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LIC Housing Finance Ltd.

BSE: 500253 Sector: Financials
NSE: LICHSGFIN ISIN Code: INE115A01026
BSE 00:00 | 07 Apr 215.90 -2.95
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NSE 00:00 | 07 Apr 216.00 -2.65
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OPEN 223.00
PREVIOUS CLOSE 218.85
VOLUME 315624
52-Week high 586.80
52-Week low 186.00
P/E 4.07
Mkt Cap.(Rs cr) 10,895
Buy Price 215.90
Buy Qty 1.00
Sell Price 215.90
Sell Qty 4.00
OPEN 223.00
CLOSE 218.85
VOLUME 315624
52-Week high 586.80
52-Week low 186.00
P/E 4.07
Mkt Cap.(Rs cr) 10,895
Buy Price 215.90
Buy Qty 1.00
Sell Price 215.90
Sell Qty 4.00

LIC Housing Finance Ltd. (LICHSGFIN) - Auditors Report

Company auditors report

TO THE MEMBERS OF LIC HOUSING FINANCE LIMITED

Report on the Standalone Financial Statements Opinion

We have audited the standalone financial statements of LIC HOUSING FINANCE LIMITED(hereinafter referred to as "the Company") which comprise the StandaloneBalance Sheet as at March 31 2019 the Standalone Statement of Profit and Loss (includingother comprehensive income) the Standalone Statement of Changes in Equity and StandaloneStatement of Cash Flows for the year then ended and notes to the standalone financialstatements including a summary of the significant accounting policies and otherexplanatory information. In our opinion and to the best of our information and accordingto the explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (the ‘Act') in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2019 andprofit total comprehensive income changes in equity and its cash flows for the yearended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing specified undersub-section (10) of section 143 of the Act (‘SAs'). Our responsibilities under thoseSAs are further described in the Auditor's Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (‘ICAI') together with the ethical requirements that arerelevant to our audit of the standalone financial statements under the provisions of theAct and the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Key audit matters

Key audit matters are those matters that in our professional judgement 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 as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context.

Key Audit Matter How the matter was addressed in our audit
Transition date accounting
Refer to the accounting policies in the standalone financial statements: Significant accounting policies – Basis of preparation and Note 4 to the standalone financial statements: "First time adoption of Ind AS"
Adoption of new accounting framework (Ind AS)
Effective April 1 2018 the Company adopted Ind AS notified by the Ministry of Corporate Affairs with the transition date of April 1 2017. We performed audit procedures set out below Design / controls
The following are the major impact areas for the Company upon transition: Assessed the design implementation and operating effectiveness of key internal controls over management's evaluation of transition date choices and exemptions availed in line with the Ind AS 101.
• Classification and measurement / valuation of financial instruments:
Substantive tests
- Determination of Expected Credit Loss (ECL) • Evaluated management's transition date choices and exemptions for compliance / acceptability under Ind AS 101;
- Computation of Effective Interest Rate on financial assets and financial liabilities
• Classification and measurement of investment in Subsidiaries and Associates • Understood the approach and methodology adopted by management to implement the transition to Ind AS;
• Test checked the computations relating to transition adjustments;
• Additional disclosures as per the requirements of the new financial reporting framework • Assessed areas of significant estimates and management judgement on transition in line with Ind AS principles;
Transition to the new financial reporting framework involves multiple decision points for management i.e. Ind AS 101 First Time Adoption prescribes choices and exemptions for first time application of Ind AS at the transition date. • Compared the reasonableness of management assumptions in respect of recognition and measurement of financial instruments including determination of ECL provisioning as at the date of transition etc.
We identified the transition date accounting as a key audit matter because of the significant degree of management judgement in the first-time application of Ind AS principles as at the transition date particularly in the areas noted above and the additional disclosures associated with Ind AS transition.
Key Audit Matter How the matter was addressed in our audit
Expected Credit Loss – Impairment of carrying value of loans and advances
Refer to the accounting policies in Note 2.14 (f) and Note 37.4.2.3 and 37.4.2.4 to the standalone financial statements: Impairment and write-off; Note 3.1 to the standalone financial statements: use of estimates and judgements – determination of Expected Credit Loss and Note 8 to the standalone financial statements: Loans
Subjective estimate We performed audit procedures set out below
The calculation of certain credit provisions for the Company is inherently judgemental. Individual and collective impairment provisions (identified and unidentified) may not reflect recent developments in credit quality arrears experience or emerging macro-economic risks. Design / controls
With the applicability of Ind AS 109 credit loss assessment is now based on ECL model. The Company's impairment allowance is computed based on estimates including the historical default and loss ratios. Management exercises judgement in determining the quantum of loss based on a range of factors. • For housing loan portfolios we tested the design and operating effectiveness of the key controls over the completeness and accuracy of the key inputs and assumptions into the impairment models the identification of impaired and restructured accounts and key systems reconciliations. We evaluated controls over the modelling process including model monitoring validation and approval. We tested controls over model outputs and recognition and approval of post model adjustments and management overlays.
The most significant areas are: • For Project exposures we tested design and operating effectiveness of the key controls over the determination of whether loans displayed indicators of impairment;
Complex impairment models – Models used in the Housing Loan portfolios to estimate the existence of incurred loss events and the resultant expected write-offs. Judgement is required to determine the inputs methodologies and assumptions and these can significantly impact the provisions held. The most significant judgements include the segmentation level at which historical loss rates are calculated and the length of the recovery period and the loss emergence period applied to historical loss provisions. • Understood Company's new / revised processes systems and controls implemented relating to impairment allowance process including governance controls over the development and implementation of the ECL model;
• Test checked the design and implementation of key internal financial controls over loan impairment process used to calculate the impairment charge;
• Test checked management review controls over measurement of impairment allowances and disclosures in the standalone financial statements.
Identification of impairment – Project Loan exposures of the Company are individually assessed for impairment based on a borrower's financial performance solvency and liquidity. The nature of this assessment means there is an inherent risk that loss impairment triggers may not be identified on a timely basis. Substantive tests
• Performed substantive procedures over validating completeness and accuracy of the data and reasonableness of assumptions used in the model;
The other significant areas are: • We tested a selection of post model adjustments and management overlays in order to assess the reasonableness of the adjustments by challenging key assumptions inspecting the calculation methodology and tracing a sample back to source data
- Segmentation of loan book • We have discussed with external specialists to test the working of the ECL model and reasonableness of assumptions used;
- Loan staging criteria • Performed cut off procedures on a sample basis relating to recoveries at year end that would impact staging of loans;
- Calculation of probability of default / Loss given default • Test checked the basis of collateral valuation in the determination of ECL provision.
- Consideration of probability weighted scenarios and forward looking macro-economic factors.
There is a large increase in the data inputs required for the computation of ECL. This increases the risk of completeness and accuracy of the data that has been used as a basis of assumptions in the model.
Evaluation of uncertain tax positions Our procedures included:
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. • Obtained details of completed tax assessments and demands for the year ended March 31 2019 from management. We assessed the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. We have also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions.
Refer Note 40 (b) to the Standalone Financial Statements Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2018 to evaluate whether any change was required to management's position on these uncertainties.
Temporary Book Overdraft Our procedures included:
As at March 31 2019 other financial liability in respect of Temporary Book Overdraft amounting to Rs. 6909.46 crores which are pending to be encashed . Temporary Book Overdraft represents cheques issued towards disbursements to borrowers and cheques issued for payment of expenses but not encashed. We have reviewed the nature of the amounts paid the sustainability clearance of cheque after the balance sheet date and the likelihood of clearance within reasonable period.
Refer Note 43 to the Standalone Financial Statements
Information Technology (‘IT') We performed audit procedures set out below
IT systems and controls The Company's key financial accounting and reporting processes are highly dependent on information systems including automated controls in information systems such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being misstated. The Company uses several systems for its overall financial reporting. • Understood General IT Control i.e. access controls program/ system change program development computer operations (i.e. job processing data/ system backup incident management) over key financial accounting and reporting systems and supporting control systems (referred to as in-scope systems);
• Understood IT infrastructure i.e. operating systems and databases supporting the in-scope systems;
We have identified ‘IT systems and controls' as key audit matter because of significant use of IT system and the scale and complexity of the IT architecture. • Test checked the General IT Controls for design and operating effectiveness for the audit period over the in-scope systems;
• Understood IT application controls covering
- user access and roles segregation of duties and - key interfaces reports reconciliations and system processing;
• Test checked the IT application controls for design and operating effectiveness for the audit period;
• Performed testing to determine that these controls remained unchanged during the audit period or were changed following the standard change management process;
• Test checked controls over the IT infrastructure covering user access (including privilege users) data center and system change (e.g. patches).

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theDirector's report and Management Discussion & Analysis (MD&A) report but does notinclude the standalone financial statements and our auditor's report thereon. TheDirector's report and MD&A report is expected to be made available to us after thedate of this auditor's report.

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 when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

Management's Responsibilities for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin sub-section (5) of Section 134 of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance total comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under section 133 of the Act. 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 management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

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:

• Identify and assess the risks of material misstatement of the 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under sub-section(3)(i) of section 143 of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements of in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our 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.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 financial year ended March 31 2019 and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matter

The comparative financial information of the Company for the year ended March 31 2018and the transition date opening balance sheet as at April 1 2017 included in theseStandalone Ind AS Financial Statements are based on the previously issued statutoryfinancial statements prepared in accordance with the Companies (Accounting Standards)Rules 2006 audited by us whose report for the year ended March 31 2018 and March 312017 dated April 23 2018 and April 25 2017 respectively expressed an unmodified opinionon those Standalone Financial Statements as adjusted for the differences in theaccounting principles adopted by the Company on transition to the Ind AS which have beenaudited by us.

Our opinion on the standalone financial statements is not modified in respect of theabove matters.

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 matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required by sub-section (3) of Section 143 of the Act based on our audit wereport that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose 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 Standalone Balance Sheet the Standalone Statement of Profit and Loss(including Other Comprehensive Income) the Standalone Statement of Changes in Equity andthe Standalone Statement of Cash Flow dealt with by this Report are in agreement with thebooks of account;

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of sub-section 2 ofSection 164 of the Act.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these standalone financial statements and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB".

(g) With respect to the other matters to be included in the Auditor's report inaccordance with the requirements of the sub-section 16 of Section 197 of the Act asamended: In our opinion the managerial remuneration for the year ended March 31 2019 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act.

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements – Refer Note 40 to the standalonefinancial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For SHAH GUPTA & CO. For CHOKSHI & CHOKSHI LLP
Chartered Accountants Chartered Accountants
Firm Registration No.: 109574W Firm Registration No.: 101872W / W100045
Heneel K Patel Mitil R Chokshi
Partner Partner
M. No. 114103 M. No. 047745
Place: Mumbai Place: Mumbai
Date: 04.05.2019 Date: 04.05.2019

ANNEXURE A

TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of LIC HOUSING FINANCE LIMITED of evendate)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of property plant andequipment by which property plant and equipment are verified annually. In our opinionthis periodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and the records examineby us and based on the examination of the registered sale deed/ transfer deed /conveyancedeed provided to us we report that the title deeds comprising all the immovableproperties of land and acquired buildings which are freehold are held in the name of theCompany as at the balance sheet date.

In respect of immovable properties of buildings that have been taken on lease anddisclosed as property plant and equipment in the standalone financial statements thelease agreements are in the name of the Company where the Company is the lessee in theagreement.

(ii) The nature of the Company's business is such that it is not required to hold anyinventories and hence reporting under paragraph 3 (ii) of the order is not applicable tothe Company.

(iii) According to the information and explanations given to us 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. Hence reporting under paragraph 3 (iii) (a) (b) and (c) of the Order is notapplicable to the Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has not granted any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act. The Company has complied with the provisions ofSection 186 of the Act in respect of investments made or loans or guarantee or securityprovided to the parties covered under Section 186.

(v) As per the Ministry of Corporate Affairs notification dated 31 March 2014 theprovisions of Sections 73 to 76 or any other relevant provisions of the Act and theCompanies (Acceptance of Deposits) Rules 2014 as amended with regard to the depositsaccepted are not applicable to the Company and hence reporting under Clause 3(v) of theOrder is not applicable.

(vi) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under sub-section 1 of section 148 of the Actfor the products / services of the Company and hence reporting under paragraph 3 (ii)of the order is not applicable to the Company.

(vii) (a) According to the information and explanations given to us and the records ofthe company examined by us in our opinion the Company is regular in depositing with theappropriate authorities undisputed statutory dues including provident fund employees'state insurance income tax sales-tax goods and service tax cess and other materialstatutory dues applicable to it. According to information and explanations given to us noundisputed amounts payable were outstanding at the year end for a period of more thansix months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax goods and service tax cess and other material statutory dues whichhave not been deposited with the appropriate authorities on account of any dispute.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to financialinstitutions banks Government and dues to debenture holders. The Company has not takenloans or borrowings from government.

(ix) According to the information and explanations given to us money raised by way ofdebt instruments and term loans have been applied by the Company during the year for thepurpose for which they were raised other than temporary deployment pending application ofproceeds. Apart from money raised by way of debt instruments the Company has neitherraised any moneys by way of initial public offer / further public offer nor were suchproceeds pending to be applied during the current year.

(x) According to the information and explanations given to us no fraud by the Companyor no material fraud on the Company by its officers or employees has been noticed orreported during the year.

(xi) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to the information andexplanations given to us we report that the managerial remuneration has been paid /provided in accordance with the requisite approvals mandated by the provisions of Section197 read with Schedule V to the Act.

(xii) The Company is not a Nidhi Company and hence reporting under paragraph 3 (xii)of the Order is not applicable.

(xiii) According to the information and explanations given to us the Company is incompliance with Section 177 and 188 of the Act where applicable for all transactions withthe related parties and the details of related party transactions have been disclosed inthe standalone financial statements as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underparagraph 3 (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith directors. Hence reporting under paragraph 3(xv) of the Order is not applicable.

(xvi) In our opinion and according to information and explanation given to us theCompany is not required to be registered under section 45-IA Reserve Bank of India Act1934.

For SHAH GUPTA & CO. For CHOKSHI & CHOKSHI LLP
Chartered Accountants Chartered Accountants
Firm Registration No.: 109574W Firm Registration No.: 101872W / W100045
Heneel K Patel Mitil R Chokshi
Partner Partner
M. No. 114103 M. No. 047745
Place: Mumbai Place: Mumbai
Date: 04.05.2019 Date: 04.05.2019

ANNEXURE B

TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of LIC HOUSING FINANCE LIMITED of evendate) Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of sub-section (3) of Section 143 of the CompaniesAct 2013 (the ‘Act')

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

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 on Audit of Internal Financial Controls OverFinancial Reporting (the ‘Guidance Note') issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial informationas required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under sub-section (10) ofSection 143 of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects. Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment 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 internal financial controls system overfinancial 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 withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised 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.

Opinion

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 controlswith reference to financial statements and such internal financial controls were operatingeffectively as at March 31 2019 based on the internal financial controls with referenceto financial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For SHAH GUPTA & CO. For CHOKSHI & CHOKSHI LLP
Chartered Accountants Chartered Accountants
Firm Registration No.: 109574W Firm Registration No.: 101872W / W100045
Heneel K Patel Mitil R Chokshi
Partner Partner
M. No. 114103 M. No. 047745
Place: Mumbai Place: Mumbai
Date: 04.05.2019 Date: 04.05.2019