To the Members of M/s. Elgi Rubber Company Limited
Report on the audit of the Standalone Indian Accounting Standards (Ind AS) FinancialStatements Opinion
1. We have audited the Standalone Financial Statements of Elgi Rubber Company Limited("the Company") which comprise the Balance Sheet as at March 31 2021 theStatement of Profit and Loss (including the statement of Other Comprehensive Income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information (hereinafterreferred to as "Standalone Financial Statements").
2. 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 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2021 the profit and totalcomprehensive income and changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act (SAs). Our responsibilities under those Standards 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 (ICAI) togetherwith the independence requirements that are relevant to our audit of the StandaloneFinancial Statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the StandaloneFinancial Statements.
Key Audit Matters
4. 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. We have determined the matters described below to bethe key audit matters to be communicated in our report. We have fulfilled theresponsibilities described in the Auditor's responsibilities for the audit of theStandalone financial statements section of our report including in relation to thesematters.
|S.No. Key Audit Matter ||Auditor's Response |
|1. Recoverability of Income tax assets and Receivables from Government authorities ||Principal Audit Procedures |
|As at March 31 2021 non-current assets and other current in respect of Income tax assets to the extent of Rs. 15.58 million and Receivable from government authorities to the extent of Rs.47.91 million are outstanding. ||We analyzed and reviewed the nature of the amounts recoverable the sustainability and the likelihood of recoverability upon final resolution. The income tax assets represent excess taxes paid over the actual expected tax liabilities; the amounts receivable from government authorities represent input tax credits eligible for set off and as such we considered and concluded that these recoverable are sustainable upon final resolution. |
|2. Evaluation of uncertain tax positions ||Principal Audit Procedures |
|The Company has no material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. (Refer note 44) ||We obtained details of completed tax assessments and demands received upto the end of the financial year and till the date of finalization of our report from management. We analyzed the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. We considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions to evaluate whether any change was required to management's position on these uncertainties. |
We have determined that there are no other key audit matters to communicate in ourreport.
Information Other than the Standalone Financial Statements and Auditor's Report thereon
5. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures Business Responsibility
Report Corporate Governance and Shareholder's Information but does not include theStandalone Financial Statements and our 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 standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility and those charged with governance for the StandaloneFinancial Statements
6. 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 totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 financialstatements 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.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
7. Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financialstatements 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 mayinvolve collusion forgery intentional omissions misrepresentations or the override ofinternal control.
Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty 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 orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements 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 decisionsof a reasonably knowledgeable user of the financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scopeof our audit work and in evaluating the results of our work; and (ii) to evaluate theeffect of any identified 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 withthem all relationships and other matters that may reasonably be thought to bear on our independenceand 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 financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or 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 ofsuch communication.
Report on Other Legal and Regulatory Requirements
8. As required by Section 143(3) of the Act based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Cash Flow statement dealt with bythis Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors aredisqualified as on March 31 2021 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 over financialreporting of the Company and the operating effectiveness of such controls refer toour separate Report in "Annexure B". Our report expresses an unmodified opinionon the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In ouropinion and to the best of our information and according to the explanations given to usthe remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:
i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer note no.44 to thestandalone Financial Statements.
ii) The company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
9. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3and 4 of theOrder.
Annexure - A to the Independent Auditor's Report
Referred to in para 9 of the independent auditors' report of even date to the membersof Elgi Rubber Company Limited on the Standalone Financial Statements for the year endedMarch 31 2021.
1. a. The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.
c. According to the information and explanations given to us and the records examinedby us we report that the title deeds comprising all the immovable properties which arefreehold are held in the name of the company as at the balance sheet date. Immovableproperties of whose title deeds have been pledged as security for Borrowings taken fromBanks are held in the name of the company as confirmed by the respective banks andverified with the Memorandum of deposit of title deeds as produced to us. In respect offreehold assets these have been confirmed by the Company.
2 a. The physical verification of inventory excluding stocks with third parties hasbeen conducted at reasonable intervals by the Management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them.
b. In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.
c. In our opinion and according to the information and explanations given to us thecompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification as compared to the book records.
3 a. The Company has granted unsecured loans amounting to Rs. 858.29 million to 4subsidiaries covered in the register maintained under Section 189 of the Act. There are nofirms /LLPs/ other parties covered in the register maintained under Section 189 of the Actto whom the company has granted any unsecured loans.
b. In respect of the aforesaid loans the terms and conditions under which such loanswere granted are not prejudicial to the Company's interest.
c. In respect of the loans granted Company considering the pandemic situation onaccount of Covid-19 restructured the repayment schedule for principle and interest and asper the restructured agreement repayment of principle and interest for the year does notarise.
d. In respect of the above loans considering the restructured agreement there is noamount which is overdue for more than ninety days.
4 In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by it.
5 According to the explanation and information provided to us the Company has compliedwith the provisions of Sections 73 to 76 and any other relevant provisions of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014. We have beeninformed that no order has been passed by the Company Law Board or the National CompanyLaw Tribunal or the Reserve Bank of India or any court or any other Tribunal in thisregard.
6 Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
7 a. According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is generally regular indepositing the undisputed statutory dues including Employees Provident Fund EmployeesState Insurance Income Tax Goods and Services Tax Customs Duty Cess and other materialstatutory dues as applicable with the appropriate authorities.
b. According to the information and explanations given to us and the records of theCompany examined by us following are the dues of income tax Goods and ServicesTax and Customs Duty which have not been deposited on account of disputes:
|Name of the statute ||Nature of dues ||Amount (Rs.in million) ||Period to which amount relates (FY) ||Forum where dispute is pending |
|Excise Duty (Erstwhile Treadsdirect Ltd) ||Differential duty on own consumption ||5.27 ||2006-07 ||CESTAT Bengaluru |
|Excise Duty (Erstwhile Treads direct Ltd) ||Valuation dispute ||0.45 ||2006-07 to 2009-10 ||CESTAT Chennai |
|Excise Duty (Erstwhile Treads direct Ltd) ||Valuation dispute ||4.36 ||2009-14 ||Commissioner (Appeals) Cochin |
|Excise Duty (Erstwhile Treadsdirect Ltd) ||Valuation dispute ||0.60 ||2015-16 ||Commissioner (Appeals) Cochin |
|Excise Duty (Erstwhile Treadsdirect Ltd) ||Valuation dispute ||0.16 ||2016-17 ||Commissioner (Appeals) Cochin |
|Legal Metrology ||Compounding Fee ||0.15 ||2015-16 ||Hon'ble High Court Kerala |
|Service tax (Erstwhile Titan Tyrecare Products Ltd) ||Service Tax on Know how ||1.47 ||2008-09 ||CESTAT Chennai |
|VAT (Erstwhile TreadsdirectLtd) ||Levy of Entry Tax on Rubber Products ||0.13 ||2004-05 ||Deputy Commissioner Bhopal |
|VAT (Erstwhile TreadsdirectLtd) ||Dispute on rate of tax ||8.34 ||2008-09 to 2010-11 ||Appellate Tribunal Hyderabad |
|VAT (Erstwhile Treadsdirect Ltd) ||Dispute on rate of tax ||2.08 ||2008-09 to 2010-11 ||Appellate Tribunal Hyderabad |
|VAT (Erstwhile Treadsdirect Ltd) ||Non Submission of documents ||25.24 ||2009-10 ||Assistant Commissioner Special Circle Palakkad |
|VAT (Erstwhile Treadsdirect Ltd) ||Levy of Tax on labour charges on Works Contract ||12.06 ||2010-11 to 2012-13 ||Hon'ble High Court of Chennai |
|VAT (Erstwhile Treadsdirect Ltd) ||Sale / Purchase effected after RC cancellation ||20.54 ||2010-11 ||Hon'ble High Court of Kerala |
|VAT (Erstwhile Treadsdirect Ltd) ||ITC Reversal on VAT Dispute ||1.20 ||2011-12 ||Deputy Commissioner Appeals - Palakkad |
|CST (Erstwhile Treadsdirect Ltd) ||Non-submission of documents ||1.50 ||2011-12 ||Deputy Commissioner Appeals - Palakkad |
|VAT (Erstwhile Treadsdirect Ltd) ||Non-submission of documents ||5.64 ||2010-11 ||Appellate and Revisional board of Commercial Taxes Kolkatta |
|VAT (Erstwhile Treadsdirect Ltd) ||Non-submission of documents ||2.34 ||2011-12 ||Sales Tax Officer (STO) Kolkatta |
|VAT (Elgi Rubber Company Ltd) ||Goods detained by Roving squard at Villu- puram check post ||0.07 ||2016-17 ||Madras High Court |
|VAT (Elgi Rubber Company Ltd) ||ITC Reversal on VAT Dispute ||1.46 ||2011-12 to 2012-13 ||Deputy Commissioner Appeals - Palakkad |
|CST (Erstwhile Treadsdirect Ltd) ||Dispute on C-Forms submitted ||0.86 ||2010-11 ||Deputy Commissioner Appeals Palakkad |
|VAT (Erstwhile Treadsdirect Ltd) ||ITC Reversal Dispute ||2.67 ||2012-13 ||Deputy Commissioner Appeals - Palakkad |
|CST (Erstwhile Treadsdirect Ltd) ||Non-submission of documents ||2.32 ||2012-13 ||Deputy Commissioner Appeals Palakkad |
|CST (Erstwhile TreadsdirectLtd) ||Non-submission of documents ||4.62 ||2013-14 ||Deputy Commissioner Appeals Palakkad |
|CST (Erstwhile Treadsdirect Ltd) ||Non-submission of documents ||2.98 ||2014-15 ||Deputy Commissioner Appeals Palakkad |
|VAT (Erstwhile Treadsdirect Ltd) ||ITC Reversal ||1.06 ||2015-16 ||Deputy Commissioner Appeals Palakkad |
|GST (Elgi Rubber Company Limited) ||Defective E-way bill ||0.08 ||2018-19 ||Assistant Excise & Taxation officer (Enf.) Gurugram (North) |
|CST (Erstwhile Treadsdirect Ltd) ||Non-submission of documents ||4.26 ||2015-16 ||Deputy Commissioner Appeals Palakkad |
|CST (Elgi Rubber Company Ltd) ||Non-submission of documents ||0.18 ||2016-17 ||Deputy Commissioner Appeals Palakkad |
|CST (Elgi Rubber Company Ltd) ||Non-submission of documents ||0.47 ||2012-13 ||Deputy Commissioner Appeals Palakkad |
|CST (Elgi Rubber Company Ltd) ||Non-submission of documents ||0.39 ||2013-14 ||Deputy Commissioner Appeals Palakkad |
|CST (Elgi Rubber Company Ltd) ||Non-submission of documents ||0.22 ||2015-16 ||Deputy Commissioner Appeals Palakkad |
|VAT (Erstwhile Treadsdirect Ltd) ||ITC reversal dispute ||2.59 ||2014-15 ||Deputy Commissioner Appeals Palakkad |
|CST (Erstwhile Treadsdirect Ltd) ||Non-submission of documents ||0.67 ||2016-17 ||Senior Joint Commissioner Kolkatta |
|CST (Erstwhile Treadsdirect Ltd) ||Non-submission of documents ||0.49 ||2017-18 ||Senior Joint Commissioner Kolkatta |
|CST (Elgi Rubber Company Ltd) ||Non-submission of documents ||0.34 ||2015-16 ||Deputy Commissioner Appeals Coimbatore |
|CST (Elgi Rubber Company Ltd) ||Non-submission of documents ||1.388 ||2016-17 ||Deputy Commissioner Appeals Coimbatore |
|CST (Elgi Rubber Company Ltd) ||Non-submission of documents ||0.29 ||2014-15 ||Deputy Commissioner Appeals Coimbatore |
|CST (Elgi Rubber Company Ltd) ||Non-submission of documents ||0.89 ||2015-16 ||Deputy Commissioner Appeals Coimbatore |
8 According to the records of the Company examined by us and on the basis ofinformation and explanations given to us and considering the moratorium availed andapproved by the banks the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government as at the balance sheet date.
9 In our opinion and according to the information and explanations given to us themoneys raised by way of term loans have been applied for the purposes for which they wereobtained. The Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments).
10 During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
11 The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
12 As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
13 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 financial statements as required by the applicableaccounting standards.
14 The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.
15 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 non-cashtransactions with Directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
16 The Company is not required to be registered under Section 45-IA of the Reserve Bankof India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company
Annexure - B to the Independent Auditor's Report
The annexure referred to the Independent Auditors' Report of even date to the membersof Elgi Rubber Company Limited on the Standalone Ind AS Financial Statements for the yearended March 31 2021.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
1. We have audited the internal financial controls over financial reporting of ElgiRubber Company Limited ("the Company") as of March 31 2021 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
2. 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 Reporting issuedby the Institute of Chartered Accountants of India. These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
3. 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") and the Standards on Auditing as specified under Section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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.
5. 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
6. A Company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of 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:
i. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;;
ii. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of Management and Directors of the company; and
iii. provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that couldhave a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
7. 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.
8. In our opinion 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 March 31 2021 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 M S Jagannathan and Visvanathan |
| ||Chartered Accountants |
| ||FRN : 001209S |
|Place : Coimbatore ||MV Jeganathan |
|Date : June 10 2021 ||M No 214178 |
| ||UDIN:21214178AAAABG6822 |