To the Members of
DEEPAK FERTILISERS AND PETROCHEMICALS CORPORATION LIMITED REPORT ON THE AUDIT OF THESTANDALONE FINANCIAL STATEMENTS OPINION
We have audited the standalone financial statements of Deepak Fertilisers AndPetrochemicals Corporation Limited ("the Company") which comprise thestandalone balance sheet as at 31 March 2020 and the standalone statement of profit andloss (including other comprehensive loss) standalone statement of changes in equity andstandalone statement of cash flows for the year then ended and notes to the standalonefinancial statements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "standalone financialstatements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of afiairs of the Company as at 31 March 2020 and profit and other comprehensiveloss changes in equity and its cash fiows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
EMPHASIS OF MATTER
We draw attention to Note 47 to the standalone financial statements which describesthat a Search was carried out by the Income Tax Department on the Company in November2018. Pursuant to notice received in the last quarter of the year 2019-20 the Company hasfiled revised tax returns for Assessment Years 2013-2014 to 2018-2019. Management does notexpect any additional liability to devolve on the Company and no provision has beenrecognised as at 31 March 2020. Though the Company has not received any demand notice tilldate the uncertainty in the matter remains till the proceedings are concluded.
Our opinion is not modified 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 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.
DESCRIPTION OF KEY AUDIT MATTERS
Useful lives of Property Plant and Equipment ("PPE")
(refer note 2.3(c) and note 3 to the standalone financial statements)
|The key audit matter ||How the matter was addressed in our audit |
|During FY 2020 the Dahej Nitric Acid Project was commissioned and property plant and equipment additions amounting to Rs. 46527 Lakhs were capitalized. ||Our audit procedures included the following: |
|ThePPEadditionsaboveincludedusedPPEitemsonwhich significant refurbishment costs were incurred prior to installation. The carrying value of such used PPE assets as at 31 March 2020 was Rs. 19672 Lakhs. ||? Evaluated the design and operating efiectiveness of key internal financial controls over estimation of useful lives of used PPE assets; |
|Evaluation of the useful life of used PPE assets is a complex matter which involved technical assessment and was subject to significant estimation uncertainty. ||? Compared the list of used PPE assets capitalized during FY 2020 with the assessment shared as per the Company's external expert's report and the PPE additions listing; |
|Accordingly we identified determination of the useful life of used PPE assets as a key audit matter. ||? Assessed the competence capabilities and objectivity of external expert engaged by the Company; |
|The Company has appointed an external expert to assess the useful lives of used PPE assets. ||? Gained an understanding of the work of the expert by evaluating their report; |
| ||? Used our internal specialist to evaluate the technical assessment and useful life estimation performed by the Company's expert; |
| ||? Compared the useful lives of used PPE assets to similar used assets which were capitalized in the previous accounting periods; and |
|Contingencies and Provisions(refer note 42 and note 47 to the standalone financial statements) ||? Assessed the adequacy of the disclosures made by the Company relating to useful life of the used PPE assets in the standalone financial statements. |
|The Company operates in various states within India exposing it to a variety of difierent Central and State laws and regulations and interpretations thereof. In this complex regulatory environment there is a high risk of litigations and claims. ||? Obtained an understanding of key internal financial controls in respect of assessment of litigations and claims relating to the relevant laws and regulations; |
|The Company's tax positions have been challenged by the authorities on a range of matters. ||? Obtained the Company's assessment of the pending disputes including where applicable external legal counsel opinions developments during FY 2020 and post year-end status of litigations; |
|Moreover resolution of tax and legal proceedings may span over multiple years and may involve protracted negotiations or litigation. ||? Inquired with the Company's external legal counsels where applicable to understand the Company's assessment of the litigations and claims; |
|The Company applies significant judgment in estimating the likelihood of the outcome of each case and consequently its impact on the standalone financial statements. These estimates could change over time as new facts emerge and as each matter progresses. ||? Evaluated the Company's assessments by understanding precedents set in similar cases and assessed the reliability of the Company's past estimates/judgements; |
| ||? Performed test checks on the provision made/ contingent liabilities/ other significant litigations /disclosures made in the standalone financial statements; |
|Accordingly we identified Contingencies and Provisions as a key audit matter. ||? Involved our experts to gain an understanding and to evaluate disputed direct and indirect tax matters and evaluate positions taken by the Company; and |
| ||? Assessed the adequacy of the disclosures made by the Company relating to contingencies and provisions in the standalone financial statements. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS' 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 otherinformation and 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.
MANAGEMENT'S AND BOARD OF DIRECTORS' RESPONSIBILITY FOR THE STANDALONE FINANCIALSTATEMENTS
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 afiairs profit/ loss and othercomprehensive income changes in equity and cash fiows 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 operatingefiectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the Management and Board of Directorsare 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so. The Board ofDirectors is also responsible for overseeing the Company's financial reporting 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 infiuence the economic decisions of userstaken on the basis of these standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is suficient 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 efiectiveness of such controls
.? Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the standalone financialstatements made by the Management and Board of Directors.
? Conclude on the appropriateness of the Management and Board of Directors use ofthe going 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's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue 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. We communicate with those charged with governance regarding among othermatters 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 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 REQUIREMENTS
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. (A) As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive loss) the standalone statement of changes in equity and thestandalone statement of cash fiows dealt with by this Report are in agreement with thebooks of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference tostandalone financial statements of the Company and the operating efiectiveness of suchcontrols refer to our separate Report in "Annexure B".
(B) 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
: i. The Company has disclosed the impact of pending litigations as at 31 March 2020 onits financial position in its standalone financial statements - Refer note 42 and note 47to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; iii. Following is the instance of delayin transferring amounts required to be transferred to the Investor Education andProtection Fund by the Company:
|Year ||Type of dividend ||Dividend unpaid (INR in Lakhs) ||Status |
|1997-1998 ||Final ||0.37 ||Not yet transferred to Investor Education and Protection Fund due to legal dispute with regards to ownership of shares which remains unresolved |
during the period from 8 November 2016 to 30 December 2016 have not been made in thesefinancial statements since they do not pertain to the financial year ended 31 March 2020.(C) With respect to the matter to be included in the Auditors' Report under Section 197(16) of the Act we report that: We draw attention to Note 46 to the standalone financialstatements for the year ended 31 March 2020 according to which the managerial remunerationpaid/ accrued to the Managing Director of the Company (amounting to Rs. 389.21 Lakhs)exceeds the prescribed limits under section 197 read with Schedule V of the Companies Act2013 by Rs. 264.77 Lakhs. As per the provisions of the Act the excess remuneration issubject to approval of the shareholders which the Company proposes to obtain in theforthcoming Annual General Meeting. The Ministry of Corporate Afiairs has not prescribedother details under Section 197(16) which are required to be commented upon by us.
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE FINANCIAL STATEMENTSOF DEEPAK FERTILISERS AND PETROCHEMICALS CORPORATION LIMITED fi 31 MARCH 2020
With reference to Annexure A referred to in paragraph 1 in "Report on Other Legaland Regulatory Requirements" of the Independent Auditors' Report to the Members ofthe Company on the standalone financial statements for the year ended 31 March 2020 wereport that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) The Company has a regular program of physical verification of its property plantand equipment by which its property plant and equipment are verified in a phased mannerover a period of three years. In our opinion the periodicity of physical verification ofproperty plant and equipment is reasonable having regard to the size of the Company andthe nature of its assets. In accordance with this program certain property plant andequipment were verified during the year and no material discrepancies were noticed on suchverification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company title deeds of immovable properties are held inthe name of the Company except for those immovable properties held in the name of YerrowdaInvestments Limited which is a jointly controlled operation having net book valueamounting to Rs. 16538 Lakhs as at 31 March 2020.
(ii) The inventory except goods in transit and stock with third parties has beenphysically verified by the management during the year. In our opinion the frequency ofsuch verification is reasonable. In respect of stock lying with third parties at the yearend written confirmations have been obtained and in respect of good-in-transitsubsequent goods delivery documents have been verified by the management. Thediscrepancies noticed on verification between the physical stocks and the book recordswere not material and have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theAct. Accordingly paragraph 3(iii) of the Order is not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act with respectto loans investments guarantees and security as applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of Sections 73 to76 of the Act and the Rules made thereunder.
(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 prescribed by the Central Governmentunder Section 148(1) of the Act and are of the opinion that prima facie the prescribedrecords have been made and maintained. We have not however made a detailed examinationof the records with a view to determine whether they are accurate or complete. (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 Employees' stateinsurance Income tax Duty of customs Goods and Services Tax and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities except for delays in Income tax (tax deducted at source andcollected at source) Provident fund and Labor welfare fund ranging from 7 days to 31days. As explained to us during the year the Company did not have any dues on account ofCess.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' state insurance Income tax Duty ofcustoms Goods and Service Tax and other material statutory dues were in arrears as at31fiMarch 2020 for 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 ofIncome tax Service tax Sales tax Value Added Tax Duty of customs Duty of excise andGoods and Service Tax as at 31 March 2020 which have not been deposited by the Company onaccount of disputes except for the following:
|Name of the Statute ||Nature of Dues ||Amount (Rs. in Lakhs)# ||Amount paid under protest (Rs. in Lakhs) ||Financial year to which the amount relates ||Forum where the dispute is pending |
|The Income Tax Act 1961 ||Income tax demands ||27 ||27 ||Assessment Year 2003- 2004 ||Bombay High Court |
|The Income Tax Act 1961 ||Income tax demands ||0.9 ||- ||Assessment Year 1993- 1994 ||Income Tax Appellate Tribunal |
|The Income Tax Act 1961 ||Income tax demands ||7196 ||1901 ||Assessment Year 1997- 1998 Assessment Years 2012-2013 to 2014-2015 ||Commissioner of Income Tax (Appeals) |
|The Income Tax Act 1961 ||Income tax demands ||12 ||- ||Assessment Year 1993- 1994 and 2003-2004 ||Income Tax Assessing Oficer |
|The Central Excise Act 1944 ||Excise duty demands ||1355 ||20 ||Financial Year 2007-08 to ||Customs Excise and Service |
| || || || ||Financial Year 2010-11 and ||Tax Appellate Tribunal |
| || || || ||Financial Year 2015-16 || |
|The Central Excise Act 1944 ||Excise duty demands ||893 ||- ||Financial Year 2008-09 to ||Supreme Court |
| || || || ||Financial Year 2009-10 || |
|Finance Act 1994 ||Service tax Demands ||183 ||18 ||Financial Years 2015-16 ||Customs Excise and Service |
|(Service Tax) || || || || ||Tax Appellate Tribunal |
|Finance Act 1994 ||Service tax Demands ||1881 ||- ||Financial Year 2006- 07 to ||Bombay High Court |
|(Service Tax) || || || ||Financial Year 2011- 12 || |
|The Bombay Sales Tax Act 1959 ||Sales tax demands ||72 ||- ||Financial Year 2004-2005 ||Maharashtra Sales Tax Tribunal |
|The Central Sales Tax Act 1956 ||Sales tax demands ||1999 ||155 ||Financial Years 2004-05 to 2006-2007 and Financial Year 2010-11 to 2013-14 ||Maharashtra Sales Tax Tribunal |
|The Central Sales Tax Act 1956 ||Sales tax demands ||775 ||233 ||Financial Year 2005-06 to 2009-10 ||Joint Commissioner of Commercial Taxes (Appeals) Belgavi |
|The Central Sales Tax Act 1956 ||Sales tax demands ||912 ||- ||Financial Year 2014-15 ||Joint Commissioner of Appeals of Sales Tax Pune |
|The Central Sales Tax Act 1956 ||Sales tax demands ||9 ||1 ||Financial year 2015-2016 ||Dy. Commissioner of Sales Tax Madhya Pradesh |
|The Maharashtra Value ||Sales tax demands ||887 ||425 ||Financial Year 2005-06 ||Maharashtra Sales Tax |
|Added Tax Act 2002 || || || ||Financial Year 2011-12 ||Tribunal Mumbai |
| || || || ||Financial Year 2011-12 || |
|The Maharashtra Sales ||Lease tax on crane hire charges ||0.2 ||- ||Financial Year 1990-1991 ||Dy. Commissioner of Sales Tax Pune |
|Tax on Transfer of Right to Use any Goods for any purpose 1985 || || || || || |
|The Maharashtra Tax on the Entry of Goods in ||Entry tax on natural gas procured from ||4663 ||1635 ||Financial Years 2012-2013 to 2016-2017 ||Maharashtra Sales Tax Tribunal Mumbai |
|Local Areas of Act 2002 ||outside Maharashtra || || || || |
|The Punjab VAT Act 2005 ||VAT demands ||2 ||- ||Financial Year 2008-2009 ||Punjab Value Added Tax Tribunal |
|Custom Tarifi Act 1975 ||Tarifi heading classification ||68 ||7 ||Financial Years 2005-2006 to 2009-2010 ||Deputy Commissioner of Customs (Preventive) Alibaug Division Marine & Preventive Wing Mumbai |
|Custom Tarifi Act 1975 ||Custom Valuation rules ||418 ||49 || ||The Directorate of Revenue Intelligence Kolkata |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to any bank. The Companydoes not have any loans or borrowings from financial institutions government or debentureholders during the year.
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public ofier or further public ofier(including debt instruments). The money raised by way of term loans have been applied forthe purposes for which they were obtained.
(x) According to the information and explanations given to us no fraud by the Companyand no material fraud on the Company by its oficers or employees has been noticed orreported during the year.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company Managerial Remuneration paid/ accrued to theChairman and Managing Director of the Company is in excess of the limits specified underSection 197 read with Schedule V to the Act by Rs. 264.77 Lakhs. The Company is in theprocess of obtaining approval from shareholders at the forthcoming annual general meetingfor such excess remuneration paid (refer note 46).
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.Accordingly paragraph 3 (xii) of the Order is not applicable to the Company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with Sections 177 and 188 of the Act where applicable and the details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with the directors or persons connected with them during the year.Accordingly paragraph 3(xv) of the Order is not applicable to the Company.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of India1934.
For B S R & Associates LLP
Firm Registration No.: 116231W/W-100024
Membership No.: 101190 UDIN: 20101190AAAABA1678
Place: Pune Date: 30 June 2020
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE FINANCIAL STATEMENTSOF DEEPAK FERTILISERS AND PETROCHEMICALS CORPORATION LIMITED FOR THE YEAR ENDED 31 MARCH2020 REPORT ON THE INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE AFORESAID STANDALONEFINANCIAL STATEMENTS UNDER CLAUSE fiIfi OF SUBfiSECTION 3 OF SECTION 143 OF THE COMPANIESACT 2013 (Referred to in paragraph 2A (f) under Report on Other Legal andRegulatory Requirements' section of our report of even date)
We have audited the internal financial controls with reference to standalone financialstatements of Deepak Fertilisers And Petrochemicals Corporation Limited ("theCompany") as of 31 March 2020 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating efiectively as at 31 March 2020 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").
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 standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating efiectively for ensuring the orderly andeficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements. 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 standalone financial statements were established andmaintained and whether such controls operated efiectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating efiectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating efiectiveness 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 standalone financial statementswhether due to fraud or error.
We believe that the audit evidence we have obtained is suficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to standalone financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONE FINANCIALSTATEMENTS
A Company's internal financial controls with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A Company's internalfinancial controls with reference to standalone financial statements include thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly refiect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of standalone financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial efiect on the standalone financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONEFINANCIAL STATEMENTS
Because of the inherent limitations of internal financial controls with reference tostandalone 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 financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
For B S R & Associates LLP
Firm Registration No.: 116231W/W-100024
Membership No.: 101190 UDIN: 20101190AAAABA1678
Place: Pune Date: 30 June 2020