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Essar Shipping Ltd.

BSE: 533704 Sector: Infrastructure
NSE: ESSARSHPNG ISIN Code: INE122M01019
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VOLUME 35744
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OPEN 7.00
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VOLUME 35744
52-Week high 16.15
52-Week low 6.62
P/E
Mkt Cap.(Rs cr) 143
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Essar Shipping Ltd. (ESSARSHPNG) - Auditors Report

Company auditors report

To the Members of Essar Shipping Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Essar Shipping Limited("the Company") which comprises of the balance sheet as at 31 March 2021 thestandalone statement of Profit and Loss (including Other Comprehensive Income) standalonestatement of cash flows and the standalone statement of changes in equity for the yearthen ended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information.

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 31 March 2021 the loss (financial positionincluding Other Comprehensive Income) changes in equity and its cash flows for the yearended 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 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 ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules there under and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion on the standalone financial statements.

Material Uncertainty Related to Going Concern

We draw attention to Note No. 28 to the standalone financial statements whichindicates that as on 31 March 2021 the Company has accumulated losses of Rs.8264.54crore as against capital and reserves of Rs.5217.94 crore. The Company has also defaultedon several loans and some of the lenders of the company have filed application before theHigh court / National Company Law Tribunals for recovery of overdue amounts and / orenforcement of guarantees. The Company's current liabilities exceeds its current assets ason 31 March 2021. This indicates that a material uncertainty exists that may cast doubton the Company's ability to continue as a going concern. The Company however hasrepresented that as mentioned in Note No. 28 to the standalone financial statementsnecessary steps have been taken to meet liabilities as and when they become due forpayment.

We also draw attention to Note No. 30 of the standalone financial statements whereinthe Company got admitted to Corporate Insolvency Resolution Process due to invocation ofcorporate guarantee on account of default by a Subsidiary Company. However subsequentlypost settlement with the lender after the date of the balance sheet these proceedings havebeen withdrawn against the Company. The Subsidiary Company however is still to fulfil thesettlement terms and subject to final settlement the impact of Corporate InsolvencyResolution Process remains uncertain.

Our opinion on the standalone financial statements is not modified for the abovematter.

Emphasis of Matter

a. We draw attention to Note No. 6(E) of the standalone financial statements whereinthe Company had recognized revenue in the financial year 2017-18 amounting to Rs. 369.81crore (including accrued interest upto 31 March 2018) based on compensation granted tothe Company by arbitration proceedings for breach of contract terms by a charterer and thesame remains outstanding as on 31 March 2021. The Company is confident of full recoveryof its claims. However pending conclusion of the said proceedings no further interest isaccrued on the same;

b. We also draw attention to Note No. 9(A) of the standalone financial statements whichstates that the Company had issued standby letter of credit (SBLC) with three banks forRs. 687.37 crore to secure a loan availed by a subsidiary which were invoked during theprevious year. The Company is taking up matter with respective bank to settle the loansthrough monetization of assets;

c. We draw attention to Note No. 9(A) of the standalone financial statements whereincompany has disclosed payables to a wholly owned overseas subsidiary net of amountsreceivables from the same subsidiary. This is subject to pending application and approvalfrom the regulatory authorities.

Our opinion is not modified in respect of the above matters and in case of point (a) to(c) above our opinion was not modified in respect of previous year as well.

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. In addition to the matters described in the MaterialUncertainty Related to Going Concern paragraph we have determined the matters describedbelow to be the key audit matters to be communicated in our report:

Key Audit Matter Auditor's Response
Going concern Our audit included but was not limited to the following activities:
As on 31 March 2021 the Company has accumulated losses of Rs. 8264.54 crore as against capital and reserves of Rs. 5217.94 crore. 1. Requested and obtained external confirmation of balances from each of these lenders to confirm the balance outstanding as on 31 March 2021;
The Company has also defaulted on several loans and lenders have initiated recovery proceedings as mentioned in Note No. 28 of the standalone financial statements. The Company's current liabilities exceeds its current assets as on 31 March 2021 (Refer Note No. 28 of standalone financial statements). All these factors indicates that a material uncertainty exists that may cast doubt on the Company's ability to continue as a going concern. 2. Assessing management's steps to be taken to meet liabilities as and when they become due for payment;
3. Obtained and evaluated the Company's plans to repay these loans (with interest) through communication letters and the extent of stepstaken for the same;
4. Obtaining and evaluating various communications with the lenders for the one- time settlement proposed by the company.
5. Evaluating other legal and other developments related to the company and / or its subsidiaries based on subsequent Minutes of the Audit Committee and Board of Directors We found the key assumptions were supported by the available evidence. Based on the audit procedures performed we found disclosures in Note No. 9 of the standalone financial statements to be appropriate.
Evaluation of Litigation matters Our audit included but was not limited to the following activities:
The Company has certain significant open legal proceedings under arbitration for various matters with the Lenders & Customers continuing from earlier years (Refer Note No. 22 and 28 of standalone financial statements) 1. Assessing management's position through discussions with the external legal opinions obtained by the Company (where considered necessary) on both the probability of success in the aforesaid cases and the magnitude of any potential loss;
2. Discussion with the management on the development in these litigations during the year ended 31 March 2021;
3. Review of the disclosures made by the Company in the standalone financial statements in this regard;
4. Obtaining representation letter from the management on the assessment of these matters (including the basis of the judgement).

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

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises of the information included in the AnnualReport including it's annexures Corporate Governance and Shareholder's Information butdoes not include the standalone financial statements and our independent auditor's reportthereon. The Company's annual report is expected to be made available to us afterthe dateof this auditor's report.

Our opinion on the standalone financial statements does not cover the other informationand we will 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.

Responsibilities of the 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 financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements the 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 unlessthe management either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Company's management and Board of Directors are also responsible for overseeing theCompany'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 independent auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in aggregate they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these standalone financialstatements.

As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain 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 Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial control systems in place and the operating effectiveness ofsuch controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourindependent auditor's report. However future events or conditions may cause the Companyto 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.

• Obtain sufficient appropriate audit evidence regarding the standalone financialstatements of the Company to express an opinion on the standalone financial statements.

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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.

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 standalone financial statements ofthe current period and are therefore the Key Audit Matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosures about thematters 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 tooutweigh 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 in terms of Section 143 (11) of the Act and on the basisof such checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us we give in the "AnnexureA"

a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

b. In our opinion proper books of accounts 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 standalone Statement of Profit and Loss including othercomprehensive income standalone statement of changes in equity and the standalone CashFlow Statement dealt with by this Report are in agreement with the relevant books ofaccounts;

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. The matters described under "Emphasis of Matter" paragraph and the GoingConcern matter described under the "Material Uncertainty Related to GoingConcern" paragraph in our opinion may have an adverse effect on the functioning ofthe Company;

f. On the basis of the written representations received from the directors as on 31March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of Section164(2) of the Act;

g. With respect to the adequacy of the internal financial controls with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure B". Our reportexpresses an unmodified opinion on the adequacy and operating effectiveness of theCompany's internal financial controls with reference to standalone financial statements;

h. 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 our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with requisite approvals mandated by the provisions of Section 197 read withSchedule V of the Act;

i. 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:

a) The Company does not have any pending litigations on its financial position in itsstandalone financial statements other than as mentioned in Note No. 22 to the standalonefinancial statements;

b) The Company did not have any long-term contracts including derivative for whichthere were any material foreseeable losses;

c) The Company is not required to transfer any amount to the Investor Education andProtection Fund during the ended 31 March 2021;

d) i) The management has represented that to the best of it's knowledge and belief nofunds have been advanced or loaned or invested (either from borrowed funds or sharepremium or any other sources or kind of funds) by the company to or in any other person(s)or entity(ies) including foreign entities ("Intermediaries") with theunderstanding whether recorded in writing or otherwise that the Intermediary shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries")or provide any guarantee security or the like on behalf of the Ultimate Beneficiaries;

ii) The management has represented that to the best of it's knowledge and belief nofunds have been received by the company from any person(s) or entity(ies) includingforeign entities ("Funding Parties") with the understanding whether recordedin writing or otherwise that the company shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party ("Ultimate Beneficiaries") or provide any guarantee securityor the like on behalf of the Ultimate Beneficiaries; and

iii) Based on such audit procedures that we have considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (i) and (ii) contain any material mis-statement.

For C N K & Associates LLP
Chartered Accountants
Firm Registration No.: 101961 W/W - 100036
Himanshu Kishnadwala
Partner
Membership No. 37391
Place: Mumbai UDIN: 21037391AAAADJ8072
Date: June 24 2021

Annexure - A to the Independent Auditor's Report

(Referred to in paragraph 1 under ‘Report on Other Legal and

Regulatory Requirements' section of our report ofeven date)

(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of property plant and equipment;

(b) As per the information and explanations provided to us the management has carriedout the physical verification of property plant and equipment during the year inaccordance with a program of verification which in our opinion provides physicalverification of all assets at reasonable intervals. No material discrepancies have beennoticed on such verification;

(c) According to the information and explanations given to us and on the basis of ourexamination ofthe records of the Company it has proper title of the immovable property inthe name of the Company.

(ii) As informed to us the inventory has been physically verified by the Management atreasonable intervals during the year and no material discrepancies have been noticed onsuch verification;

(iii) According to the information and explanations provided to us the Company hasgranted unsecured loan to one company (Step-down Subsidiary company) covered in theregister maintained under section 189 of the Act and the year-end balance is Rs.60000000;

(a) In respect of the aforesaid loans which are repayable on demand the terms andconditions of the loan not prejudicial to the interests of the Company;

(b) In respect of the aforesaid loans since the principal and interest are repayableon demand the regularity of principal and payment of interest cannot be determined;

(c) In respect of the aforesaid loans since the loan is repayable on demand theoverdue amounts cannot be determined.

(iv) 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 Act in respect ofloans investments guarantees and securities as applicable.

(v) According to the information and explanations provided to us the Company has notaccepted any deposits to which directives of the Reserve Bank of India and provisions ofsections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder apply. Accordingly the provisions of clause 3 (v) of the Order are not applicableto the Company.

(vi) According to the information and explanations provided to us the Company is notrequired tomaintain cost records pursuant to the Companies (Cost Records and Audit) Rules2014 as amended and prescribed by the Central Government under sub-section (1) of section148 of the Act;

(vii) (a) According to the information and explanation provided to us and the recordsof the Company examined by us in our opinion the Company has generally been regular indepositing undisputed statutory dues including provident fund duty of customs goods andservice tax and other material statutory dues as applicable with appropriate authorities.However delays in deposits of profession tax and provident fund were observed rangingfrom 14 to 106 days and 7 to 17 days respectively. The extent of arrears o f undisputedtax deducted at source outstanding as at 31 March 2021 for a period of more than sixmonths from the date the same became payable is Rs. 0.03 crore.

(b) According to the information and explanations provided to us and the records of thecompany examined by us the particulars of dues of Income Tax Goods and Service tax Dutyof Customs and Duty of Excise or cess as at 31 March 2021 which have not been depositedon account of a dispute are as follows:

(Rs. In crore)

Name of the Statute Nature of Dues Amount Period to which the amount relates Forum where the matter is pending
Income Tax Act 1961 Income Tax 7.29 A.Y. 199394 The High Court of Bombay
Income Tax Act 1961 Income Tax 18.13* A.Y. 201213 CIT-Ap- peals
Income Tax Act 1961 Income Tax 37.55* A.Y. 201415 CIT-Ap- peals
Income Tax Act 1961 Income Tax 39.13 A.Y. 201516 CIT-Ap- peals
Income Tax Act 1961 Income Tax 43.57* A.Y. 201617 CIT-Ap- peals
Foreign Trade (Develop ment and Regulation Act 1992) Custom Duty 27.40 A.Y. 200607 The High Court of Bombay

* The income tax department has adjusted refund of Rs 26.69 Cr against the demand ofthe respective assessment years.

(vm) According to the records of the Company examined by us and the information andexplanations given to us except for the loans borrowings and dues mentioned in the belowtable the Company has not defaulted in repayment of loans and borrowings to FinancialInstitution banks government or dues to Debenture holders as at the balance sheet date:

(Amount in Rs. Cr)

Lender Name Amount of default of principal as atthe balance sheet date Amount of default of accrued interest as at the balance sheet date Period of Default
Debenture Holders
Life Insurance Corporation 700.00 797.87 2132 days
CSEB (Chattisgarh State Electricity Board) Gratuity and Pension fund Trust 2.80 0.91 269 days
Rajasthan Rajya Vidyut Prasaran Nigam Limited 0.91 1519 days
Banks
Syndicate Bank 55.42 26.29 1980 days
State Bank of India (Invoked SBLC) 294.28 54.72 461 days
EXIM Bank (Invoked SBLC) 54.66 16.23 633 days
Yes Bank (Invoked SBLC) 285.91 133.15 624 days
Financial Institutions IGoF 25.()0 10.41' 2161 days
ILFS 25.28 1.02 548 days
Total 1 443.35 1 041.51

(ix) According to the records of the Company examined by us and the information andexplanation provided to us the Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments);

(x) According to the information and explanations provided to us no fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit;

(xi) According to the information and explanations provided to us and based on ourexamination of the records of the Company during the year the Company has paid/ providedmanagerial remuneration in accordance with requisite approvals mandated by the provisionsof Section 197 read with Schedule V of the Act;

(xii) In our opinion and according to the information and explanations provided to usthe Company is not a Nidhi company and accordingly the provisions of clause 3 (xii) ofthe Order are not applicable to the company;

(xiii) According to the records of the Company examined by us and the information andexplanation provided to us all transactions with the related parties are in compliancewith sections 177 and 188of the Act where applicable and the details thereof have beendisclosed in the Standalone financial Statements under Note No. 27 to the standalonefinancial statements as required by the applicable Indian accounting standards;

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review undersection 42 of the Act. Accordingly the provisions of clause 3(xiv) are not applicable tothe Company;

(xv) According to the information and explanations provided to us and based on ourexamination of the records of the Company the Company has not entered into noncashtransactions with directors or persons connected with them. Accordingly clause 3(xv) ofthe Order is not applicable to the Company;

(xvi) According to information and explanation given to us the Company is not requiredto be registered under section 45IA of the Reserve Bank of India Act 1934. Accordinglyclause 3(xvi) of the Order is not applicable to the Company.

For C N K & Associates LLP
Chartered Accountants
Firm Registration No.: 101961 W/W - 100036
Himanshu Kishnadwala
Partner
Membership No. 37391
UDIN: 21037391AAAADJ8072
Place: Mumbai
Date: June 24 2021

Annexure - B to the Independent Auditors' Report

of even date on the standalone financial statements of Essar Shipping Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

Opinion

We have audited the internal financial controls with reference to financial statementsof Essar Shipping Limited ("the Company") as of 31 March 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at 31 March2021 based on the internal control with reference to financial statements 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 ("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 control with referenceto financial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note. 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 (hereinafter referred to as "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing issued

by ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls with reference to financialstatements. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control withrespect to financial statements based on the assessed risk. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone 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 withreference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol with reference to financial statements includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

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

For C N K & Associates LLP
Chartered Accountants
Firm Registration No.: 101961 W/W - 100036
Himanshu Kishnadwala
Partner
Membership No. 37391
UDIN: 21037391AAAADJ8072
Place: Mumbai
Date: June 24 2021

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