To The Members of Indian Metals and Ferro Alloys Limited
Report on the Audit of the Standalone Ind AS
We have audited the accompanying Standalone Ind AS financial statements of IndianMetals and Ferro Alloys Limited ("the Company") which comprise the BalanceSheet as at 31st March 2020 the Statement of Profit and Loss (including the Statement ofOther Comprehensive Income) the Statement of Cash Flows and the Statement of Changes inEquity for the year then ended and notes to the financial statements including a summaryof significant accounting policies and other explanatory information (together referred toas "Standalone Ind AS Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at 31st March 2020 and its lossincluding other comprehensive income its cash flows and changes in equity for the yearended on that date.
Basis for Opinion
We conducted our audit of the Standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Rs.AuditorRs.sResponsibilities for the Audit of the Standalone Ind AS financial StatementsRs. section ofour report. We are independent of the Company in accordance with the Rs.Code of EthicsRs.issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the Standalone Ind AS financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the Code of Ethics.We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Ind AS financial statements.
Emphasis of Matter
We draw attention to the following matters in the Notes to the Standalone Ind ASfinancial statements:
a) Note Nos. 45 and 46 to the Standalone Ind AS financial statements relating to theCompany's exposure in its subsidiary and non-recognition of income from interest onunsecured loan given to the subsidiary respectively. These matters have arisen out of thecancellation of allotment of the coal block being held by the subsidiary vide theHonRs.ble Supreme Court of IndiaRs.s order dated 24th September 2014 and the subsequentevents in connection therewith.
b) Note No. 58 to the standalone Ind AS financial statements which describes theuncertainties and the impact of Covid-19 pandemic on the Company's operations carryingamounts of investments recoverability of receivables and other assets and management'sevaluation of the future performance of the Company. In view of the uncertain economicenvironment a definitive assessment of the impact on the subsequent periods is dependentupon circumstances as they evolve.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificant in our audit of the Standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the Standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
Evaluation of uncertain tax positions:
See Note 39 to the Standalone Ind AS financial statements
|Key Audit Matter Description ||How the matter was addressed |
|The Company has material uncertain tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. ||We obtained details of completed tax assessments and demands till the year ended March 31 2020 from the management. We involved our internal experts to evaluate the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. We discussed with the management's tax team to understand the status of all significant provisions and any changes to management's judgements in the year. We read correspondence with tax authorities and Company's external tax advisors/lawyers to evaluate our assessment of recorded estimates and evaluate the completeness of the provisions recorded and whether any change was required to management's position on these uncertainties. |
|The Company applied Ind AS -116'Leases' which replaced Ind AS-17'Leases' and the measurement presentation and disclosure from the date of its initial application of 01st April 2019 that resulted in change in accounting policy. ||Our audit procedures in this area included the following: |
|The Company has adopted Ind AS-116 with modified retrospective approach from 01st April 2019 and has not restated comparative figures in accordance with the transitional provisions contain within Ind AS -116. ||Obtained an understanding and evaluated the Company's implementation process including the review of the updated accounting policy in accordance with Ind AS- 116. |
|We have considered this as a key audit matter because the adoption and implementation of Ind AS-116 resulted in significant changes to the Standalone Ind AS financial statements of the Company along with changes to processes systems and controls degree of judgements which have been applied and the estimates made in determining the impact of Ind AS-116. ||We evaluated management assumptions specifically the assumptions used to determine the discount rate lease terms and measurement principals with the assistance of our internal experts. |
| ||Tested the factual inputs and calculation of the right-of-use asset and lease liability calculated by the management for each material lease contract. |
| ||Obtained an understanding and evaluated the key controls associated with the relevant process for leases and performed substantive procedures on the statement of profit and loss and balances of assets and liabilities that were subject to the effect of Ind AS-116. |
| ||Assessed the modified retrospective application and adequacy of the Company's disclosures of the impact of the new standard in the Standalone Ind AS financial statements. |
Information other than the Standalone Ind AS financial Statements and Auditor's ReportThereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report of the Board ofDirectors including annexures to Board's Report but does not include the Standalone Ind ASfinancial statements and our auditor's report thereon.
Our opinion on the Standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of the Management and Those Charged with Governance for the StandaloneInd AS financial Statements
The Company's Board of Directors is responsible for the matters stated in Section >_() of the Act with respect to the preparation of these Standalone Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding
other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section >__ of the Act read withthe Companies (Indian Accounting Standards) Rules _ > as amended. 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 e_ectively for ensuring the accuracy and completeness of the accounting recordsrelevant to the preparation and presentation of the Standalone Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the Standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors is also responsible for overseeing the Company's financialreporting process.
AuditorRs.s responsibility for the Audit of the Standalone Ind AS financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditorRs.s report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Standalone Ind AS 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 Standalone Ind ASfinancial 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 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 auditorRs.s report to the related disclosures inthe Standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditorRs.s report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Standalone IndAS financial statements including the disclosures and whether the Standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatement in the Standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the Standalone Ind AS financial statementsmay be influenced. We consider quantitative materiality and qualitative factors in (i)planning the scope of our audit work and in evaluating the results of our work; and (ii)to evaluate the effect
of any identified misstatement in the Standalone Ind AS 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 Standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditorsRs. report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
The comparative Ind AS financial statements for the year ended 31st March 2019 includedin the these Standalone Ind AS financial statements have been audited by Haribhakti &Co. LLP Chartered Accountants whose audit report dated 18th May 2019 expressedunmodified opinion on the comparative Ind AS financial statements.
Our opinion is not modified in respect of this matter.
Report on other legal and regulatory requirements
1. As required by the Companies (AuditorRs.s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in Paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of 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 Cash Flows and Statement of Changes in Equity dealt with by thisreport are in agreement with the books of account.
(d) In our opinion the aforesaid Standalone Ind AS financial statements comply withthe Indian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.
(e) The matter described in the in para (a) of Emphasis of Matter paragraph above inour opinion may have an adverse effect on the functioning of the Company.
(f) 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.
(g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(h) With respect to the other matters to be included in the AuditorRs.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 Standalone Ind AS financial statements - Refer Note 39 47 48 and 49 tothe Standalone Ind AS 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.
iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
3. With respect to the other matters to be included in the AuditorRs.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 for the year ended 31st March 2020 has beenpaid/provided by the Company to its directors in accordance with the provisions of section197 read with Schedule V to the Companies Act 2013. Further the remuneration paid by theCompany to its directors during the year is in excess of the limits laid down undersub-section 1 of Section 197 of the Act and the requisite approval in accordance with thesaid section read with Schedule V to the Act has been obtained by the Company - Refer Note44 (e) to the Standalone Ind AS financial statements.
Annexure "A" To the Independent AuditorRs.s Report
Annexure referred to in paragraph 1 under the heading "Report on other legal andregulatory requirements" of our Report of even date.
i. (a) The Company has maintained proper records showing full including quantitativedetails and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular phased programme of verification which in our opinion havingregard to the size of the Company and nature of its fixed assets provides for physicalverification of all the fixed assets at reasonable intervals. According to the informationand explanations given to us no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiesrecorded as fixed assets in the books of accounts of the Company are held in the name ofthe Company as at the balance sheet date except as detailed herein below:
|Land/ Buildings ||Total number of cases ||Leasehold/ Freehold ||Gross Block as at 31st March 2020 (in crores) ||Net Block as at 31st March 2020 (in crores) ||Remarks |
|Land ||6 ||Freehold ||0.04 ||0.04 ||The deed of conveyance is in the erstwhile name of subsidiary which had amalgamated with the Company (Refer Note 54 to the Standalone financial statements) |
|Land ||3 ||Leasehold ||15.82 ||15.82 ||The deed of conveyance is in the erstwhile name of entity which had amalgamated with the Company |
ii. Physical verification of inventory has been conducted by the management atreasonable intervals during the year. The discrepancies noticed on physical verificationbetween the physical stocks and book records which in our opinion were not material havebeen properly dealt with in the books of account.
iii. The Company has granted unsecured loans to Companies covered in the registermaintained under Section 189 of the Companies Act 2013.
(a) According to the Information and explanations given to us we are of the opinionthat the terms and conditions of the grant of the aforesaid loans are not prejudicial tothe Company's interest except that the loans and interest thereon are repayable/payableon demand which may be prejudicial to the Company's interest as one of the borrowingCompany's ability to repay/pay such loan/ interest is contingent on the outcome of certainmatters as detailed in Note 45 and 46 to the Standalone Ind AS financial statements.
(b) According to the information and explanations given to us the aforesaid loans andinterest thereon are repayable/payable on demand. We have been informed that no demand onaforesaid for loans and interest has been made by the Company till date and accordinglythe paragraph 3 (iii)(b) of the order is not applicable to the Company.
(c) As explained in paragraph 3 (iii) (b) aforesaid there is no amount which isoverdue.
iv. In our opinion and according to the information and explanations given to us theCompany has not made investments given security which is covered under provisions ofsection 185 and 186 of the Companies Act 2013. In respect of loan given and guaranteeprovided during the year the same in our opinion is in compliance of section 185 and 186of Companies Act 2013.
v. As per the information and explanations given to us the Company has not acceptedany deposits as mentioned in the directives issued by the Reserve Bank of India and theprovisions of Section 73 to 76 or any other relevant provisions of the Act and the rulesframed there under. Accordingly the paragraph 3(v) of the Order is not applicable to theCompany.
vi. The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013 for manufacturing of High Carbon Ferro Chrome.We have broadly reviewed the cost records maintained by the Company pursuant to theCompanies (Cost Records and Audit) Rules 2014 as amended prescribed by the CentralGovernment under sub-section (1) of Section 148 of the Act and are of the opinion thatprima facie the prescribed cost records have been made and maintained.
vii. (a) According to the information and explanations given to
us and on the basis of our examination of the books of account the Company has beengenerally regular in depositing undisputed statutory dues including provident fundemployeesRs. state insurance income-tax goods and service tax duty of custom duty ofexcise value added tax cess and other material statutory dues applicable to it to theappropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employeesRs. state insurance income tax goods andservice tax duty of custom duty of excise value added tax and cess and other materialstatutory dues were outstanding as on 31st March 2020 for a period of more than sixmonths from the date they became payable.
(b) According to the information and explanations given to us and on the basis of ourexamination of the books of account the dues as at 31st March 2020 of income tax goodsand service tax duty of custom duty of excise value added tax and cess which have notbeen deposited on account of any dispute are as follows:
|Name of the Statute ||Nature of dues ||Amount involved (Rs. in crores) ||Amount unpaid (Rs. In crores) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||0.97 ||0.17 ||Assessment Years 1987-88 to 198990 ||Orissa High Court |
|Income Tax Act 1961 ||Income Tax ||3.05 ||0.42 ||Assessment Year 2016-2017 ||Commissioner of Income Tax (Appeals)-I Bhubaneswar |
|Orissa Sales Tax Act 1947 ||Sales Tax ||0.00* ||0.00* ||1990- 91 to 1991- 92 ||Orissa High Court |
|Orissa Sales Tax Act 1947 ||Sales Tax ||0.07 ||0.04 ||1994-95 ||Odisha Sales Tax Tribunal |
|Finance Act 1994 ||Service Tax ||0.50 ||0.48 ||2012-2017 ||Commissioner (Appeals) Central Excise Customs & Service Tax |
|Central Excise Act 1944 ||Excise Duty ||0.39 ||0.19 ||1993-2002 ||Orissa High Court |
|Central Excise Act 1944 ||Cenvat Credit reversal ||0.01 ||0.01 ||2011-2012 ||Deputy Commissioner of Central Excise Customs & Service Tax |
|Central Excise Act 1944 ||Cenvat Credit reversal ||19.18 ||18.18 ||2009-2014 ||Customs Excise & Service Tax Appellate Tribunal |
|Central Excise Act 1944 ||Cenvat Credit reversal ||1.36 ||1.26 ||April 2015 to September 2015 ||Commissioner (Appeals) Central Excise Customs & Service Tax |
|Central Excise Act 1944 ||Cenvat Credit reversal ||5.47 ||5.26 ||April 2014 to September 2015 ||Customs Excise & Service Tax Appellate Tribunal |
|Central Excise Act 1944 ||Cenvat Credit reversal ||9.07 ||8.73 ||October 2015 to June 2017 ||Customs Excise & Service Tax Appellate Tribunal |
|Odisha Value Added Tax Act 2004 ||Value Added Tax ||1.63 ||0.03 ||October 2011 to March 2015 ||Odisha Sales Tax Tribunal |
|Goods and Services Tax Act 2017 ||CGST and SGST ||2.86 ||2.65 ||October- November 2018 ||State Tax Officer CT and GST Rayagada |
viii. Based on our audit procedures and on the information and explanations given tous the Company has not defaulted in repayment of loans or borrowings to financialinstitutions or to any banks. The Company did not have dues to financial institutionsgovernment and to debenture holders.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. Based on our audit proceduresand according to information and explanations given by the management the term loans wereapplied for the purpose for which they were obtained.
x. According to the information and explanations given to us no fraud by the Companyor no material fraud on the Company by its officers or employees has been noticed orreported during the year.
xi. According to the information and explanations given by the management themanagerial remuneration has been paid/ provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act 2013.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly provisions of paragraph 3(xii) of the Orderare not applicable to the Company.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company all the transactions with the related partiesare in compliance with the sections 177 and 188 of the Companies Act 2013 whereapplicable and details of such transactions have been disclosed in the Standalone Ind ASfinancial statements as required by the applicable accounting standards.
xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly provisions of paragraph 3(xiv) of the Order are not applicable tothe Company.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him as referred to in section 192 ofthe Companies Act 2013. Accordingly provisions of paragraph 3(xv) of the Order are notapplicable to the Company.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly provisions of paragraph 3(xvi) of the Order are notapplicable to the Company.
Annexure "B" To the Independent AuditorRs.s Report
Annexure referred to in paragraph 2(f) under the heading "Report on other legaland regulatory requirements" of our report of even date.
Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of INDIANMETALS AND FERRO ALLOYS LIMITED ("the Company") as of 31st March 2020 inconjunction with our audit of the Standalone Ind AS financial statements of the Companyfor 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 control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by Institute ofChartered Accountants of India and deemed to be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditorRs.s judgement including the assessment of the risks ofmaterial misstatement of the Standalone Ind AS financial statements whether due to fraudor 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 systemover financial reporting with reference to these Standalone Ind AS financial statements.
Meaning of Internal Financial Controls Over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.