To the Members of Jindal Steel & Power Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements ofJindal Steel & Power Limited ("the Company") which comprise the BalanceSheet as at 31st March 2021 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (herein after referredto as "standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31st March2021 its Profit (including Other comprehensive income) changes in equity and its cashflows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone financial statementsof the current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.
We have determined the matters described below to be the key auditmatters to be communicated in our report:-
|Sl. No. Description of Key Audit Matter ||How our audit addressed the key audit matters |
|1. Recognition and measurement of taxation and tax litigation ||Our procedures included: |
|The Company has significant tax and other litigations against it. There is a high level of judgement required in estimating the level of provisioning required and appropriateness of disclosure of those litigations as Contingent Liabilities. || |
| || We evaluated the design and tested the operating effectiveness of controls in place for the determination and recognition of current tax and deferred tax balances. We determined that we could rely on these controls for the purposes of our audit; |
|The recognition and measurement of taxation (current tax deferred tax assets and liabilities) requires management judgement and assumptions. The recognition of deferred tax assets involved management's estimation regarding likelihood of the realization of these assets in particular whether there will be taxable profits in future periods that support recognition of these assets. || We tested the underlying data in support of tax calculations; |
| || We made enquiries regarding the tax assessments as well as the results of previous claims/demands and changes to the tax environments. |
|Refer Note 39 and 40(a)(ii) (b) to the Standalone Financial Statements || For legal regulatory and tax matters our procedures included examining external opinions obtained by management examining relevant correspondences and discussing with Company's legal counsel and tax head. |
| || We also involved our internal tax specialists to gain an understanding and to determine the level of exposure for tax litigation of the Company. |
| || In assessing management's conclusions with respect to the recognition of deferred tax assets we evaluated the amount of tax losses recognised in light of the future projected profitability. We determined that the tax balances were supportable and provision for taxes deferred tax assets and liabilities are recorded and assessed the adequacy of disclosures in the standalone financial statements. |
|2. Revenue Recognition || |
|Revenue from the sale of goods (hereinafter referred to as "Revenue") is recognized when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such recognition in case of sale of goods is when the control over the same is transferred to the customer which is mainly upon delivery. ||Our procedures included: |
| || Evaluating the integrity of the general information and technology control environment and testing the operating effectiveness of key IT application controls |
| || Evaluating the design and implementation of Company's controls in respect of revenue recognition. |
| || Testing the effectiveness of such controls over revenue cut off at year-end |
|The timing of revenue recognition is relevant to the reported performance of the Company. The management considers revenue as a key measure for evaluation of performance. There is a risk of revenue being recorded before control is transferred. || Testing the supporting documentation for sales transactions recorded during the period closer to the year end and subsequent to the year end including examination of credit notes issued after the year end to determine whether revenue was recognized in the correct period. |
|Refer Note No. 3.14 Significant Accounting Policies; and Note No. 31 Revenue from Operations; of the Standalone Financial Statements || Performing analytical procedures on current year revenue based on monthly trends and where appropriate conducting further enquiries and testing. |
| || Assessing the appropriateness of the Company's revenue recognition accounting policies in line with IND AS 115 ("Revenue from Contracts with Customers") and testing thereof. |
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the standalone financial statements and our auditor'sreport thereon. The Annual Report is expected to be made available to us after the date ofthis Auditors' Report. Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone financial statementsour responsibility 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.
When we read Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.
Responsibility of Management and Those Charged with Governance for theStandalone Financial Statements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position/state ofaffairs financial performance total comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) specified under Section 133 ofthe Act. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible 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.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgement and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the ability of the Company to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant de_ciencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the standalone financialstatements.
As stated in the note no. 60 regarding approval of Board of Directorsat its meeting held on 26th April 2021 of the proposed divestment by way of sale by theCompany of up to its entire equity interest sale in Jindal Power Limited ("JPL")i.e. 96.42% of the paid up equity share capital. The completion of the stated proposedtransaction is subject to approvals of the shareholders of the Company lenders and suchregulatory and other approvals consents permissions and sanctions as may be necessary.On the consummation of proposed transaction the necessary accounting adjustments will becarried out.
Our opinion on the same is not modified in respect of above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of Section 143 of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including othercomprehensive income the Statement of Changes in Equity and the Statement of Cash Flowsdealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements complywith the Indian Accounting Standards specified under Section 133 of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014.
e) On the basis of the written representations received from thedirectors as on 31st March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2021 from being appointed as a director interms of Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B". Our report expresses unmodified opinionon the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.
g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements Refer Note No.40(a)(ii)(a) and (b) to the standalone financial statements;
ii. The Company has made provision as required under the applicablelaw or Indian accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts; iii. There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theCompany during the year ended 31st March 2021.
h) In our opinion and to the best of our information and according tothe explanations given to us the managerial remuneration (to be read with Note No. 54B(b) to the standalone financial statements) for the year ended 31st March 2021 has beenpaid/ provided for by the Company to its directors in accordance with the provisions ofSection 197 read with Schedule V to the Act.
| ||For Lodha & Co. |
| ||Chartered Accountants |
| ||Firm Registration No. 301051E |
| ||(N. K. Lodha) |
| ||Partner |
|Place: New Delhi ||Membership No. 085155 |
|Date: 12th May 2021 ||UDIN: 21085155AAAACC2857 |
Annexure "A" to the Independent Auditor's Report
(Referred to in paragraph 1 under Report on Other Legal andRegulatory Requirements' section of our report of even date on the StandaloneFinancial Statements of JINDAL STEEL & POWER LIMITED for the year ended 31st March2021)
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Property Plant & Equipment have been physically verifiedby the management as per the regular programme of periodical physical verification in aphased manner and the physical verification carried out during the year is reasonablehaving regard to the size of the Company and the nature of its Property Plant &Equipment. No material discrepancies noticed on such physical verification. (c) Accordingto the information and explanations given to us and on the basis of our examination of therecords of the Company the title deeds of immovable properties included in fixed assetsare held in the name of the Company (this to be read with note 5(2) of financialstatements).
(ii) The inventory of the Company (except stock lying with the thirdparties and in transit) part of stores and spares have been physically verified by themanagement at reasonable intervals. In our opinion the procedures of physicalverification of inventory followed by the management are reasonable in relation to thesize of the Company and nature of its business. No material discrepancies noticed on suchphysical verification of inventory as compared to book records.
(iii) The Company has not granted any secured or unsecured loan to anycompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013. Accordingly the provisions ofClauses 3(iii) (a) (b) & (c) of the Order are not applicable. (iv) According to theinformation explanations and representations provided by the management and based on theaudit procedures performed we are of the opinion that in respect of loans investmentsguarantees and security the Company has complied with the provisions of the Section 185and 186 of the Companies Act 2013. (v) In our opinion and according to the informationand explanations given to us the Company has not accepted deposits from public within theprovision of section 73 to 76 of the Act or any other relevant provisions of the Act andthe rules framed there under (to the extent applicable). We have been informed that noorder has been passed by the Company Law Board or National Company Law Tribunal or ReserveBank of India or any Court or other Tribunal in this regard. (vi) We have broadly reviewedthe books of account maintained by the Company pursuant to the rules made by the CentralGovernment for the maintenance of cost records under section 148(1) of the Act in respectof the Company's products to which the said rules are made applicable and are of theopinion that prima facie the prescribed records have been made and maintained. We havehowever not made a detailed examination of the said records with a view to determinewhether they are accurate or complete.
(vii) According to the records of the Company and information andexplanations given to us in respect of statutory dues: (a) The Company has generally beenregular in depositing undisputed statutory dues including Provident Fund Employee'sState Insurance Income Tax Goods and Service Tax Custom Duty Cess and other materialstatutory dues with the appropriate authorities to the extent applicable. There were noundisputed statutory dues payable as at March 31 2021 which were outstanding for a periodof more than six months from the date they become payable.
(b) The dues in respect of income tax service tax duty of customsduty of excise Goods and Service Tax sales tax and value added tax that have not beendeposited with the appropriate authorities on account of any dispute and the forum wherethe dispute is pending are given below:-
| || || || ||Rs |
|S. Name of Statue No. ||Nature of Statutory Dues ||Net of Pre-deposit as on 31.03.2021 ||Period to which amount relates ||Closing Forum where dispute is pending |
|1 || ||40.83 ||April- 2014 to June-2017 ||Addl. Commissioner CTC |
|2 || ||5.85 ||FY 2005-06 & FY 2012-13 & 2013-14 ||Hon'ble Orissa High Court |
|Central Sales Tax 1956 ||Central Sales Tax || || || |
|3 || ||7.36 ||April- 2011 to June-2017 ||COMMISSIONER RANCHI |
|4 || ||13.77 ||April- 2015 to Sep-2015 ||Dy. Commissioner Sale Tax Angul |
|5 || ||0.01 ||FY 2007-2008 to 2010-2011 ||Dy. Commissioner Sale Tax Rourkela |
|6 || ||20.05 ||FY 2011-12 & FY 2012-13 ||CESTAT Kolkata |
|7 || ||9.39 ||FY 2013-14 to FY 2014-15 ||CESTAT Hyderabad |
|8 Custom Act 1962 ||Custom Duty ||2.14 ||FY 2011-12 ||DCC Paradeep |
|9 || ||5.75 ||FY 2002-03 & April-2014 to ||CESTAT Mumbai |
| || || ||Nov-2015 || |
|10 || ||2.18 ||FY 2013-14 & April-2015 to ||Hon'ble High Court Kolkata |
|W.B.Entry Tax Act 2012 ||Entry Tax || ||June-2017 || |
|11 || ||0.55 ||April-2017 to June-2017 ||The Commissioner (Appeal) |
|12 || ||60.62 ||April-2007 to Oct-2011 ||Addl. Commissioner CTC & Tribunal |
| || || || ||Cuttack |
|13 || ||29.79 ||FY 2012-13 to 2013-14 ||Deputy Commissioner of CT & GST Angul |
|14 Odisha Entry Tax Act 1999 || ||22.30 ||FY 2006-07 FY 2011-12 & ||Additional Commissioner of Sales Tax |
| || || ||April- 2014 to June-2017 ||Angul |
|15 || ||8.53 ||Nov-2010 to July-2011 ||Odisha High Court |
|16 || ||0.03 ||FY 2007-2008 ||Addl. Commissioner CCT Cuttack |
|17 || ||666.45 ||Jan-2010 to Nov-2013 ||Odisha High Court |
|18 || ||329.70 ||April-2010 to June-2017 ||CESTAT Kolkata |
|19 || ||158.63 ||FY 2010-11 to FY 2015-16 ||CESTAT Delhi |
|21 || ||2.94 ||FY 2015-16 ||The Commissioner Appeal |
|Central Excise Act 1944 ||Excise Duty || || || |
|22 || ||2.46 ||FY 2012-13 to FY 2014-15 ||Commissioner (Appeals)BBSR |
|23 || ||4.24 ||FY 2016-17 ||The Joint Secretary Delhi |
|24 || ||1.83 ||FY 2011-12 to FY 2015-16 ||Supreme Court New Delhi |
|25 || ||1.04 ||July 2017 ||Hon'ble High Court Bilaspur |
|26 || ||543.83 ||AY 2009-10 & AY 2010-11 ||Punjab & Haryana High Court |
|27 || ||785.12 ||AY 2005-06 AY 2008-09 to ||ITAT New Delhi |
|The Income Tax Act 1961 ||Income Tax || || || |
| || || ||AY 2012-13 and AY 2015-16 || |
|28 || ||78.26 ||AY 2013-14 to AY 2019-20 ||CIT(A) |
|29 || ||39.62 ||FY 2009-10 to FY 2016-17 ||CESTATKolkata |
|The Finance Act 1994 ||Service Tax || || || |
|30 || ||12.99 ||FY 2010-11 to FY 2012-13 ||CESTAT New Delhi |
|32 Haryana Value Added Tax || ||0.02 ||FY 2016-17 ||The Commissioner (Appeals) |
|2003 || || || || |
|33 Gujarat VAT Act 2003 || ||0.002 ||FY 2014-15 ||Commissioner (Appeals) Gujarat |
|34 Jharkhand VAT Act || ||3.47 ||FY 2012-13 to FY 2014-15 & ||COMMISSIONER RANCHI |
| || || ||April-2016 to June-2017 || |
|35 Tamil Nadu Vat ||Value Added Tax ||0.72 ||FY 2008-2009 to 2009-2010 ||Appellate Deputy Commissioner-III |
| || || || ||Chennai |
|36 || ||17.07 ||FY 2012-13 & 2013-14 ||Hon'ble Orissa High Court |
|The Odisha Value Added || || || || |
|37 || ||10.55 ||April-2014 to June-2017 ||Addl. Commissioner CTC |
|Tax Act 2004 || || || || |
|38 || ||0.13 ||FY 2007-2008 ||Dy. Commissioner Rourkela |
|39 Bihar Value Added Tax 2005 || ||0.07 ||2015-16 ||The Appellate Commissioner |
(viii) In our opinion on the basis of audit procedures and accordingto the information and explanations given to us the Company has not defaulted inrepayment of dues (including interest) to banks and financial institutions. As at 31March 2021 there was no overdue financial obligations to banks/ financial institutions/debenture holders.
(ix) The Company has not raised moneys by way of initial public offeror further public offer (including debt instruments). Money raised on term loans have beenapplied for the purposes for which loans were raised.
(x) Based on the audit procedure performed and according to theinformation and explanations given to us by the management no fraud by the Company or nofraud on the Company by its officers or employees has been noticed or reported during theyear.
(xi) In our opinion and according to the information and explanationsgiven to us managerial remuneration (to be read with Note No. 54B (b) to the financialstatements) has been paid or provided in accordance with the requisite approvals mandatedby the provisions of Section 197 read with Schedule V of the Companies Act 2013.
(xii) The Company is not a Nidhi company and hence reporting underclause 3(xii) of the Order is not applicable to the Company.
(xiii) In our opinion and according to the information and explanationsgiven to us the Company is in compliance with Sections 177 and 188 of the Companies Act2013 where applicable for all transactions with the related parties and the details ofrelated party transactions have been disclosed in the financial statements as required bythe applicable Indian accounting standards (Ind AS) [refer Note No. 54].
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause (xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into non-cash transactions withits Directors or persons connected to itsdirectorsandhenceprovisionsofSection192oftheCompaniesAct 2013 are not applicable to theCompany.
(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
| ||For Lodha & Co. |
| ||Chartered Accountants |
| ||Firm Registration No. 301051E |
| ||(N. K. Lodha) |
|Place: New Delhi ||Partner |
|Date: 12th May 2021 ||Membership No. 085155 |
Annexure "B" to the Independent Auditor's Report
(Referred to in paragraph 2(f) under Report on Other Legal andRegulatory Requirements' section of our report of even date)
REPORT ON THE INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTINGUNDER CLAUSE _i_ OF SUB_ SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 _"THEACT"_
We have audited the internal financial controls over financialreporting of JINDAL STEEL & POWER LIMITED ("the Company") as of 31st March2021 in conjunction with our audit of the standalone 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 andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. 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 respective company's policies thesafeguarding 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.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.
We believe that the audit evidence obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial control over financial reporting isa process 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 controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIALREPORTING
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2021 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
| ||For Lodha & Co. |
| ||Chartered Accountants |
| ||Firm Registration No. 301051E |
| ||(N. K. Lodha) |
|Place: New Delhi ||Partner |
|Date: 12th May 2021 ||Membership No. 085155 |