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Gujarat State Fertilizers & Chemicals Ltd.

BSE: 500690 Sector: Agri and agri inputs
NSE: GSFC ISIN Code: INE026A01025
BSE 00:00 | 24 Sep 117.80 4.55
(4.02%)
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114.00

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123.20

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113.75

NSE 00:00 | 24 Sep 117.85 4.50
(3.97%)
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114.40

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123.35

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OPEN 114.00
PREVIOUS CLOSE 113.25
VOLUME 759665
52-Week high 127.10
52-Week low 54.00
P/E 8.96
Mkt Cap.(Rs cr) 4,694
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 114.00
CLOSE 113.25
VOLUME 759665
52-Week high 127.10
52-Week low 54.00
P/E 8.96
Mkt Cap.(Rs cr) 4,694
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gujarat State Fertilizers & Chemicals Ltd. (GSFC) - Auditors Report

Company auditors report

TO THE MEMBERS OF GUJARAT STATE FERTILIZERS & CHEMICALS LIMITED

Report on the Audit of the Standalone Financial Statements

Auditor's Opinion

We have audited the accompanying standalone financial statements of Gujarat StateFertilizers & Chemicals Limited ("the Company") which comprise thebalance sheet as at 31st March 2020 and the statement of Profit and Loss (including OtherComprehensive income) statement of changes in equity and statement of cash flows for theyear then ended on that date and notes to the financial statements including a summaryof significant accounting policies and other explanatory information (hereinafter referredto as "standalone financial statements").

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") Act in the manner so required and give atrue and fair view in conformity with the Indian Accounting Standards prescribed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended ("Ind As") and other accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2020 profit totalcomprehensive loss changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.

Emphasis of Matter

We draw attention to Note no. 48 to the standalone financial statement to assess therecoverability of certain receivables and investments the management has consideredinternal and external information upto the date of approval of the standalone financialstatement and economic forecasts. Based on current indicators of future economicconditions management expects to recover the carrying amount of these assets. The actualimpact of global health pandemic may be different from that estimated as at the date ofapproval of the standalone financial statement and management will continue to closelymonitor any material changes to future economic conditions.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matter Auditor's Response
Evaluation of uncertain tax positions: Principal Audit Procedures
The Company has material uncertain tax positions for liability of Rs 31044.76 Lakhs including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer Notes 38 to the Standalone Financial Statements. We evaluated the related accounting policy for provisioning for tax exposures and found it to be appropriate. We have obtained details of completed tax assessments and demands upto the year ended March 31 2020 from management. We evaluated auditee's response / opinion taken from various tax experts by auditee to challenge the underlying assumptions in estimating the tax provision and the possible outcome of the disputes. We also 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 as at March 31 2020 to evaluate whether any change was required to management's position on these uncertainties. From the evidence obtained and in the context of the financial statements taken as a whole we consider the provisions in relation to uncertain tax positions as at 31 March 2020 to be appropriate.
Impairment of property plant and equipment: Principal Audit Procedures
Company has discontinued its operations at Fiber & Polymer unit due to non-viability of its products. Gross block of the assets of the Fiber & Polymer unit and it's carrying value as on 31st March 2020 works out to Rs 26475.38 Lakhs & Rs 6215.03 Lakhs. Further methanol plant having Gross Block and carrying value as on 31st March 2020 of Rs 27537.13 Lakhs & Rs 19717.35 Lakhs is not in operation since last 3 to 4 years. We have considered this issue to be a key audit matter because the analysis performed by management requires the use of complex estimates and judgments regarding the future earnings performances \ recoverable amount of the CGUs to which the aforementioned assets belong. We evaluated the management's various viable proposals impairment calculations assessing the net recoverable value of the CGU used in the models and the process by which they were drawn up including comparing them to the latest circle rates of the Land and testing the underlying calculations. Based on our audit procedures we found management's assessment in determining the carrying value of the property plant and equipment of Fiber & Polymer unit and Methanol Plant to be reasonable. Refer Note 49 (i) & (iv) to the Standalone Financial Statements.
Fair Value assessment of subsidy receivables from Government: Principal Audit Procedures
Government Subsidy Receivable forms a significant part of the Company's assets amounting to Rs 183104.24 Lakhs as at March 31 2020. Given the size of the subsidy balance relative to the total assets of the company and the estimates and judgements described in Note 12 to the Standalone Financial statements the fair value assessment requires significant audit attention. Our audit procedure includes review of subsidy receivable from Department of Fertilizer (i.e. sovereign Authority) is backed by the approved claims generated from MFMS (Mobile Fertilizer Management System).
Subsidy income recognised and remained outstanding over significant period are discussed / enquired with management based on follow-up with Department of Fertilizers Government of India including basis of management judgement and realisation certainty thereof.
Based on the above procedures performed the management's assessment of implications of government notifications / policies on recognition of subsidy revenue and the recoverability were considered to be reasonable.
Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (new revenue accounting standard): Principal Audit Procedures
Company manufactures and sells a number of fertilizer and chemical products to its customers mainly through its own distribution network. Sales contracts specifically w.r.t Bill and Hold transaction contains constructive obligation for transfer of control to the buyer. As per the terms of the contract with the customers company use to recognize the sale based on the invoicing and considering the transfer of control and other criteria set out in para B81 of Ind AS 115. Refer Notes 46 to the Standalone Financial Statements. Our audit procedure focused on transactions occurring within proximity of the year end in the Fertilizer segment obtaining evidence to support the appropriate timing of revenue recognition based on terms and conditions set out in sales contracts delivery documents and dealers' confirmation.
Recognition / de-recognition and measurement of Urea Subsidy Income Principal Audit Procedures
Our audit procedure includes:
Revenue from concession receivable from the Government of India ('GOI') is recognized when control of the products has transferred to the customer and there is no unfulfilled obligation that could affect the customer's acceptance of the products. Concessions in respect of urea as notified under the New Pricing Scheme is recognized with adjustments for escalation/de- escalation in the prices of inputs and other adjustments as estimated by the management in accordance with the known policy parameters in this regard. • We assessed design implementation and operative effectiveness of management's key internal controls over revenue recognition.
• We performed test of details on a sample basis and evaluated the underlying documents relating to urea concession income.
• We read relevant notifications issued by the GOI and discussed with the management to understand the underlying matters and basis for management judgement and estimates including necessary changes made in estimates to address variations noted in past.
During the current year company has recognized Urea subsidy income of aggregating to Rs 78139.02 Lakhs. Considering significant estimates involved as mentioned above revenue and profit may deviate on account of change in such judgements and estimates. • We reviewed the calculation of urea concession income including escalation / de-escalation adjustments as per known policy parameters in this regard.
• We assessed the disclosures in the financial statements in this regard.

Information Other than the 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 Board's Report and Annexure toBoard's Report but does not include the financial statements and our auditor's reportthereon. The other information is expected to be made available to us after the date ofthis auditor's report thereon.

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

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

Management's Responsibility for the Standalone Financial Statement

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 the accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system 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 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.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

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 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 the statement of changes in equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(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 our opinion and to the best of our information and according to the explanationsgiven to us the managerial remuneration has been paid by the company to its directorsduring the year is in accordance with 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements – Refer Note no 38 to the financial statements;

ii. Provision has been made in the financial statements as required under theapplicable law or accounting standards for material foreseeable losses if any onlong-term contracts including derivative contracts.

iii. There were no amounts which were required to be transferred to the investor'seducation and protection fund by the company.

For T R Chadha & Co LLP
Firm's Reg. No-: 006711N/N500028
Chartered Accountants
Brijesh Thakkar
Place : Ahmedabad Partner
Date : 18th June 2020 Membership No-135556
UDIN : 20135556AAAADM5404

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

ANNEXURE "A" TO INDEPENDENT AUDITORS' REPORT FOR THE PERIOD ENDED MARCH 2020

(Referred to in Paragraph 1 under the Heading of "Report on Other Legal andRegulatory Requirements" section of our Report of even date)

(i) Fixed Assets

a) The Company has maintained proper records showing full particulars includingquantitative details and situtation of fixed assets.

b) The fixed assets have been physically verified by the management during the yearwhich in our opinion is reasonable having regard to the size & nature of the company.No material discrepancies were noted on such verification.

c) According to the information and explanations given to us and the records examinedby us and based on the examination of registed sales deed/trasnfer deed/latter of awardprovided to us we report that the title deeds comprising all the immovable propertiesof land and buildings are held in the name of the Company as at the balance sheet date.

(ii) Inventories

As explained to us the inventories except goods-in-transit were physically verifiedduring the year by the Management at reasonable intervals and no material discrepancieswere noticed on physical verification.

(iii) Loans given

According to Information and explanations given to us the Company has not granted anySecured or unsecured loan to companies firms Limited Liability Partnerships or otherparties covered in the register maintained under Section 189 of the Companies Act 2013.Hence reporting under clause 3 (iii) (a) (b) and (c) does not arise.

(iv) Compliance of Sec. 185 & 186

In our openion and according to the information and explanations given to us thecompnay has complied with the provisions of sections 185 & 186 of the companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) Public Deposit

According to Information and explanations given to us the company has notaccepted any deposits from the public during the year and in respect of unclaimeddeposits the company has complied with the proviosn of section 73 to 76 or any otherrelevent provisons of the copmanies Act 2013.

(vi) Cost Records

The company is maintaining the cost records as specified by the Central Governmentunder sub-section (1) of section 148 of the Companies Act in respect of service carriedout by the company. We have broadly reviewed the cost records maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 as amended prescribed bythe Central Government under sub-section (1) of Section 148 of the Companies Act 2013 andare of the opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

(vii) Statutory Dues

According to the information and explanations given to us in respect of statutorydues:

a) The Company has generally been regular in depositing its undisputed statutory duesincluding Provident Fund Income-tax Goods and Service Tax Customs duty cess and othermaterial statutory dues applicable to it to the appropriate authorities.

b) No undisputed amounts payable in respect of the aforesaid dues were outstanding asat March 31 2020 for a period of more than six months from the date they became payable.

c) Detail of dues of Income-tax Sales Tax Service Tax Customs Duty Excise Duty andValue Added Tax which have not been deposited as on 31 March 2020 on account of disputesare given below:

Name of Statute Nature of Dues Forum where dispute is pending Period/between various periods to which the amount relates Amount involved (excluding interest and penalty Rs in Lakhs) Amount unpaid (excluding interest and penalty Rs in Lakhs)
Assessing Officer FY 2016-17 1.68 1.68
Income Tax Act 1961 Income Tax
Commissioner (Appeals) FY 2009-10 & FY 2015-16 650.87 419.65
FY 1986-89
High Court- Ahmedabad-HO 6936.92 6911.92
FY 2011-2015
Central Excise Act 1994 Excise Duty FY 2009-12
CESTAT-HO 386.19 357.57
FY 2013-17
Commissioner-Appeals FY 1991-95 80.20 80.20
CESTAT FY 2017-18 1357.03 1357.03
Customs Act1962 Custom Duty
Commissioner-Appeals FY 2016-17 9.36 8.66
Commissioner-Appeals FY 2013-17 162.65 150.45
Supreme Court FY 2010-13 11.51 10.36
FY 2005-12
Finance Act 1994 Service Tax CESTAT 166.80 96.62
FY 2014-16
Commissioner FY 2013-14 12.20 11.29
Gujarat Value added tax Act 2003 Gujarat Value Added Tax Joint/Dy. Commissioner of Commercial Tax FY 2006-07 to 2012-13 2886.83 2491.34
Central Sales Tax Additional Commissioner of Sales Tax Delhi FY 1998-99 0.14 0.14
Central Sales Tax Act 1956 Central Sales Tax Assistance Commissioner of Sales Tax West Bengal FY 1995-96 & 1997-98 2.21 2.21
Central Sales Tax Joint/Dy. Commissioner of Commercial Tax FY 2006-07 to 2015-16 2772.00 2551.71

(viii) In our opinion and according to the information and explanations given tous the company has not defaulted in the repayment of loans or borrowings to financialinstitutions & banks. The Company has not taken any loans or borrowings fromGovernment and has not issued any debentures.

(ix) The Company has not raised money by way of initial public offer or furtherpublic offer (including debt instrument) any term loans during the period under audittherefore paragraph 3 (ix) of the order is not applicable to the company.

(x) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and as per the information and explanationsgiven by the management we report that no fraud by the Company or any fraud on thecompany by its officers or employees has been noticed or reported during the year.

(xi) According to information & explanations given to us the managerialremuneration has been paid by the company to its directors during the year is inaccordance with provisions of Section 197 of the Act.

(xii) The company is not a Nidhi Company and hence reporting under clause (xii) ofthe paragraph 3 of the order is not applicable.

(xiii) In our opinion and according to the information and explanations given tous all the transactions with the related parties are in compliance with section 177 and188 of the Companies Act 2013 where applicable and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable Indian accounting standards.

(xiv) During the year company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Therefore paragraph 3 (xiv)of the order is not applicable to the company.

(xv) In our opinion and according to the information and explanations given to usduring the year the company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence paragraph 3 (xv) of the order is notapplicable to the company.

(xvi) In our opinion and according to the information and explanations given to uscompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.

For T R Chadha & Co LLP
Firm's Reg. No-: 006711N/N500028
Chartered Accountants
Brijesh Thakkar
Place : Ahmedabad Partner
Date : 18th June 2020 Membership No-135556
UDIN : 20135556AAAADM5404

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OFGUJARAT STATE FERTILIZERS & CHEMICALS LIMITED.

(Referred to in Paragraph 2(F) under the Heading of "Report on Other Legal andRegulatory Requirements" section of our Report of even date)

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

We have audited the internal financial controls with reference to Financial Statementsof Gujarat State Fertilizers and Chemicals Limited ("the Company") as of 31March 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal financial controls with reference tofinancial statements 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". These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

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 on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions 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 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31 March 2020 based on "the internal control with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India".

For T R Chadha & Co LLP
Firm's Reg. No-: 006711N/N500028
Chartered Accountants
Brijesh Thakkar
Place : Ahmedabad Partner
Date : 18th June 2020 Membership No-135556
UDIN : 20135556AAAADM5404

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