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GE Power India Ltd.

BSE: 532309 Sector: Engineering
NSE: GEPIL ISIN Code: INE878A01011
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NSE 15:44 | 23 Oct 710.40 -12.45
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OPEN 716.75
PREVIOUS CLOSE 721.90
VOLUME 707
52-Week high 933.00
52-Week low 672.90
P/E 31.95
Mkt Cap.(Rs cr) 4,740
Buy Price 699.60
Buy Qty 1.00
Sell Price 717.00
Sell Qty 1.00
OPEN 716.75
CLOSE 721.90
VOLUME 707
52-Week high 933.00
52-Week low 672.90
P/E 31.95
Mkt Cap.(Rs cr) 4,740
Buy Price 699.60
Buy Qty 1.00
Sell Price 717.00
Sell Qty 1.00

GE Power India Ltd. (GEPIL) - Auditors Report

Company auditors report

To the Members of GE Power India Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the standalone financial statements of GE Power India Limited("the Company") which comprise the standalone balance sheet as at 31 March2019 the standalone statement of profit and loss (including other comprehensive income)standalone statement of changes in equity and standalone statement of cash flows for theyear then ended and notes to the standalone financial statements including a summary ofthe significant 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 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 and profit and other comprehensiveincome 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 Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Description of Key Audit Matter

The key audit matter How the matter was addressed in our audit
Revenue and margin recognition Our procedures included the following:
The Company conducts a significant portion of its business under long-term projects including construction-type fixed price projects. A. We obtained an understanding of the Company's internally established methods processes and control mechanisms for project management in the bid and execution phase of construction contracts. We also assessed the design and operating effectiveness of the accounting related internal controls by obtaining an understanding of business transactions specific to construction contracts from the initiation of the transaction through presentation in the standalone financial statements and testing controls over these processes.
Revenue from long-term construction contracts is recognized in accordance with Ind AS 115 Revenue from Contracts with Customers based on the extent of progress towards completion. The revenue on contracts may also include variations and claims. Variations and claims are recognised on a contract-by-contract basis when the Company's negotiations have reached a stage such that it is probable that the customer will accept the claim and the amount can be measured reliably.
B. We evaluated management's estimates and assumptions based on a risk- based selection of a sample of contracts. Our sample particularly included projects that are subject to significant future uncertainties and risks such as projects with a large portion of materials and services to be provided by suppliers subcontractors or consortium partners cross-border projects and projects with changes in cost estimates delays and / or low or negative margins. For the selected contract samples we performed the following:
We consider the accounting for construction contracts to be an area posing a significant risk of material misstatement (including the potential risk of management override of internal controls) and accordingly a key audit matter because management's assessments significantly impact the determination of the extent of progress towards completion. These assessments include in particular the scope of deliveries and services required to fulfill contractually defined obligations total estimated contract costs remaining costs to completion and total estimated contract revenues as well as contract risks including technical political regulatory and legal risks. i. Review of the contracts and their terms and conditions including contractually agreed deliveries and services termination rights penalties for delay and breach of contract as well as liquidated damages. In order to evaluate whether revenues were recognized on an accrual basis for the selected projects we analyzed revenues and corresponding cost of sales to be recognized in the statement of profit and loss in the reporting period considering the extent of progress towards completion and examined the accounting for the associated items in the balance sheet.
ii. Discussion with the management including challenging the key estimates and assumptions adopted in the forecast of contract revenue and contract costs including estimated costs to completion the recognition of variation orders the adequacy of contingency provisions and the assessment of potential liquidated and ascertained damages for contracts which were behind schedule by obtaining and assessing information in connection with the assumptions adopted including contract agreements and sub-. contracts correspondence with customers regarding contract variations and claims and by considering historical outcomes for similar contracts.
Revenues total estimated contract costs and contract margins may deviate significantly from original estimates based on new knowledge about cost overruns and changes in project scope over the term of a construction contract. Furthermore the first time application of Ind AS 115 in the year ended 31 March 2019 was of relevance for our audit as it required the Company-wide assessment of contracts in relation to the new accounting criteria.
iii. Obtained detailed breakdown of the total estimated costs to completion and compared to actual costs incurred at the reporting date and cost estimates with agreements with subcontractors and suppliers and other documentation referred to by management in its assessment of the estimated costs to completion;
iv. We further performed inquiries of project management (both commercial and technical project managers) with respect to the development of the projects the reasons for deviations between planned and actual costs the current estimated costs to complete the projects and management's assessments on probabilities that contract risks will materialize. We also obtained an understanding of the stage of completion of the project through inquiries with project managers and by participating in project review meetings. In designing our audit procedures we also considered results from project audits conducted by the internal audit function.
v. Challenged the assumptions and critical judgements made by management which impacted their estimations of the liquidated and ascertained damages assessments by comparing the key terms and conditions in the assessments with customers and by comparing the estimated contract completion time with the Company's updated progress report or correspondence from customers;
vi. Inquired into the reasons for significant variation in current cost and revenue estimates when compared with prior estimates to assess the reliability of the management's process of preparing such estimates.
vii. As a response to the risk of fraud in revenue recognition on long-term projects we tested on a sample basis the accuracy of the revenue recorded based on inspection of externally available evidence such as project acceptance documentation contractual terms and conditions and customer correspondence. We assessed the consistency of the accounting information with the project information obtained.
C. Considering the requirements of Ind AS 115 we also assessed the accounting for contract amendments. With respect to the first-time application of Ind AS 115 we obtained an understanding of the processes implemented in response to the new standard. We also appraised the disclosures on the effects of the first-time application of Ind AS 115 in the notes to the standalone financial statements.
Uncertain tax provisions and deferred taxes Our procedures included the following:
The Company has material uncertain tax positions including matters under dispute which involve significant judgment to determine the possible outcome of these disputes. • We used our tax specialists to assist us in assessing the Company's open tax positions. Our specialists 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 to evaluate whether any change was required to management's position on these uncertainties.
This also affects the measurement and completeness of uncertain tax positions the recoverability of deferred tax assets as well as the measurement and completeness of deferred tax liabilities.
• We analysed and challenged the assumptions used to determine tax accruals (including allowances/ disallowances and their consequential impact on deferred taxes) based on our knowledge and experiences of the application of local legislation by the relevant authorities and courts.
Accruals for tax contingencies require the management to make judgements and estimates in relation to tax issues and exposures. This is a key audit risk due to the time taken for tax matters to be agreed with the tax authorities and complexity of tax legislation.
• We assessed the adequacy of the Company's disclosures in respect of tax and uncertain tax positions by reference to the relevant accounting standards and statute.
Assets held for sale Our procedures included the following:
The Company announced its intention to dispose off its assets held at Shahabad and Vadodara location. The Company does not yet have an active buyer for its assets located at Vadodara. The management is actively looking for buyer and remains committed to the plan to dispose off the assets and thereby continues to classify the same as Assets held for sale. • We challenged management's basis for the continued classification of the assets as held for sale through understanding of the status of the sale process and obtained necessary documentary support including the correspondences with prospective buyers;
• Involved our valuation specialists in assessing the appropriateness and reasonableness of the value assessed.
Management's assessment of the basis for classification of the assets as non-current assets held for sale is judgemental as the sale has to be considered highly probable and is expected to be completed within one year in accordance with Ind AS 105 "Non-current Assets Held For Sale and Discontinued Operations". • We reviewed management's assessment of the valuation of the non-current assets held for sale and assessed the reasonableness of the carrying value of the underlying assets.
• We also assessed and validated the adequacy of the Company's disclosures by reference to the relevant accounting standards and statute.
At the same time management is required to measure the assets at the lower of carrying amount and fair value less costs to sell. Inaccurate management's estimates made in the fair value less costs to sell could result in a significant impact on the value of the assets recorded at the end of the reporting period and the impairment loss in the statement of profit and loss and other comprehensive income for the year ended 31 March 2019.

Other information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditor's reportthereon.

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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such 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 ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

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

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

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.

e) On the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2019 from being appointed as a director in terms of Section 164(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".

(B) 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 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 onits financial position in its standalone financial statements - Refer Note 40 to thestandalone financial statements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts- Refer Note 46 to the standalone financial statements;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditor's Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For B S R & Co LLP
Chartered Accountants
Firm's Registration No.101248W/ W100022
Rajesh Arora
Place: Noida Partner
Date: 27 May 2019 Membership No.076124

ANNEXUREA

REFERRED IN THE INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF GE POWER INDIA LIMITED ON THE STANDALONE FINANCIAL STATEMENTS FOR THEYEAR

ENDED 31 MARCH 2019.

We report that:

i. (A) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets (property plant and equipment and intangible assets).

(B) According to the information and explanations given to us the fixed assets arephysically verified by the management in accordance with a phased programme designed tocover all items of fixed assets over a period of three years which in our opinion isreasonable having regard to the size of the Company and nature of its fixed assets. Inaccordance with this programme a portion of fixed assets has been physically verified bythe management during the year. As informed to us no material discrepancies were observedon such verification.

(C) According the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of the immovable properties areheld in the name of the Company except the following land (and buildings appurtenantthereto) held in erstwhile name of the Company for which name change is in process:

Name of the property Gross Block as at 31 March 2019 Accumulated Depreciation as at 31 March 2019 Net Block as at 31 March 2019
Freehold Land# 3.2 - 3.2
Factory Building# 90.9 71.7 19.2
Office Building# 14.6 11.8 2.8
Total 108.7 83.5 25.2

#included under Assets held for sale as at 31 March 2019.

ii. According to the information and explanations given to us the inventories exceptfor goods in transit and inventories lying with third parties have been physicallyverified by the management during the year. In our opinion the frequency of suchverification is reasonable. For inventories lying with third parties written confirmationhave been obtained. Further as informed the discrepancies noticed on verificationbetween the physical inventory and the book records were not material.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies or other parties covered in theregister maintained under Section 189 of the Act. Further there are no firms and limitedliability partnerships covered in the register required under Section 189 of the Act.Accordingly para 3 (iii) of the Order is not applicable.

iv. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has complied with the provisions ofSection 185 and 186 of the Act with respect to loans and investments made.

v. According to the information and explanations given to us the Company has notaccepted any deposits covered under Section 73 to 76 of the Act.

vi. We have broadly reviewed the books of account maintained by the Company in respectof products and services where pursuant to the rules made by the Central Government themaintenance of cost records has been prescribed under sub section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of such records with a view to determine whether they are accurate orcomplete.

vii. (A) According to the information and explanations given to us and on the basis ofour examination 'of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees' StateInsurance Income tax Duty of Customs Goods and Service tax Cess and any other materialstatutory dues to the extent applicable have been regularly deposited with theappropriate authorities during the year.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income tax Goods andService tax Duty of Customs Cess and other material statutory dues to the extentapplicable were in arrears as at 31 March 2019 for a period of more than six months fromthe date they became payable.

(B) According to the information and explanations given to us and on the basis of therecords of the Company examined by us there are no dues of Income-tax Sales-tax Servicetax Goods and Service Tax Duty of Customs Value Added Tax and Duty of Excise which havenot been deposited with the appropriate authorities on account of any dispute except asmentioned below:

viii. According to the information and explanations given to us the Company does nothave any loans or borrowings from any financial institutions banks government ordebenture holders during the year. Accordingly paragraph 3 (viii) of the order is notapplicable.

ix. According to the information and explanations given to us the Company did notraise any money by way of initial public offer or further public offer (including debtinstrument) and any term loans during the year. Accordingly paragraph 3 (ix) of the Orderis not applicable.

x. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.

xi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/ provided for managerialremuneration in accordance with the provisions of Section 197 read with Schedule V to theAct.

xii. According to the information and explanations given to us the Company is not aNidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable.

xiii. According to information and explanations given to us and on the basis of ourexamination of the records of the Company all transactions with the related parties arein compliance with Section 177 and 188 of the Act where applicable and the details havebeen disclosed in the standalone financial statements as required by the applicableaccounting standards.

xiv. According to information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicable.

xv. According to information and explanations given to us the Company has not enteredinto any noncash transactions with directors or persons connected with him. Accordinglyparagraph 3(xv) of the Order is not applicable.

xvi. According to information and explanations given to us the Company is not requiredto be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For B S R & Co LLP
Chartered Accountants
Firm's Registration No.101248W/ W100022
Rajesh Arora
Place: Noida Partner
Date: 27 May 2019 Membership No.076124

ANNEXUREB

TO THE INDEPENDENT AUDITOR'S REPORT

ON THE STANDALONE FINANCIAL STATEMENTS OF GE POWER INDIA LIMITED FOR THE YEAR ENDED 31MARCH 2019.

Report on the Internal Financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013

(Referred to in paragraph (2A(f)) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

OPINION

We have audited the internal financial controls with reference to financial statementsof GE Power India Limited ("the Company") as of 31 March 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the 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 prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

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 such internal financial controlsassessing 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 standalone financial statements whether due to fraud orerror.

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 controls 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 controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

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 controls 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 B S R & Co LLP
Chartered Accountants
Firm's Registration No.101248W/ W100022
Rajesh Arora
Place: Noida Partner
Date: 27 May 2019 Membership No.076124