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Kirloskar Brothers Ltd.

BSE: 500241 Sector: Engineering
NSE: KIRLOSBROS ISIN Code: INE732A01036
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VOLUME 2130
52-Week high 180.95
52-Week low 76.00
P/E 14.15
Mkt Cap.(Rs cr) 921
Buy Price 116.00
Buy Qty 50.00
Sell Price 116.40
Sell Qty 8.00
OPEN 116.50
CLOSE 116.00
VOLUME 2130
52-Week high 180.95
52-Week low 76.00
P/E 14.15
Mkt Cap.(Rs cr) 921
Buy Price 116.00
Buy Qty 50.00
Sell Price 116.40
Sell Qty 8.00

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 31st March 2019 the statement of profit and loss(including other comprehensive income) the cash flow statement and the statement ofchanges in equity for the year then ended and notes to the standalone financialstatements including a summary of significant accounting policies and other explanatoryinformation.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (hereinafter referred as "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 (hereinafter referred as "Ind AS") and otheraccounting principles generally accepted in India of the state of affairs (financialposition) of the Company as at 31st March 2019 and its profit (financialperformance 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 (hereinafterreferred 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 and appropriate toprovide a basis for our opinion.

Key audit matters

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

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

B. Carrying value of investments in subsidiaries and joint ventures

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

Description of key audit matter:

Revenue amounting to र 1013 Million reported in the company's standalone financialstatements pertains to customer specific long-term contracts and the same are required tosatisfy the recognition and measurement criteria as enunciated in IND AS 115‘Revenue from Contracts with Customers'. In case of these contracts the revenue isrecognised over time and is based on a percentage completion method (POC) for each of suchcontracts. The stage of project completion is determined based on a ratio of project costsactually incurred till the period / year end to the planned / estimated total cost tocomplete the said project. This necessarily involves estimations and certain assumptionsto be made by the management in determining the total planned costs and an appropriateallocation of costs actually incurred on each project. This inherently creates certainuncertainties and results in complexities in accounting treatment wherein incorrectassumptions and estimates can lead to revenue being recognised in incorrect accountingperiods thereby impacting the results. In addition in POC method revenue recognition andrespective collections do not follow a linear trend irrespective of stage completiondetermined by the company. Collections do depend on satisfaction of certain otherperformance obligations as laid down in the respective project agreements. Consequentlythose amounts that remain as receivables whose due dates for payments depend on otherconditions give rise to certain receivables that are due and others not due for paymentrequiring the company to adopt a differential accounting classification and treatment.While assessing the contractual obligations as at any period close change orders and / orcancellations are required to be considered by the company to adopt an appropriateaccounting treatment for revenues already recognised valuation of work in progress andrespective receivables. Considering these factors in the context of our audit this matterwas of significance and hence a key audit matter.

Description of Auditor's response:

With a view to verify the alignment of the company's project accounting system with theactual progress of the project and its status at any period close we designed our auditprocedures related to this area to obtain an understanding of project acceptance andexecution process and the related accounting controls including verification of compliancewith IND AS 115 – ‘Revenue from contracts with customers'. These includedinter-alia reading through the material contracts and formation of a standard checklistto note the terms and conditions and considerations required to be taken note of forappropriate financial accounting till a project is finally executed and closed. Wediscussed with the management the risks associated with the project execution tounderstand requirement of any specific recognition of financial accounting considerationsand developed requisite key controls requiring audit attention and review. The company hasautomated through its accounting software the method of calculating the percentage ofcompletion method which we have verified on test basis. We reviewed planned costs theirlatest estimates rationale for revision in estimates based on information shared by themanagement in our discussions approvals to such revisions in the estimates and comparedthem with latest costs to complete related mathematical accuracy and on a sample basisvalidated resulting recognition of revenue. We discussed with management the status ofamount receivable and have verified the evidence supporting the recoverability in samplecases. We verified the calculations of expected credit loss provisions and corroboratedwith specific management discussions on major projects.

B. Carrying value of investments in subsidiaries and joint ventures Description of keyaudit matter:

The company has invested an amount of र 2979 Million in subsidiaries and jointventures. These investments are stated at cost in the financial statement. One of theforeign subsidiaries has further invested in step-down foreign companies including certainacquisitions made in the past with a view to become one of the global leaders in the areaof company's operations. These foreign subsidiaries have their individual gestationperiods and have been incurring losses in past few years. Given the multi layeredinvestment structure and being subjected to international business dynamics the companyis required to evaluate their individual financial status and value propositions todetermine carrying value of these investments in light of group's overall stated businessplans and its vision both in domestic and international markets and hence requires aclose monitoring by the management of these situations. Against this background thismatter was of significance in the context of our audit.

Description of Auditor's response:

We have obtained audited financial statements of these subsidiaries and joint venturesand have compared their net worth against investment by the ultimate holding company. Asour standard auditing procedure we have sent to the auditors of all subsidiaries andjoint ventures a group reporting instruction requiring each auditor to respond with hiscomments. Component auditors have not raised any major concern on the ability of theentities to operate as a going concern. Management has provided us with the business plansand how in their business judgement any negative net worth is either compensated withimproving business conditions in some of these entities or have additional assets whosemarket values have adequate coverage to offset the negative net worth condition within thelarger scheme of business prospects as a group. Going forward our regular audit proceduresare designed to keep a follow up on outcomes of these management assertions.

Information other than the standalone financial statements and auditor's report thereon(hereinafter referred as "other information")

The Company's Management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the Board's report and managementdiscussion and analysis included in the annual report but does not include the standalonefinancial statements and our auditor's report thereon.

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

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of 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.

Responsibilities of management and Those Charged with Governance for the standalonefinancial statements

The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financialperformance cash flows and changes in equity of the Company in accordance with theaccounting principles generally accepted in India including the Ind AS. 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 effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements Company's Management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's responsibilities for the audit of the standalone financial statements

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

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: A. Identify and assess therisks of material misstatement of the standalone financial statements whether due tofraud or error design and perform audit procedures responsive to those risks and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.

B. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct 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 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 the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

E. Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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 financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the central government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143 (3) of the Act and based on our audit we report that: a.We have sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit; b. In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books; c. The balance sheet the statement of profitand loss (including other comprehensive income) statement of changes in equity and thestatement of cash flows dealt with by this report are in agreement with the books ofaccount; d. In our opinion the aforesaid standalone financial statements 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 31st March 2019 taken on record by the Board of Directors noneof the directors is disqualified as on 31st March 2019 from being appointed as a directorin terms of section 164 (2) of the Act; f. With respect to the adequacy of the internalfinancial controls over financial reporting of the Company and the operating effectivenessof such controls refer to our separate report in "Annexure B"; ourreport expresses an unmodified opinion on the adequacy and operating effectiveness of theCompany's internal financial controls over financial reporting; g. With respect to theother matters to be included in the auditor's report in accordance with the requirementsof section 197(16) of the Act as amended we report that in our opinion and to the bestof our information and according to the explanations given to us the remuneration paid bythe Company to its directors during the year is in accordance with the provisions ofsection 197 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) Rules2014 in our opinion and to the best of our information and according to the explanationsgiven to us: i. The Company has disclosed the impact of pending litigations as at 31stMarch 2019 on its financial position in its standalone financial statements - refer note28 to the standalone financial statements. ii. The Company has made provision as requiredunder the applicable law or Ind AS for material foreseeable loses if any on long termcontracts including derivative contracts - refer note 38 to the standalone financialstatements. 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

Tirtharaj Khot

Partner

Membership No.: (F) 037457 Pune : 16th May 2019

Annexure A to the Independent Auditor's Report

Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory 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 at regularintervals based on the programme of verification which in our opinion is reasonable. Nomaterial discrepancies were identified during such physical verification conducted by theCompany during the year.

(c) According to the information and explanation provided to us all title deeds ofimmovable properties are held in the name of the Company.

(ii) Physical verification of inventory has been conducted at reasonable intervals bythe management. Discrepancies noticed on physical verification were not material and thesame have been properly dealt with in the books of account. (iii) The Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct except to a subsidiary company and an associate in earlier years as mentioned below:

Name of party Opening balance र Million Year-end balance र Million Maximum balance र Million
The Kolhapur Steel Limited (TKSL) - subsidiary company 12.214 11.214 12.214
KBL Synergy LLP – associate (including interest) 1.639 1.774 1.774

(a) According to the information and explanations provided to us the unsecured loangiven to TKSL in earlier years was under an Order from Board for Industrial and FinancialReconstruction (BIFR) and advance given to KBL Synergy LLP both without any specificagreed terms for charge of interest and repayment. Considering the above-mentioned factsand materiality of the amounts in our opinion the terms and conditions of loan / advanceare not prejudicial to the Company's interest. (b) According to the information andexplanations provided to us there is no agreed schedule of repayment of principal andpayment of interest stipulated for the above-mentioned loan / advances. Accordinglyreporting on para 3(iii)(b) and 3(iii)(c) is not applicable.

(iv) According to information and explanation provided to us the Company has compliedwith provisions of section 185 and section 186 of the Act. (v) According to informationand explanation provided to us the Company has not accepted deposits hence thedirectives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 ofthe Act and the rules framed there under are not applicable to it. According toinformation and explanation provided to us no order has been passed by Company Law Boardor National Company Law Tribunal or Reserve Bank of India or any court or any othertribunal in the current year. Accordingly reporting on para 3(v) is not applicable. (vi)The Central Government has specified maintenance of cost records under section 148(1) ofthe Act. We have broadly reviewed these records relating to materials labour and otheritems of cost maintained by the Company and are of the opinion that prima facie; theprescribed accounts and records have been made and maintained. We have not however made adetailed examination of records with a view to determine whether they are accurate andcomplete.

(vii) (a) The Company is generally regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax goods and service taxsales-tax service tax duty of customs duty of excise value added tax cess and anyother statutory dues as applicable with the appropriate authorities. According to theinformation and explanation provided to us no undisputed amounts payable in respect ofstatutory dues were in arrears as at 31st March 2019 for a period of more than six monthsfrom the date they became payable. (b) According to the information and explanationprovided to us dues of income tax sales tax service tax duty of customs duty ofexcise value added tax or cess which have not been deposited on account of dispute are asfollows

Name of statute Nature of dues Amount involved र Million Amount unpaid र Million Period to which amount Relates Forum where Dispute is Pending
Central Sales Tax Act 1956 CST (including interest penalty etc if any) 0.41 0.31 1993-94 High Court
2.75 2.20 2007-08 Commissioner
4.10 4.10 2008-09 2009-10 Commercial Tax Officer
2010-11 2013-14
1.17 0.15 2011-12 2012-13 Deputy Commissioner
0.66 0.66 2016-17 2017-18 Sr Joint Commissioner
1.61 1.61 2011-12 2012-13 Appeal Authority
3.36 1.70 2011-12 MP Commercial Tax
Appellate Board
1.07 0.75 2010-11 Dy Commissioner of
Commercial Taxes
35.51 31.96 2015-16 Additional Commissioner
of Commercial Tax
(Appeals)
Local Sales Tax of Various States LST GST Sales Tax WCT VAT (including interest penalty etc if any) 7.25 7.25 2008-09 2009-10 Appellate Dy. Commissioner-CT
115.96 115.96 2008-09 2009-10 Commissioner-CT/High
2011-12 Court of TS & AP
10.55 10.55 2011-12 2012-13 Appeal Authority
1.10 0.88 2011-12 MP Commercial Tax
Appellate Board
14.66 12.91 2012-13 2013-14 Additional Commissioner
2014-15 2015-16 of Commercial Tax (Appeals)
4.79 4.79 1992-93 Deputy Commissioner
(Appeals)
0.05 0.03 2000-01 Commercial Tax Officer
22.21 14.98 2003-04 2004-05 Sales Tax Appellate
2005-06 Tribunal
123.63 86.54 2010-11 Dy Commissioner
7.46 5.21 1989-90 1990-91 High Court
1991-92 1992-93
1994-95 1995-96
Chapter V of Finance Act 1994 Service Tax (including interest penalty etc if any) 95.73 95.73 2004-05 to 2007-08 Commissioner (Appeals)
898.66 898.66 2006-07 to 2011-12 Commissioner
7.52 7.52 2008-09 to 2012-13 CESTAT
Central Excise Act 1944 Excise Duty (including interest penalty etc if any) 0.14 0.14 1990-91 Deputy Commissioner
21.24 21.24 2007-08 High Court
2.72 2.72 2003-04 2005-06 to CESTAT
2009-10
The Income Tax Act 1961 Income Tax (including interest penalty etc if any) 34.28 20.56 2001-02 High Court
928.24 120.52 2008-09 2009-10 CIT (Appeals)

(viii) Based on our audit procedures and according to the information and explanationprovided to us the Company has not defaulted in repayment of dues to a financialinstitution bank or government. The Company does not have any debenture holders.

(ix) According to information and explanation provided to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments). According to the information and explanations provided to us term loansavailed by the Company were prima facie; applied for the purposes for which the loanswere obtained.

(x) Based upon the audit procedures performed by us and according to the informationand explanations provided to us no material fraud by the Company or any material fraud onthe Company by its officers or employees has been noticed or reported during the year.(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 on para 3(xii) is notapplicable.

(xiii) According to the information and explanation provided to us all transactionswith the related parties are in compliance with Sections 177 and 188 of the Act whereverapplicable and the details have been disclosed in the standalone financial statements asrequired by the applicable Ind AS.

(xiv) According to the information and explanation provided to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. Accordingly reporting on para 3(xiv)is not applicable.

(xv) According to the information and explanation provided to us the Company has notentered into any non-cash transactions with directors or persons connected with them.Accordingly reporting on para 3(xv) is not applicable.

(xvi) According to the information and explanation provided to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly reporting on para 3(xv) is not applicable.

For Sharp & Tannan Associates

Chartered Accountants

Firm's Registration No.: 109983W

Tirtharaj Khot

Partner

Membership No.: (F) 037457

Pune : 16th May 2019

Annexure B to the Independent Auditor's Report

Referred to in paragraph 2 (F) under the heading "Report on other legal andregulatory 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 Act 2013 ("theAct")]

Opinion

We have audited the internal financial controls over financial reporting of KirloskarBrothers Limited (hereinafter referred as "the Company") as of 31stMarch 2019 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2019 based onthe internal financial control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting (hereinafterreferred as "the guidance note") issued by the Institute of CharteredAccountants of India (hereinafter referred as "ICAI").

Management's responsibility for internal financial controls

The Company's Management and Board of Directors are 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. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditor's responsibility

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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about theadequacy 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 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 and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

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 standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial 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 standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial 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.

For Sharp & Tannan Associates

Chartered Accountants

Firm's Registration No.: 109983W

Tirtharaj Khot

Partner

Membership No.: (F) 037457

Pune : 16th May 2019