To the Members of
Larsen & Toubro Infotech Limited
Report on the audit of the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Larsen & ToubroInfotech Limited ("the Company") which comprise the Balance Sheet as at March31 2021 the Statement of Profit and Loss including Other Comprehensive Income theStatement of Cash Flows and the Statement of Changes in Equity for the year then endedand a summary of significant accounting policies and other explanatory information(hereinafter referred to as "the Standalone Financial Statements").
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 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards as prescribed underSection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended ("Ind AS") and other accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2021 its profit and totalcomprehensive income its changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Act (SAs). 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 (the ICAI") together with theethical requirements that are relevant to our audit of the Standalone Financial Statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence obtained by us is sufficient and appropriateto provide a basis for our audit opinion on the Standalone Financial Statements.
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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report:
|Revenue Recognition || |
|Key Audit Matter ||Accuracy of recognition measurement presentation and disclosures of revenue and other related balances in view of the principles laid down under Ind AS 115 "Revenue from Contracts with Customers". |
| ||The application of the revenue accounting standard (Ind AS 115) involves significant judgements/material estimates relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. |
| ||Additionally the standard requires disclosures which involve collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the Balance Sheet date. |
| ||The Company has also evaluated the impact of COVID 19 resulting from (i) the possibility of constraints to render services which may require revision of estimations of costs to complete the contract because of additional efforts (ii) onerous obligations (iii) penalties relating to breaches of service level agreements and (iv) termination or deferment of contracts by customers. |
| ||Refer Note No. 2(d) and Note No. 26 to the Standalone Financial Statements for relevant accounting policy and disclosure respectively. |
|Principal Audit Procedures ||Our audit approach consisted of testing the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||Evaluated the design and operating effectiveness of internal controls relating to the application of revenue accounting standard specifically those relating to identification of the distinct performance obligations and determination of transaction price. Procedures performed included enquiry and observation reperformance and inspection of evidence in respect of operation of these controls. |
| ||Tested the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the revenue accounting standard. |
|Principal Audit Procedures ||Selected a sample of continuing and new contracts and performed the following procedures: |
| || Read analysed and identified the distinct performance obligations in these contracts. |
| || Compared such performance obligations with those identified and recorded by the Company. |
| || Reviewed contracts terms to determine the transaction price including any variable consideration to determine the appropriate transaction price for computing revenue and to test the basis of estimation of the variable consideration. |
| || Samples in respect of revenue recorded for time and material contracts were tested through a review of approved time sheets including customer acceptances subsequent invoicing and historical trend of collections and disputes. |
| || In respect of samples relating to fixed price contracts progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and contracting systems. We also tested the access and change management controls relating to these systems. |
| ||Performed analytical procedures for reasonableness of revenue disclosed by type and service offerings. |
| ||Critically reviewed management's assessment relating to impact of Covid 19 on revenue recognition as stated above. |
| ||We reviewed the collation of information and the logic of the report generated from the management system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied after the Balance Sheet date. |
Assessment of provisions and contingent liability in respect of compliance withvarious laws and regulations as applicable
|Key Audit Matter ||Adequacy of provisioning and assessing contingent liabilities in respect of compliance with applicable laws and regulations including Income tax assessments. |
| ||The Company's operations are spread across several jurisdictions including those outside India requiring the Company to ensure compliance with relevant laws and regulations. Recognition of provisions and disclosure of contingent liabilities on account of potential claims in relation to same may require critical evaluation of legal positions/opinions taken by the Company involving a complex matter and a high degree of professional judgment. |
| ||Furthermore the Company's SEZ unit is eligible for exemption under Section 10AA of Indian Income Tax Act 1961. |
| ||The Company may have some unsettled tax positions including matters under dispute on account of disallowance of exemption under Section 10A/10AA on profits earned by STPI/SEZ units on onsite export revenue. The evaluation involves significant judgement to determine the possible outcome of these cases. |
| ||Refer Note No. 2(j) and Note No. 35 to the Standalone financial statements for relevant accounting policy and disclosure respectively. |
|Principal Audit Procedures ||We have evaluated the design and operating controls in relation to the compliance tracker maintained by the Company with respect to compliance with local and international laws and regulations. |
| ||We read the summary of litigation matters provided by management and held discussions with the Company's legal counsel. |
| ||We have also enquired with some of the Company's external legal advisors with respect to the matters and examined related correspondence including advices for foreign branch compliances and obtained an external legal confirmation wherever appropriate. |
| ||In respect of provisions against litigation and the assessment of contingent liabilities we tested the calculation of the provisions/contingent liability assessment; we reviewed the assumptions against third party data where available and assessed the estimates against historical trends. We considered management's judgements on the level of provisioning/recognition of contingent liability as appropriate. |
Investment in Subsidiaries
|Key Audit Matter ||The carrying amount of investments in subsidiaries held at cost less impairment representing 6.62% of the Company's total assets are reviewed annually for impairment. |
| ||The carrying amount of investment is assessed based on financial performance of subsidiaries and projected cash flows where necessary. This activity requires significant management judgement and estimates. Management has also carried out sensitivity analysis for all key assumptions including the cash flow projections consequent to the change in estimated future economic conditions arising from the possible effects due to COVID-19. |
| ||Refer Note No. 2(o) and Note No. 5 to the Standalone Financial Statements for relevant accounting policy and disclosure respectively. |
|Principal Audit Procedures ||We compared the carrying amount of investments with the relevant subsidiary Balance Sheet to identify whether their net assets being an approximation of their minimum recoverable amount were in excess of their carrying amount and assessing whether those subsidiaries have historically been profit-making. |
| ||For the investments where the carrying amount exceeded the net asset value compared the carrying amount of the investment with the expected value of the business based on a suitable multiple of the subsidiaries' earnings or discounted cash flow analysis including reviewing the sensitivity analysis carried out by the management especially with reference to Covid-19 situation. |
| ||Tested the assumptions and underlying cash flows based on our knowledge of the Company and the markets in which the subsidiaries operate; and |
| ||We also considered the adequacy of disclosures in the financial statements relating to the valuation of investments in subsidiaries including those made with respect to judgements and estimates. |
Information Other than the Standalone Financial Statements and Auditors' Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Directors' Report and the related annexures but does notinclude the Standalone Financial Statements and our auditors' 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 and in doing so consider whether the other informationis materially inconsistent with the Standalone Financial Statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate 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 management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditors' 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 auditors' 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:
Identify and assess the risks of material misstatement of the Standalone FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
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 auditors' 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 ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
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 our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the Standalone FinancialStatements.
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 year and are therefore the key audit matters. We describe these matters inour auditors' report unless law or regulation precludes public disclosure about the matteror 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 and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanations given to us wegive in Annexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss including Other Comprehensiveincome the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisreport are in agreement with the books of account.
(d) In our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164(2) of theAct.
(f) With respect to the adequacy of the internal financial controls with reference toStandalone Financial Statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in Annexure B. Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols with reference to Standalone Financial Statements.
(g) In our opinion the managerial remuneration for the year ended March 31 2021 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofSection 197 read with Schedule V to the Act. Also refer paragraph 11 of Annexure A to theIndependent Auditors' Report.
(h) With respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of Rule 11 of the Companies (Audit and Auditors) Rules2014 as amended 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 its financialposition in its Standalone Financial Statements Refer Note 35 to the StandaloneFinancial Statements;
(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts Refer Note 38 to the Standalone Financial Statements;
(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure A to the Independent Auditor's Report
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date on the Standalone Financial Statements ofLarsen & Toubro Infotech Limited for the year ended March 31 2021]
1. (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of property plant and equipment.
(b) The Company has a regular programme for physical verification of its propertyplant and equipment by which the property plant and equipment are verified by themanagement according to a phased programme designed to cover all the items over a periodof three years. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its property plant andequipment. In accordance with the programme the Company has physically verified certainproperty plant and equipment during the year and no material discrepancies were noticedon such verification.
(c) According to the information and explanations given to us the title deeds of theimmovable properties are held in the name of the Company.
2. The Company is in the business of rendering services and consequently does not holdany inventory. Accordingly the reporting under Clause 3(ii) of the Order is notapplicable to the Company.
3. According to the information and explanations given to us the Company has granted aloan to a company covered in the register maintained under Section 189 of the Act. Theterms and conditions of the grant of such loan are not prejudicial to the Company'sinterest. The schedule of repayment of principal and payment of interest has beenstipulated and the repayments and receipts are regular. There is no amount overdue formore than 90 days. The Company has not granted any loans secured or unsecured to firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act.
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respect toloans granted and investments made by the Company. The Company has not provided anyguarantee or security during the year to the parties covered under Sections 185 and 186 ofthe Act.
5. According to the information and explanations given to us the Company has notaccepted any deposits from the public within the meaning of Sections 73 to 76 or any otherrelevant provisions of the Act and the rules framed there under where applicable.Accordingly the reporting under Clause 3(v) of the Order is not applicable to theCompany.
6. The Company's operations do not involve processing or manufacturing activities.Accordingly the reporting under Clause 3(vi) of the Order is not applicable to theCompany.
7. (a) According to the information and explanations given to us and on the basis ofour examination of records of the Company the amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Goods and Services taxProvident Fund Employees' State Insurance Income-tax Cess and other material statutorydues have been regularly deposited during the year by the Company with the appropriateauthorities. According to the information and explanations given to us and on the basis ofour examination of records of the Company there were no undisputed statutory dues payablein respect of Sales tax Service tax Duty of Customs Duty of Excise and Value Added Tax.
According to the information and explanations given to us and on the basis of ourexamination of records of the Company there were no arrears of undisputed statutory duesin respect of Goods and Services tax Provident fund Employees' State InsuranceIncome-tax Sales tax Service tax Duty of Customs Duty of Excise Value Added Tax Cessand other material statutory dues as on the last day of the year for a period of more thansix months from the date they became payable.
(b) According to the information and explanations given to us and on the basis of ourexamination of records of the Company there are no statutory dues in respect of Salestax Duty of Customs and Duty of Excise as at March 31 2021 which have not beendeposited with the appropriate authorities on account of any dispute. The statutory duesin respect of Goods and Services Tax Income-tax Service tax and Value Added Tax as atMarch 31 2021 which have not been deposited with the appropriate authorities on accountof a dispute are as under:
|Name of Statute ||Nature of dues ||Rs. in Million* ||Period to which amount relates ||Forum where pending |
|West Bengal Value Added Tax ||Demand raised based on subcontractor turnover ||8.42 ||FY 2015-16 and 2016-17 ||Senior Joint Commissioner Kolkata South Circle |
|Service Tax ||Disallowance of Input Tax Credit ||270.55 ||FY 2008-09 to 2017-18 ||CESTAT |
|GST ||GST Appeal filed ||496.79 ||FY 2017-18 and FY 2018-19 ||Commissioner Appeals |
|GST ||EC SHEC KKC - Cess refund filed under GST since c/f in TRAN-1 not allowed ||29.30 ||Pre-GST ||Commissioner Appeals |
|Income-tax Act 1961 ||Disallowance of exemption under Income Tax ||84.26 ||FY 2008-09 (AY 2009-10) ||ITAT |
|Income Tax Act 1961 ||Disallowance of exemption under Income Tax ||0.18 ||FY 2010-11 (AY 2011-12) ||ITAT |
| ||Penalty ||131.38 ||FY 2006-07 (AY 2007-08) ||Commissioner Appeals |
| ||Disputes regarding calculation of notional interest on transactions with related party and disallowance of FTC ||1.21 ||FY 2010-11 (AY 2011-12) || |
| ||Dispute regarding Disallowance of claim on the ground that it is allowable only for 10 consecutive Assessment years. ||1.67 ||FY 2010-11 (AY 2011-12) || |
| ||Disputes regarding exclusion of interest income from Section 10A calculation addition of notional interest on transactions with related party and disallowance of FTC ||2.08 ||FY 2008-09 (AY 2009-10) ||Assessing Officer (Assistant Commissioner of Income Tax) |
*Net of amounts paid including under protest.
8. According to the information and explanations given to us and on the basis of ourexamination of records of the Company the Company has not taken any loans or borrowingsfrom any bank or financial institution or Government. The Company has not issued anydebentures. Accordingly the reporting under Clause 3(viii) of the Order is not applicableto the Company.
9. According to the information and explanations given to us the Company has notraised any moneys by way of initial public offer further public offer (including debtinstruments) and term loans during the year. Accordingly the reporting under Clause 3(ix)of the Order is not applicable to the Company.
10. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.
11. In our opinion the managerial remuneration for the year ended March 31 2021 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofSection 197 read with Schedule V to the Act. Also refer paragraph 2(g) of IndependentAuditors' Report.
12. According to the information and explanations given to us the Company is not aNidhi company and the Nidhi Rules 2014 are not applicable to it. Accordingly thereporting under Clause 3(xii) of the Order is not applicable to the Company.
13. In our opinion and according to the information and explanations given to us theCompany has entered into transactions with related parties in compliance with theprovisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required by IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act.
14. According to the information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly the reporting under Clause 3(xiv) of the Order isnot applicable to the Company.
15. In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with its directors or directors ofits holding or subsidiary company or persons connected with them during the year and hencethe provisions of Section 192 of the Act are not applicable to the Company. Accordinglythe reporting under Clause 3(xv) of the Order is not applicable to the Company.
16. According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly the reporting under Clause 3(xvi) of the Order is not applicable to theCompany.
Annexure B to the Independent Auditor's Report
[Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date]
Report on the Internal Financial Controls with reference to financial statements underClause (i) of sub-section (3) of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls with reference to financial statementsof Larsen & Toubro Infotech Limited ("the Company") as of March 31 2021 inconjunction with our audit of the Standalone Financial Statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting ("the Guidance Note") issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Act 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 with reference to financial statements was established and maintainedand if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that
(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) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorisations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at March 31 2021 basedon the criteria for internal financial control with reference to financial statementsestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India.
| ||For B. K. Khare & Co. |
| ||Chartered Accountants |
| ||Firm Registration No. 105102W |
| ||Padmini Khare Kaicker |
| ||Partner |
| ||Membership No. 044784 |
|Mumbai May 4 2021 ||UDIN: 21044784AAAAAU9821 |