To The Members of Electrosteel Castings Limited
Report on the Audit of the Standalone Financial Statements Qualified Opinion
We have audited the accompanying standalone financial statements of ElectrosteelCastings Limited ("the Company") which comprise the Balance sheet as at March31 2020 the statement of profit and loss (including other comprehensive income) thestatement of cash flow and the statement of changes in equity for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information. (hereinafter referred to as the "standalonefinancial statement")
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandard) Rules 2015 as amended (Ind As) and other accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2020 its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.
Basis for Qualified Opinion
Attention is drawn to the following notes to the accompanying standalone financialstatement:
a) Note no. 47 in respect to cancellation of coal block allotted to the company inearlier years and non-recognition of the claims receipt thereof and non-carrying of anyadjustment in the books of accounts for the reasons stated in the note. Pendingfinalisation of the matter and as the matter is sub judice disclosures as per IndianAccounting standard will be given effect on final settlement of the matter and thebalances appearing in the books of accounts in respect to such coal block have beencarried forward at their carrying cost and disclosed as capital work in progress propertyplant & equipment inventories and other heads of account. The impact andconsequential adjustment thereof are not presently ascertainable.
b) Note No. 8A.2 in respect to Company's investment amounting to Rs. 1653.76 lakhs inElectrosteel Steels Limited (ESL) the pledge of which was invoked by the lenders of ESLand the same has been
set aside by the Hon'ble High Court at Calcutta. The plea of the company to release thepledge is pending before the Hon'ble High Court at Calcutta. Further certain fixed assetsof Elavur plant of the Company which are mortgaged in favour of a Lender of ESL who hasassigned their rights to another entity and the symbolic possession has been taken duringthe year has been disputed by the company as enumerated in the note. Above exposures havebeen carried forward at their existing carrying value & no impairment has beenprovided in respect to above and the impact of which is not presently ascertainable.
c) Note No 48(b) in respect to carry forward of claim recoverable amounting to Rs.1778.11 Lakhs towards the compensation claimed from the Railway Authorities as mentionedin the note. The recovery of the same is dependent on the outcome of the arbitrationprocess and is not presently ascertainable.
Impacts with respect to (a) (b) & (c) above are presently not ascertainable and assuch cannot be commented upon by us.
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditors'Responsibilities 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 the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our qualified audit opinion on the standalone financial statements.
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 for the year ended March31 2020. 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 matters described in the basis forqualified opinion section we have determined the matters described below as Key auditmatters and for each matter our description of how our audit addressed the matter isprovided in that context.
|Key audit matters ||How our audit addressed the key audit matter |
|Taxation litigations and disclosures of contingent liabilities ||Our audit procedures included among others : |
|The Company is exposed to different laws regulations and interpretations thereof. The company is also subject to number of significant claims and litigations. The assessment of the likelihood and quantum of any liability in respect of these matters can be judgmental due to the uncertainty inherent in their nature. || |
I. Understanding and assessing the internal control environment relating to the identification recognition and measurement of provisions for disputes potential claims and litigation and contingent liabilities;
|At March 31 2020 the Company has carried forward non- current income tax liabilities of Rs. 5157.78 Lakhs [Refer Note 27 to the financial statements]. Further the Company has disclosed significant pending legal cases with respect to Kodilabad mines [Refer Note 48a to the financial statements] and other material contingent liabilities [Refer Note 53 to the financial statements]. ||II. Analyzed significant changes/ update from previous periods and obtained a detailed understanding of such items. Assessed recent judgments passed by the court authorities affecting such change; |
|We considered this to be a key audit matter since the accounting and disclosure of claims and litigations is complex and judgmental and the amounts involved are or can be material to the financial statements. ||III. Discussed the status of significant known actual and potential litigations with the management & noted that information placed before the board for such cases and |
| ||IV. Assessment of the management's assumptions and estimates related to the recognized provisions for disputes and disclosures of contingent liabilities in the financial statements. |
|Recoverability of Government Grant || |
|The company has been entitled for various sales tax incentives under Industrial promotion scheme issued by the State Government. The company had complied with the conditions of such scheme and incentives were accounted for in the books in earlier years. A sum of Rs. 4680.58 Lakhs (grouped under other financial assets in note no. 18) is outstanding against said incentive as on 31st March 2020. ||I. Evaluating eligibility requirements of schemes and compliances by the company. |
|We determined this to be a matter of significance to our audit due to the quantum of the government grant outstanding compliance requirement of the scheme and also because of recovery pattern of the same. ||II. Understanding and testing the design and operating effectiveness of controls as established by the management in recognition and assessment of the recoverability of the grant. |
| ||III. Considering the relevant notifications to ascertain the basis for determination completion of performance obligation and assessing the appropriateness of the management estimates for accounting of government grant and timing of recognition & past receipt of the grants. |
|inventory measurement || |
|The company deals with various types of bulk material & Finished goods such as ductile & Iron pipes pipe fittings coal coke & Iron Ore etc. The total inventory of such materials amounts to Rs.54774.82 lakhs as on March 31 2020. (refer note no. 12). ||I. Obtained the understanding of the management with regards to internal financial controls relating of Inventory management. |
|The measurement of these inventories involved certain estimations/assumption and also involved volumetric measurements. Measurement of some of these inventories also involved consideration of handling loss moisture loss/gain spillage etc. and thus required assistance of technical expertise. ||II. The company has deployed an independent agency for verification of bulk Materials in which our team were also present to oversee the process of entire materials being verified. We have also reviewed the internal verification process followed by the management for certain inventory items. |
|We determined this to be a matter of significance to our audit due to quantum of the amount & estimation involved. ||III. We have also reviewed the report submitted by external agency and obtained reasons/explanation for such differences and also confirmed the adjustment made by the company in accordance with the policy confirmed by the board of directors. |
information other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report for example Board'sReport Report on Corporate Governance Management Discussion & Analysis Report etc.but does not include the standalone financial statements and our auditors' report thereon.
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 financial statements or our knowledge obtained duringthe course of our 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 Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial Statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordance
with the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial Statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditors' Responsibility 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 auditors' 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 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 Companies Act 2013
we are also responsible for expressing our opinion on whether the Company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols;
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management;
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern; and
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 auditor's 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 (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. Further to our comments in the annexure referred to in the paragraph above asrequired 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 appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Cash Flow and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account;
d) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid financial statements comply with theIndian Accounting Standards (Ind AS) specified under section 133 of the Act. read withCompanies (Indian Accounting Standards) Rules 2015 as amended;
e) The matters described in the Basis for Qualified opinion paragraph above in theevent of being decided unfavorably in our opinion may have an adverse effect on thefunctioning of the Company;
f) 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) ofthe Act;
g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above
h) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in
"Annexure B". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting;
i) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of the section 197(16) of the Act as amended in ouropinion and to the best of our information and according to the explanation given to usthe managerial remuneration for the year ended March 31 2020 has been paid / provided bythe Company to its directors in accordance with the provisions of section 197 read withSchedule V to the Act;
j) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. Except for the matters dealt with in the Basis of Qualified Opinion paragraph impactwhereof are presently not ascertainable impacts of pending litigations (Other than thosealready recognised in the accounts) on the financial position of the Company have beendisclosed in the standalone financial statement as required in terms of the Ind AS andprovisions of the Companies Act 2013 - Refer Note No. 53 to the standalone financialstatements.
ii. The Company has made provision as required under the applicable law or Indianaccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts - Refer Note no. 45 to the standalone financial statements;and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For Singhi & Co. Chartered Accountants Firm Registration No. : 302049E
(Gopal Jain) Partner
Membership No. : 059147 UDIN: 20059147AAAAABA3397
Place : Kolkata Date : 15th June 2020
I. a. The Company has maintained proper records showing full particulars includingquantitative details and situations of fixed assets except in case of furniture andfixture.
b. During the year fixed assets have been physically verified by the managementaccording to a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets except in respect offixed assets located at Parbatpur Coal Block for reasons stated in Note No. 47(a). Asinformed no material discrepancies were noticed on such verification.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except as detailed below: (Refer Note no. 5.3 & 5.4 ofthe standalone financial statements)
|(Amount Rs. In Lakhs) |
|Nature of Immovable Properties ||Gross Block ||Net Block |
|Freehold Land ||335.81 ||335.81 |
|Freehold Land ||1889.04 ||1889.04 |
II. a. As informed the inventories of the Company except for
materials in transit finished goods lying with third parties and inventories lying atParbatpur Coal Block for reasons stated in Note no. 47(a) have been physically verifiedby the management at the reasonable intervals. In our opinion and according to theinformation and explanations given to us the frequency of such verification isreasonable. For stocks lying with third parties at the year-end written confirmationshave been obtained and in respect of goods-in-transit subsequent goods receipts have beenverified or confirmations have been obtained from the parties. The discrepancies noticedon verification between the physical stocks and the book records were wherever materialand have been properly dealt with in the books.
b. As the Company's inventory of raw materials comprises mostly of bulk materials suchas Coal Coke Iron ore etc. requiring technical expertise for quantification theCompany has hired an independent agency for the physical verification of the stock ofthese materials. Considering the above in our opinion the procedures for physicalverification of inventory followed by the management are reasonable and adequate inrelation to the size of the Company and the nature of its business.
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 the provisions of clause 3(iii) (a) (b) and (c) of the Order are notapplicable to the Company and hence not commented upon.
IV. In our opinion and according to the information and explanations provided to usthe Company has not granted any loans or provided any guarantees or security to theparties covered under Section 185 of the Act. The Company has complied with the provisionsof Section 186 of the Act in respect of investments made or loans or guarantee or securityprovided to the parties covered under Section 186 of the Act.
V. The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable to the Company.
VI. We have broadly reviewed the books of account maintained by the company pursuant tothe Rules made by the Central Government for the maintenance of cost records under Section148 (1) of the Act in respect of the Company's products to which the said rules are madeapplicable and are of the opinion that prima facie the prescribed records have beenmaintained. We have however not made a detailed examination of the said records with aview to determine whether they are accurate or complete.
VII. a. According to the information and explanations given to us during the year theCompany has generally been regular in depositing with appropriate authorities undisputedstatutory dues including Provident Fund Employees' State Insurance Income Tax SalesTax Service tax duty of Custom duty of Excise Value Added Tax Goods & ServiceTax Cess and other material statutory dues as applicable to it. No dues were in arrearsas on 31st March 2020 for a period of more than six months from the date they becamepayable except non payment of employer contribution of provident fund amounting to Rs.69.30 Lakhs
b. According to the information and explanations given to us the details of disputeddues of sales tax income tax customs duty goods & service tax excise duty servicetax and Cess if any as at 31st March 2020 are as follows:
|Name of the Statute ||Nature |
|Amount (Rs. in lakhs) ||Period to which the Amount relates ||Forum where dispute is pending |
|Sales Tax Act ||Sales Tax/ VAT ||63.97 ||2010-12 ||Commercial taxes Tribunal Ranchi |
| || ||5732.35 ||2006-09 2010-11 ||West Bengal Appellate & Revisional Board |
| || ||469.59 ||2013-16 ||Additional |
Commissioner Commercial taxes West Bengal
| || ||58.06 ||2004-05 2014-16 ||Joint Commissioner (Appeal) Sales Tax Dhanbad Circle Dhanbad |
| || ||13.24 ||2009-10 ||Hon'ble Jharkhand High Court |
| || ||787.37 ||2012-14 ||Deputy Commissioner Sales Tax Bokaro Circle Bokaro |
|Central Excise Act ||Excise |
|11.86 ||2005-06 ||Customs Excise and Service Tax Appellate Tribunal Kolkata |
| || ||10.77 ||2008-2009 ||Additional Director General Director of Revenue Intelligence New Delhi |
| || ||1910.34 ||2002-2003 to 2004-2005 2005-2007 ||Commissioner of Goods & Service Tax & Central Excise |
|Central Excise Act ||Service |
|20.29 ||2004-05 to 2007-08 ||Hon'ble Madras High Court |
| || ||470.84 ||2007-2008 to 2011-2016 ||Customs Excise and Service Tax Appellate Tribunal Kolkata |
| || ||149.7 ||2006-2012 ||Commissioner of Central Excise Chennai II Commissionerate |
| || ||377.76 ||2002-2003 to 2006-2007 ||CGST & CX Khardha Division Kolkata North Commissionerate |
| || ||1246.85 ||2016-17 ||Director General of G.S.T. Intelligence Zonal Unit Patna. |
|The Income Tax Act 1961 ||Income |
|812.51 ||2015-16 ||CIT (Appeals) |
VIII. In our opinion and according to the information and explanations provided by themanagement the Company has not defaulted in repayment of loans or borrowing to afinancial institution and banks during the year. The company has not borrowed any fundsfrom the government or through debentures during the year.
IX. In our opinion and according to the information and explanations given to us thecompany did not raise any money by way of initial public offer or further public offer(including debt instruments) however term loans raised during the year have been utilizedfor the purposes for which they were raised.
X. During the course of our examination of books of account carried out in accordancewith generally accepted auditing practices in
India we have neither come across any incidence of fraud on or by the Company nor havewe been informed of any such cases by the management.
XI. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
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. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable Indian accounting standards.
XIV. According to the information and explanations given to us and based on ourexamination of the records of the Company preferential allotment of equity shares madeduring the year is in compliance with section 42 of the Act and the amount raised by suchallotment have been used for the purposes for which the amounts were raised.
XV. According to the information and explanations given to us and as represented to usby the management and based on our examination of the records of the Company the Companyhas not entered into non-cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable.
XVI. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Singhi & Co. Chartered Accountants Firm Registration No. : 302049E
(Gopal Jain) Partner
Membership No. : 059147 UDIN: 20059147AAAAABA3397
Place : Kolkata Date : 15th June 2020
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
Referred to in paragraph (h) under 'Report on Other Legal and Regulatory Requirements'of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting ofElectrosteel Castings 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 is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For Singhi & Co. Chartered Accountants Firm Registration No. : 302049E
(Gopal Jain) Partner
Membership No. : 059147 UDIN: 20059147AAAAABA3397
Place : Kolkata Date : 15th June 2020