To the Members of GE T&D India Limited
Report on the Audit of the Financial Statements
We have audited the financial statements of GE T&D India Limited ("theCompany") which comprise the balance sheet as at 31 March 2019 the statement ofprofit and loss (including other comprehensive income) statement of changes in equity andstatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("Act") in the manner so required and give a true and fairview 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 Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Description of Key Audit Matter || |
|The key audit matter ||How the matter was addressed in our audit |
|Revenue recognition and related receivables ||Our audit procedures included the following: |
|A significant projects including construction-type and fixed price projects. Revenue from these contracts is recognized in accordance with the principles laid down in Ind AS 115 Revenue from Contracts with Customers and as detailed in "significant accounting policies" in the financial statements. || portionofCompany'sbusinesscompriseslong-term Obtaining an understanding of the processes adopted by management to carry out accounting for revenue from various projects and processes implemented in response to Ind AS 115 and review of the analysis carried out by management. |
|The first time application of Ind AS 115 with effect from 1 April 2018 was of relevance for our audit as it required the Company-wide assessment of contracts in relation to the new accounting criteria. || Inquiries of management to understand the process put in place for accounting for such contracts from initiation through recording. Obtaining an understanding of the Company's methods processes and control mechanisms for project management in the bid and execution phase of contracts. |
|In accordance with this guidance the Company classifies its various contracts with customers whether revenue should be recognized at "point in time" or "over the time" basis. There are various areas involving complexities judgements and estimates involved in accounting for revenue recognized on "over the time" basis including: ||Testing of key controls (both design and operating effectiveness) |
| ||over project accounting from initiation to recording and evaluation of subsequent impact on realisability of receivables . |
| || Selecting contracts by applying sampling methodology to various categories of contracts considering size of contracts quantum of changes in margins etc. For the selected contracts: |
| Evaluation of impact of application of new accounting standard Ind AS 115 on Company's revenue recognition policy ||- Reading and analysing management's assessment of distinct performance obligations |
| Management assessment of alternative use of the products being manufactured which in turn determines the timing of commencement of revenue recognition ||- Evaluating management's estimates and assumptions (estimated contract revenue/ costs risk provisions contract variation claims etc) through discussions and inquiries with management including reading related documents evidencing management assessment |
| Estimation of total contract costs at inception and remaining costs to completion which is a critical factor in measuring progress of a contract and amounts of revenue to be recognized ||- Review of contracts and significant including termination rights terms relating to penalties for delay and breach of contract as well as liquidated damages. |
| Assessment of various risks emanating from operational delays contract terms changes in estimations technical legal external environment etc. This requires the Company to estimate various costs to capture such risks including liquidated damages and warranties. || |
| Accounting for variations and claims of / from customers including timing of recognition. ||- Inquiring and challenging management (project managers) on various aspects of contracts such as performance/ progress key estimates and assumptions adopted in the forecast of contract revenue and contract costs including estimated costs to completion reasons for deviations the recognition of variation orders the adequacy of contingency provisions assessment of potential liquidated and ascertained damages and assessment on probabilities that contract risks will materialize. |
|Revenues total estimated contract costs and resultant margin recognition may deviate significantly from original estimates based on new knowledge about cost overruns and changes in project scope over the terms of a contract. ||- Obtaining and reading contract agreements and sub- contracts correspondence with customers regarding contract variations and considering historical outcomes for similar contracts and industry norms; |
|In view of above we determined this area to an area involving significant risk an area of audit focus and accordingly a key audit matter. || |
| || Obtaining a detailed breakdown of the total estimated costs to completion for all contracts in progress during the year and comparing on a sample basis 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. |
| || Challenging the assumptions and critical judgements made by management which impacted their estimations of the liquidated and ascertained damages assessments by reading contractual key terms and conditions and periodic progress reports. |
| || Performing a retrospective review for contracts completed during the current year by comparing the final outcome of the contracts with previous estimates made for those contracts to assess the reliability of the management's forecasting process. |
| || Obtaining a listing of all contracts with details of contract revenue and total estimated costs to assess the need for making provision for loss contracts. |
| || Obtaining and testing computations on a sample basis for unbilled revenues recognized by management as a difference between revenues recognized and billings to customers in accordance with the contract. |
| || Testing cost of sales by applying sampling methodology including related balances such as Work-in-progress trade receivables etc. Effective 1 April 2018 the Company adopted Ind AS 115 "Revenue from contracts with customers" using the cumulative effect approach as the transitional provision option available to the Company. The Company also assessed the revenue recognition method in respect of measuring percentage of completion for applicable products/ services projects. The key changes in accounting policies included non-discounting of retention money as it is considered to ensure Company's obligation rather than provision of finance to the customer and change in method of measuring percentage of completion measured now by segmented portions of a contract i.e. contract milestones achieved to actual costs incurred. As a result the cumulative effectof H817.1 million (net of tax impact of H424.1 million) has been recognized as addition to retained earnings as at 1 April 2018. |
| ||As informed to us it is impracticable to determine the adjustments/ impact of the above changes on the comparatives. Accordingly the comparatives have not been retrospectively adjusted i.e. it is presented as per previously reported results in previous year. |
|Recoverability of trade receivables ||Our audit procedures included the following: |
|Trade receivables including retention money with customers form a significant part of the financial statements. Customer contracts typically involve time consuming and complex conditions around closure of contracts including technical acceptances. Also customers pay only on the basis of ongoing performance quality obligations. The above factors generally lead to longer and significant time for realization of receivables. || Obtaining an understanding of the processes implemented by management to estimate impairment provision against trade receivables |
| ||Testing of key controls (both design and operating effectiveness) over management's estimate of impairment loss |
| || Obtaining and testing accuracy of ageing of trade receivables on a sample basis |
|As a result of above management assessment of realisability of trade receivables involves critical evaluation of all factors impacting realisability including impact of external environment such as capability of customers to pay. The Company's projects may take a significantly longer period of time to satisfy various technical and performance obligations and related customer complaints. The Company takes these considerations to assess realisability of its receivables. || Review of the model adopted by management to estimate the expected credit loss and testing related computations. Inquiring and discussing with management the various judgements and estimates made in the model. |
|Management makes an impairment allowance for trade receivables on the basis of assessment of realisability of specific customers and on the basis of expected credit loss model for the balance category of customers in accordance with Ind AS 109 Financial Instruments. For the purposes of impairment assessment significant judgements and assumptions are made including assessing credit risk timing and amount of realization etc. In view of above we determined this area to an area of audit focus and accordingly a key audit matter. || Obtaining and discussing management assessment of impairment for specific customer balances and understanding reasons for the determination. Corroborating our understanding with externally available information and internally available information such as customer correspondences management analysis notes etc |
|Provision for taxes and litigations ||Our audit procedures included the following: |
|The Company carries a significant various taxes and litigations as a result of applicability of various laws and regulations relating to sales tax goods and service tax service tax excise customs etc (either past or present). || Obtaining an understanding of the processes implemented by amount of provision towards management to estimate provision for various tax and other litigations |
|The above accruals require the management to make judgements and estimates. Determining the impact and likely outcome of any litigation matter requires judgement. The key requirements include sound judgement process understanding of related laws and regulations awareness of claims etc. ||Testing of key controls (both design and operating effectiveness) over management's estimate of provisions |
| || Selecting a sample of all accruals for the purposes of evaluation as mentioned below. Inquiring with management any other litigations/ tax laws not considered by management to arrive at their evaluation. |
|In particular this affects the measurement and completeness of uncertain tax positions/ provision for litigations and the related recoverability of deferred tax assets. || Assessing adequacy and management consideration of various litigations/ regulations on the basis of knowledge obtained by us through audit procedures carried out in other areas. |
|Due to above mentioned factors we have determined this to be a key audit matter. || Involving subject matter experts to evaluate management estimates on the basis of the facts of the each case internal evaluations legal precedence external legal opinions if any. |
| || Analysing and challenging various assumptions used by management to determine accruals based on our knowledge and experiences of the application of local legislations by the relevant authorities and courts. |
| || Evaluate compliance with the relevant accounting guidance on valuation of above-mentioned provisions |
|Information Other than the Financial Statements and Auditor's Report Thereon ||Management's Responsibility for the Financial Statements |
|The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report but does not include the financial statements and our auditors' report thereon. ||The Company's management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the state of affairs profit and other comprehensive income changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error. |
|Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. || |
|In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.c || |
In preparing the 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 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 skepticism 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 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 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.
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 ourauditors' 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 (Auditors' 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. 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 statement of cash flows dealt with bythis Report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 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".
(B) With respect to the other matters to be included in the Auditors' 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 financial statements - Refer Note 39 to the financialstatements.
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 43 to the 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 financial statements regarding holdings as well as dealingsin specified bank notes during the period from 8 November 2016 to 30 December 2016 havenot been made in these financial statements since they do not pertain to the financialyear ended 31 March 2019.
(C) With respect to the matter to be included in the Auditors' 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.
ANNEXURE A referred in the Independent Auditor's Report to the Members of GE T&DIndia Limited on the financial statements for the year ended 31 March 2019
(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.
(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.Pursuant to the programme a portion of the 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.
(ii) According to the information and explanations given to us the inventories(excluding stocks with third parties and goods-in-transit) have been physically verifiedduring the year by the management. In respect of inventories lying with third partiesthese have substantially been confirmed by them. In our opinion the frequency ofverification is reasonable. Further as informed the discrepancies noticed onverification between 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 firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct. Accordingly paragraph 3(iii) of the Order is not applicable.
(iv) According to the information and explanations given to us the Company has notgiven any loans or made any investments or provided any guarantee or security asspecified under Section 185 and 186 of the Companies Act 2013. Accordingly paragraph3(iv) of the Order is not applicable.
(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 pursuantto the rules made by the Central Government the maintenance of cost records has beenprescribed under sub section (1) of Section 148 of the Companies Act 2013 and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of such records with a viewto determine whether they are accurate or complete.
(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 Cess Goods and Service Tax and any other material statutory duesto the extent applicable have generally been regularly deposited with the appropriateauthorities 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 Cess Goodsand Service Tax and other material statutory dues to the extent applicable were inarrears as at 31 March 2019 for a period of more than six months from the date they becamepayable.
(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 Duty of Customs Duty of Excise and Value Added Tax which have not been depositedwith the appropriate authorities on account of any dispute except as mentioned below:-
|Name of the Statue ||Nature of dues ||Amount of demand* (Rs millions) ||Amount deposited against the demand (Rs millions) ||Period to which the amount relates ||Forum where dispute is pending |
|The Central Excise Act 1944 ||Excise duty ||16.3 ||0.6 ||1990-91 1996-97 1998-99 2003-04 2008-09 2015-16 2016-17 & 2018-19 ||Appellate Authority- upto Commissioner level |
| || ||64.5 ||4.1 ||2009-10 to 2016-17 & 2018-19 ||Central Excise and Service Tax Appellate Tribunal |
| || ||0.2 ||0.2 ||2008-09 ||Madras High court |
|Custom Act 1962 ||Custom ||439.9 ||- ||2014-15 ||Madras High court |
| ||duty ||2.8 ||- ||2008-09 ||Custom Excise and Service Tax |
| || || || || ||Appellate Tribunal |
| || ||0.1 ||- ||2014-15 ||Appellate Authority- Up to Commissioner Level |
|The Finance Act 1994 ||Service tax ||2.1 ||0.4 ||2009-10 2016-17 & 2018-19 ||High Court |
| || ||62.7 ||0.9 ||2015-16 2016-17 & 2018-19 ||Up to Commissioner Level |
| || ||277.7 ||167.3 ||2008-09 2010-11 to 2013-14 2015-16 to 2017-18 ||Central Excise and Service Tax Appellate Tribunal |
|Central Sales Tax Act and Local Sales Tax Acts (including works contract tax) ||Sales tax ||6923.7 ||1301.2 ||1988 -89 to 1990-91 1992-93 1993-94 1998-99 2000-01 to 2017-18 ||Appellate Authority- upto Commissioner level |
| || ||211.8 ||205.6 ||1986-87 2008-09 to 2012-13 ||Sales Tax Appellate Tribunal |
|Income Tax Act 1961 ||Income Tax ||26.8 ||26.6 ||2006-07 ||Income Tax |
| || ||75.5 ||34.2 ||2007-08 ||Appellate Tribunal |
| || ||100.8 ||- ||2008-09 || |
| || ||868.6 ||71.6 ||2009-10 || |
| || ||573.8 ||61.6 ||2010-11 || |
| || ||454.6 ||35.0 ||2011-12 ||Commissioner of Income Tax (Appeals) |
| || ||277.3 ||32.5 ||2012-13 || |
| || ||407.6 ||38.0 ||2013-14 || |
| || ||218.1 ||15.0 ||2015-16 || |
* Amount as per demand orders including interest and penalty wherever indicated in theorder
(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to any banks. Further the Company does nothave any loans or borrowings from any financial institution or government and the Companydoes not have any debentures issued / outstanding at any time during the year.
(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 managerial remuneration has been paid orprovided by the Company in accordance with the provisions of Section 197 read for theperiod under audit with Schedule V to the Act.
(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 financial statements as required by the applicable accountingstandard.
(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 non-cash 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 notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE B to the Independent Auditor's report on the financial statements of GET&D India Limited for the year ended 31 March 2019.
Report on the internal financial controls with reference to the aforesaid financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls with reference to financial statementsof GE T&D India Limited ("the Company") as of 31 March 2019 in conjunctionwith our audit of the financial statements of the Company for the year ended on that 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. 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 (hereinafterreferred to as "the Act").
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 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 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 with referenceto financial statements to future periods are subject to the risk that the internalfinancial controls with reference to financial statements may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
| ||For B S R & Associates LLP |
| ||Chartered Accountants |
| ||ICAI Firm registration number: 116231W/W-100024 |
| ||Manish Gupta |
|Place: Noida ||Partner |
|Date : 22 May 2019 ||Membership No.: 095037 |