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Kirloskar Brothers Ltd.

BSE: 500241 Sector: Engineering
NSE: KIRLOSBROS ISIN Code: INE732A01036
BSE 00:00 | 20 Sep 359.45 -7.45
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360.00

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370.00

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352.45

NSE 00:00 | 20 Sep 359.30 -7.05
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376.15

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376.15

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OPEN 360.00
PREVIOUS CLOSE 366.90
VOLUME 11289
52-Week high 504.75
52-Week low 98.00
P/E 25.08
Mkt Cap.(Rs cr) 2,854
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 360.00
CLOSE 366.90
VOLUME 11289
52-Week high 504.75
52-Week low 98.00
P/E 25.08
Mkt Cap.(Rs cr) 2,854
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kirloskar Brothers Ltd. (KIRLOSBROS) - Auditors Report

Company auditors report

To the members of KIRLOSKAR BROTHERS LIMITED

Report on the audit of the standalone financial statements

Opinion

We have audited the accompanying standalone financial statements of KirloskarBrothers Limited (hereinafter referred as "the Company") which comprise thebalance sheet as at 31 March 2021 the statement of profit and loss (including othercomprehensive income) the cash flow statement and the statement of changes in equity forthe year then ended and notes to the standalone financial statements including a summaryof significant accounting policies and other explanatory information.

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 (hereinafter referred as "theAct") in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards prescribed under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended (hereinafter referred as"Ind AS") and other accounting principles generally accepted in India of thestate of affairs (financial position) of the Company as at 31 March 2021 and its profitperformance including other comprehensive income) its cash flows and the changes inequity for the year ended on that date.

Basis for opinion

We conducted our audit in accordance with the Standards on Auditing(hereinafter referred as "SAs") specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the auditor'sresponsibilities for the audit of the standalone financial statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the standalone financial statements.

Key audit matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements taken as a whole in forming our opinion thereon and we do notprovide a separate opinion on these matters. We have determined the key audit matters asdescribed below: A. Accounting treatment for customer contracts where performanceobligations are satisfied time over B. Carrying value of investments in subsidiaries andjo int ventures

A. Accounting treatment for customer contracts where performance obligations are satisfied over time

Description of key audit matter:

Revenue amounting to Rs. 1122 million reported in the Company's standalone financial statements pertains to customer specific long-term contracts and the same are required to satisfy the recognition and measurement criteria as per Ind AS 115 ‘Revenue from Contracts with Customers'. In case of these contracts the revenue is recognised over time and is based on a percentage completion method (POC) for each of such contracts. The stage of project completion is determined based on a ratio of project costs actually incurred till the period / year end to the planned / estimated total cost to complete the said project. This necessarily involves estimations and certain assumptions to be made by the management in determining the total planned costs and an appropriate allocation of costs actually incurred on each project. This inherently creates certain uncertainties and results in complexities in accounting treatment wherein incorrect assumptions and estimates can lead to revenue being recognised in incorrect accounting periods thereby impacting the results. In addition in POC method revenue recognition and respective collections do not follow a linear trend irrespective of stage completion determined by the Company. Collections do depend on satisfaction of certain other performance obligations as laid down in the respective project agreements. Consequently those amounts that remain as receivables whose due dates for payments depend on other conditions give rise to certain receivables that are due and others not due for payment requiring the Company to adopt a differential accounting classification and treatment. While assessing the contractual obligations as at any period close change orders and / or cancellations are required to be considered by the Company to adopt an appropriate accounting treatment for revenues already recognised valuation of work in progress and respective receivables. Considering these factors in the context of our audit this matter was of significance and hence a key audit matter (Refer note 30 to the standalone financial statements).

Description of Auditor's response:

With a view to verify the alignment of the Company's project accounting system with the actual progress of the project and its status at any period close we designed our audit procedures related to this area to obtain an understanding of project acceptance and execution process and the related accounting controls including verification of compliance with Ind AS 115 ‘Revenue from Contracts with Customers'. These included inter-alia reading through the material contracts and formation of a standard checklist to note the terms and conditions and considerations required to be taken note of for appropriate financial accounting till a project is finally executed and closed. We discussed with the management the risks associated with the project execution to understand requirement of any specific recognition of financial accounting considerations and developed requisite key controls requiring audit attention and review. The Company has automated through its accounting software the method of calculating the percentage of completion method which we have verified on test basis. We reviewed planned costs their latest estimates rationale for revision in estimates based on information shared by the management in our discussions approvals to such revisions in the estimates and compared them with latest costs to complete related mathematical accuracy and on a sample basis validated resulting recognition of revenue. We discussed with management the status of amount receivable and have verified the evidence supporting the recoverability in sample cases. We verified the calculations of expected credit loss provisions and corroborated with specific management discussions on major projects.

B. Carrying value of investments in subsidiaries an d joint ventures

Description of key audit matter: i. The Company has invested an amount of Rs. 3469 million in subsidiaries and joint ventures. These investments are stated at cost in the financial statement. One of the foreign subsidiaries has further invested in step-down foreign companies including certain acquisitions made in the past with a view to become one of the global leaders in the area of Company's operations. These foreign subsidiaries have their individual gestation periods and have been incurring losses in past few years. Given the multi layered investment structure and being subjected to international business dynamics the Company is required to evaluate their individual financial status and value propositions to determine carrying value of these investments in light of group's overall stated business plans and its vision both in domestic and international markets and hence requires a close monitoring by the management of these situations. Against this background this matter was of significance in the context of our audit (Refer note 5 to the standalone financial statements).

Description of Auditor's response:

We have obtained audited financial statements of these subsidiaries and joint ventures and have compared their net worth against investment by the ultimate holding Company. Component auditors have not raised any major concern on the ability of the entities to operate as a going concern. Management has provided us with the business plans and how in their business judgement any negative net worth is either compensated with improving business conditions in some of these entities or have additional assets whose market values have adequate coverage to offset the negative net worth condition within the larger scheme of business prospects as a group. Going forward our regular audit procedures are designed to keep a follow up on outcomes of these management assertions.

Information other than the standalone financial statements andauditor's report thereon

The Company's Management and Board of Directors are responsiblefor the preparation of the other information. The other information comprises theBoard's report and management discussion and analysis included in the annual reportbut does not include the standalone financial statements and our auditor's reportthereon.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above and in doing soconsider whether the other information is materially or our knowledge obtained during thecourse of inconsistent withthestandalonefinancial our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Management's responsibility for the standalone financialstatements

The Company's Management and Board of Directors are responsiblefor the matters stated in section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including the IndAS. 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 and applicationof appropriate accounting policies making judgments and estimates that are reasonable andprudent and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements Company'sManagement and Board of Directors are responsible for assessing the Company's abilityto continue as a going concern disclosing as applicable matters related to goingconcern and using the going concern basis of accounting unless management either intendsto liquidate the Company or to cease operations or has no realistic alternative but to doso.

The Board of Directors are 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 professionaljudgment and maintain professional skepticism throughout the audit. We also: A. Identifyand assess the risks of material misstatement of the standalone financialstatementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control. B. Obtainan understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of the Actwe are also responsible for expressing our opinion on whether the Company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols C. Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

D. 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 Company's ability to continue as a we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

E. 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.

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 standalone financialstatements may be influenced. We consider quantitative materiality and in (i) planning thescope of our audit work and in evaluating the results of our work and (ii) to evaluate theeffect of any identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincludinganysignificantdeficiencies in internal that we identify during our audit.

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

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the central government 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 theOrder to the extent applicable.

2. As required by section 143 (3) of the Act and based on our audit wereport that: a) We have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purposes of our audit b) Inour opinion proper books of account as required by law have been kept by the Company sofar as it appears from our examination of those books c) The balance sheet the statementof profit and loss (including other comprehensive income) statement of changes in equityand the statement of cash flows dealt with by this report are in agreement with the booksof account d) In our opinion the aforesaidstandalonefinancialstatements comply with theInd AS specified under section 133 of the Act read with rule 7 of the Companies(Accounts) Rules 2014 e) On the basis of the written representations received from thedirectors as on 31 March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2021 from being appointed as a director in termsof section 164 (2) of the Act f) With respect to the adequacy of the internal financialcontrols over financial reporting of the Company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure B" our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company'sinternal financial controls over financial reporting g) With respect to the other mattersto be included in the auditor's report in accordance with the requirements of section197(16) of the Act as amended we report that in our opinion and to the best of ourinformation and according to the explanations given to us the remuneration paid by theCompany to its directors during the year is in accordance with the provisions of section197 of the Act and h) 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 litigationsas at 31 March 2021 on its financial position in its standalone financialstatements -refer note 28 to the standalone financial statements. ii. The Company has made provisionas required under the applicable law or Ind AS for material foreseeable loses if any onlong term contracts including derivative contracts - refer note 38 to the standalonefinancial statements. iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

For Sharp & Tannan Associates
Chartered Accountants
Firm's registration no. 109983W
by the hand of
Tirtharaj Khot
Partner
Membership no.(F) 037457
Pune 25 May 2021 UDIN: 21037457AAAAAS3181

Annexure A to the Independent Auditor's Report

(Referred to in paragraph 1 under the heading "Report on OtherLegal and Regulatory Requirements" of our report on even date)

Annexure A to the Independent Auditor's Report

(Referred to in paragraph 1 under the heading "Report on OtherLegal and Regulatory Requirements" of our report on even date) (i) (a) The Company ismaintaining proper records showing full particulars including quantitative details andsituation of fixed assets (i.e. property plant and equipment investment property andother intangible assets of the Company).

(b) The fixed assets are being physically verified by the management atregular intervals based on the programme of verification in a phased manner which in ouropinion is reasonable. No material discrepancies were noticed during such physicalverification. (c) According to the information and explanation provided to us all titledeeds of immovable properties are held in the name of the Company.

(ii) Physical verification of inventory except goods-in-transit hasbeen conducted at reasonable intervals by the management. Discrepancies noticed onphysical verification were not material and the same have been properly dealt with in thebooks of account. (iii) The Company has not granted any loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Act except to a subsidiary company in earlier yearsas mentioned below: (a) According to the information and explanations provided to us theunsecured loan given to TKSL in F 2008-09 was under an Order from Board for Industrial andFinancial Reconstruction (BIFR) without any specific agreed terms for charge of interestand repayment. Unsecured loan given to TKSL during F 19-20 is with specified terms andconditions. Considering the above-mentioned facts and materiality of the amounts in ouropinion the terms and conditions of loan are not prejudicial to the Company'sinterest.

(b) In our opinion and according to the information and explanationsprovided to us schedule of repayment of principal and payment of interest has beenstipulated for loan given to TKSL during the financial year 2019-20. The interest paymentshave been received with delays.

(c) In our opinion and according to the information and explanationsprovided to us no amount is overdue for more than ninety days as at balance sheet date.(iv) According to information and explanation provided to us the Company has compliedwith provisions of section 185 and section 186 of the Act to the extent applicable.

Name of party Opening balance Year-end balance Maximum balance
Rs. million Rs. million Rs. million
The Kolhapur Steel Limited (TKSL) - subsidiary company loan as per BIFR order in F 2008-09 10.414 10.414 10.414
The Kolhapur Steel Limited (TKSL) - subsidiary company other loan in F 19-20 150 150 150

(v) According to information and explanation provided to us theCompany has not accepted deposits hence the directives issued by the Reserve Bank ofIndia and the provisions of sections 73 to 76 of the Act and the rules framed there underare not applicable to it. According to information and explanation provided to us noorder has been passed by Company Law Board or National Company Law Tribunal or ReserveBank of India or any court or any other tribunal in the current year. Accordinglyreporting on para 3(v) is not applicable.

(vi) The Central Government has specified maintenance of cost recordsunder section 148(1) of the Act. We have broadly reviewed these records relating tomaterials labour and other items of cost maintained by the Company and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained. Wehave not however made a detailed examination of records with a view to determine whetherthey are accurate and complete.

(vii) (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generallyregular in depositing undisputed statutory dues including provident fund employees'state insurance income-tax goods and service tax sales-tax service tax duty ofcustoms duty of excise value added tax cess and any other statutory dues asapplicable with the appropriate authorities. According to the information and explanationprovided to us no undisputed amounts payable in respect of statutory dues were in arrearsas at 31 March 2021 for a period of more than six months from the date they becamepayable. (b) According to the information and explanation provided to us dues of incometax sales tax service tax duty of customs duty of excise value added tax or cesswhich have not been deposited on account of dispute are as follows:

Name of statute Nature of dues Amount involved Rs. million Amount unpaid Rs. million Period to which amount relates Forum where dispute is pending
Central Sales Tax Act 1956 CST (including interest penalty etc. if any) 35.79 32.24 2013-14 2015-16 Additional Commissioner of Commercial Tax (Appeals)
1.61 1.61 2011-12 2012-13 Commissioner of Appeal Sales Tax
4.1 2.79 2008-092009-10 2010-112013-14 CTO AP
1.78 1.38 2010-11 2016-17 & 2017- 18 Deputy Commissioner
Local Sales Tax of Various States LST GST Sales Tax WCT VAT (including interest penalty etc if any) 17.54 15.49 2012-13 to 2016- 17 Additional Commissioner of Commercial Tax (Appeals)
4.42 3.92 2007-08 2011- 12 2012-13 Commissioner of Appeal Sales Tax
32.79 25.63 1992-93 2004- 05 2005-06 2008-09 2009-10 CTO
124.7 87.62 1995-96 1994-95 2000- 01 2010-11 Deputy Commissioner
121.24 119.11 1989-90 to 1992- 93 2008-09 2009-10 2011-12 High court
45.83 0.73 2003-04 2013-14 VAT Appellate Tribunal
Chapter V of Finance Act 1994 Service Tax (including interest penalty etc if any) 103.26 100.89 2004-05 to 2007- 08 2009-10 to 2012-13 CESTAT
1.14 902.52 1.14 902.52 2012-13 2012-13 Deputy Commissioner Supreme Court
Central Excise Act 1944 Excise Duty (including interest penalty etc if any) 7.19 1.05 2003-04 2005- 06 2006-07 2009-10 2015- 16 2016-17 CESTAT
1.6 - 2016-17 2017-18 Commissioner Appeal
0.14 0.14 1996-97 Deputy Commissioner
3.66 - 2017-18 Revision Authority
21.23 21.23 2007-08 High court
The Income Tax Act 1961 Income Tax (including interest penalty etc if any) 299.88 63.9 2005-06 to 2011- 12 2015-16 to 2017-18 CIT (Appeals)
54.37 - 2001-02 2002-03 High court
351.97 - 2004-05 ITAT

(viii) Based on our audit procedures and according to the informationand explanation provided to us the Company has not defaulted in repayment of dues to afinancial institution bank or government. The Company does not have any debentureholders.

(ix) According to information and explanation provided to us theCompany has not raised moneys by way of initial public offer or further public offer(including debt instruments). According to the information and explanations provided tous term loans availed by the Company were prima facie applied for the purposes forwhich the loans were obtained.

(x) Based upon the audit procedures performed by us and according tothe information and explanations provided to us no fraud by the Company or any materialfraud on the Company by its officers or employees has been noticed or reported during theyear. (xi) According to the information and explanation provided to us the managerialremuneration has been paid and provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with schedule V to the Act.

(xii) The Company is not a Nidhi Company. Accordingly reporting onpara 3(xii) is not applicable. (xiii) According to the information and explanationprovided to us all transactions with the related parties are in compliance with sections177 and 188 of the Act wherever applicable and the details have been disclosed in thestandalone financial statements as required bythe applicable Ind AS.

(xiv) According to the information and explanation provided to us andbased on our examination of the records the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review. Accordingly reporting on para 3(xiv) is not applicable.

(xv) According to the information and explanation provided to us andbased on our examination of the records of the Company the Company has not entered intoany non-cash transactions with directors or persons connected with them. Accordinglyreporting on para 3(xv) is not applicable.

(xvi) According to the information and explanation provided to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly reporting on para 3(xvi) is not applicable.

For Sharp & Tannan Associates
Chartered Accountants
Firm's registration no. 109983W
by the hand of
Tirtharaj Khot
Partner
Membership no.(F) 037457
Pune 25 May 2021 UDIN: 21037457AAAAAS3181

Annexure B to the Independent Auditor's Report

(Referred to in paragraph 2 (F) under the heading "Report onother legal and regulatory requirements" of our report on even date)

Report on the Internal Financial Controls

[under Clause (i) of sub-section 3 of section 143 of the Companies Act2013 ("the Act")]

Opinion

We have audited the internal financial controls over financialreporting of Kirloskar Brothers Limited (hereinafter referred as "theCompany") as of 31 March 2021 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.

In our opinion and to the best of our information and according to theexplanations given to us 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 31 March 2021 based on theinternal financial 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 (hereinafter referred as"the Guidance Note") issued by the Institute of Chartered Accountants of India(hereinafter referred as "ICAI").

Management's responsibility for internal financial controls

The Company's Management and Board of Directors are responsiblefor establishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the guidance note. 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 the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditor's responsibility

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 and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Act to the extent applicable toan audit of internal financial controls. 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 overfinancialreporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financialreporting and theiroperating effectiveness. Our audit of internal financial controls over financialreportingincluded obtaining an understanding of internal financialcontrols 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 judgment including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.

We believe that the audit evidence we have 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 offinancialreporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A Company'sinternal financial control over financial reporting includes those policies and proceduresthat (1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorizations of management and directors of the Company and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the Company's assets that could have a material effect on thestandalone 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.

For Sharp & Tannan Associates
Chartered Accountants
Firm's registration no. 109983W
by the hand of
Tirtharaj Khot
Partner
Membership no.(F) 037457
Pune 25 May 2021 UDIN: 21037457AAAAAS3181

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