ("the Company") as of31 March 2019 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to 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 internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting 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 control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion and to the best of our information and according to theexplanations given to us 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 31 March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Arun K Agarwal & Associates

Chartered Accountants

(Firm's Registration No. 003917N)

Arun Kumar Agarwal

(Partner)

M. No. 082899

Place; New Delhi

Date: 30 April 2019