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Mahindra & Mahindra Financial Services Ltd.

BSE: 532720 Sector: Financials
NSE: M&MFIN ISIN Code: INE774D01024
BSE 00:00 | 16 May 169.85 3.50
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NSE 00:00 | 16 May 169.80
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OPEN 168.95
PREVIOUS CLOSE 166.35
VOLUME 116066
52-Week high 206.40
52-Week low 127.95
P/E 21.23
Mkt Cap.(Rs cr) 20,986
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 168.95
CLOSE 166.35
VOLUME 116066
52-Week high 206.40
52-Week low 127.95
P/E 21.23
Mkt Cap.(Rs cr) 20,986
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Mahindra & Mahindra Financial Services Ltd. (M&MFIN) - Auditors Report

Company auditors report

To the Members of

Mahindra & Mahindra Financial Services Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Mahindra & MahindraFinancial Services Limited ("the Company") which comprise the standalonebalance sheet as at 31 March 2021 and the standalone statement of profit and loss(including other comprehensive income) standalone statement of changes in equity andstandalone statement of cash flows for the year then ended and notes to the standalonefinancial statements including a summary of the significant accounting policies and otherexplanatory information.

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 accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2021 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditors' Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our 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 standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Description of Key Audit Matters

Key audit matter How the matter was addressed in our audit
Impairment loss allowance
Refer to the accounting policies in "Note 2.5 to the standalone financial statements: Impairment of Standalone Financial Statements and Estimation uncertainty relating to the global health pandemic from COVID-19 and current Macro-economic scenario" "Note 7 to the standalone financial statements: Loans" "Note 51.2 to the standalone financial statements: Credit Risk Management "
Our key audit procedures included:
The Company has recorded an impairment loss allowance of Rs. 4653.61 crores as at 31 March 2021 and has recognized a charge of Rs. 3734.82 crores for the year ended 31 March 2021 in its statement of profit and loss. Performed end to end process walkthroughs to identify the key systems applications and controls used in the impairment loss allowance processes. We tested the relevant manual (including spreadsheet controls) general IT and application controls over key systems used in the impairment loss allowance process.
Under Ind AS 109 Financial Instruments allowance for loan losses are determined using expected credit loss (ECL) model. The estimation of impairment loss allowance on financial instruments involves significant judgement and estimates. The key areas where we identified greater levels of management judgement and therefore increased levels of audit focus in the Company's estimation of ECLs are:
Data inputs - The application of ECL model requires several data inputs. This increases the risk that the data that has been used to derive assumptions in the model which are used for ECL calculations may not be complete and accurate. Assessed the design and implementation of controls in respect of the Company's impairment allowance process such as the timely recognition of impairment loss the completeness and accuracy of reports used in the impairment allowance process and management review processes over the calculation of impairment allowance and the related disclosures on credit risk management.
Testing management's controls over authorisation and calculation of post model adjustments and management overlays.
Model estimations – Inherently judgmental models are used to estimate ECL which involves determining Exposures at Default ("EAD") Probabilities of Default ("PD") and Loss Given Default ("LGD"). The PD and the LGD are the key drivers of estimation complexity in the ECL and as a result are considered the most significant judgmental aspect of the Company's modelling approach. Evaluated whether the methodology applied by the Company is compliant with the requirements of the relevant accounting standards and confirmed that the calculations are performed in accordance with the approved methodology including checking mathematical accuracy of the workings.
Economic scenarios – Ind AS 109 requires the Company to measure ECLs on an unbiased forward-looking basis reflecting a range of future economic conditions. Significant management judgement is applied in determining the economic scenarios used and the probability weights applied to them especially when considering the current uncertain economic environment arising from COVID-19. Sample testing over key inputs data and assumptions impacting ECL calculations to assess the completeness accuracy and relevance of data and reasonableness of periods considered economic forecasts weights and model assumptions applied.
Qualitative adjustments/ management overlays – Adjustments to the model-driven ECL results as overlays are recorded by management to address known impairment model limitations or emerging trends as well as risks not captured by models. Test of details on post model adjustments considering the size and complexity of management overlays with a focus on COVID-19 related overlays in order to assess the reasonableness of the adjustments by challenging key assumptions inspecting the calculation methodology and tracing a sample of the data used back to source data.
As at 31 March 2021 overlays represent approximately 21% of the ECL balances. These adjustments are inherently uncertain and significant management judgement is involved in estimating these amounts especially in relation to economic uncertainty as a result of COVID-19. Testing the ‘Governance Framework' over validation implementation and model monitoring in line with the RBI guidance. Discussed with and read the relevant correspondences that the Company has exchanged with the RBI with respect to the RBI's expectation to bring the net NPA ratio below 4%.
The underlying forecasts and assumptions used in the estimates of impairment loss allowance are subject to uncertainties which are often outside the control of the Company. The extent to which the COVID-19 pandemic will impact the Company's current estimate of impairment loss allowances is dependent on future developments which are highly uncertain at this point. Given the size of loan portfolio relative to the balance sheet and the impact of impairment allowance on the financial statements we have considered this as a key audit matter. Verified the mathematical accuracy of the workings required to bring down the net NPA ratio below 4%.
Management has also taken consideration of RBI's expectation to bring down the net NPA ratio below 4% and recorded an additional provision of Rs. 1320 crores on Stage 3 loans which is over and above the model determined ECL provision / overlays. Assessed whether the disclosures (including arising from the RBI expectation to bring down the net NPA ratio below 4%) on key judgements assumptions and quantitative data with respect to impairment loss allowance in the financial statements are appropriate and sufficient.
Involvement of specialists - we involved financial risk modelling specialists for the following:
Disclosures: Evaluating the appropriateness of the Company's Ind AS 109 impairment methodologies and reasonableness of assumptions used (including management overlays).
The disclosures regarding the Company's application of Ind AS 109 are key to explaining the key judgements and material inputs to the Ind AS 109 ECL results. The reasonableness of the Company's considerations of the impact of the current economic environment due to COVID-19 on the impairment loss allowance determination.
Key audit matter How the matter was addressed in our audit
IT Systems and Controls
Company's financial accounting and reporting processes are dependent on information systems including automated controls in 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. We have involved IT specialists in performing the following key audit procedures:
In addition the prevailing COVID-19 situation has caused the required IT systems to be made accessible on a remote basis and at the same time there are increasing challenges to protect the integrity of the Company's systems and data. Performed control testing on user access management change management segregation of duties system reconciliation controls and system application controls over key financial accounting and reporting systems.
We have identified ‘IT systems and controls' as key audit matter because of the high level automation number of systems being used by the management current remote working situation and the inherent risks/ complexity of the IT architecture. Tested key controls operating over information technology in relation to financial accounting and reporting systems including system access and system change management program development and computer operations.
Tested the design and operating effectiveness of key controls over user access management which includes granting access / right new user creation removal of user rights and preventive controls designed to enforce segregation of duties.
For a selected group of key controls over financial and reporting systems we independently perform procedures to determine that these control remained unchanged during the year or were changed following the standard change management process.
Other areas that were tested include password policies security configurations system interface controls controls over changes to applications and databases and controls to ensure that developers and production support did not have access to change applications the operating system or databases in the production environment.
Assessment of data security controls in the context of a large population of staff working from remote location at the year end.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises information included in the Company's annualreport but does not include the 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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's and Board of Directors' Responsibility for the Standalone FinancialStatements

Company's Management and Board of Directors are responsible for the matters stated insection 134(5) of the Act with respect to preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors is 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal 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 Companyhas adequate internal financial controls with reference to financial statements in placeand the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our Auditors' report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our Auditors' report. However future events or conditions maycause the Company to cease to continue 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 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 auditors' 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 (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. (A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account; d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under section 133 of the Act. e) On the basis of the writtenrepresentations received from the directors as on 31 March 2021 taken on record by theBoard of Directors none of the directors is disqualified as on 31 March 2021 from beingappointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2021 onits financial position in its standalone financial statements - Refer Note 45 to thestandalone financial 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 49 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; and iv. The disclosuresregarding holdings as well as dealings in specified bank notes during the period from 8November 2016 to 30 December 2016 have not been made in these financial statements sincethey do not pertain to the financial year ended 31 March 2021.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sagar Lakhani
Partner
Mumbai Membership No: 111855
23 April 2021 ICAI UDIN: 21111855AAAACA4353

Annexure A to the Independent Auditors' Report - 31 March 2021

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31 March 2021 we report that:

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

(b) The fixed assets are physically verified by the management according to a programmeof phased verification which in our opinion is reasonable having regard to the size ofthe Company and the nature of its assets. Pursuant to the programme the fixed assets havebeen physically verified by management during the year and no material discrepancies werenoticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company which are included in the head property plant andequipment.

ii. The Company does not hold any inventory. Accordingly paragraph 3(ii) of the Orderis not applicable to the Company. iii. According to the information and explanations givento us and based on the audit procedures conducted by us the Company has not granted anyloans secured or unsecured to companies firms limited liability partnerships or otherparties covered in the register maintained under section 189 of the Act. Accordinglyparagraph 3(iii) of the Order is not applicable to the Company.

iv. According to the information and explanations given to us and based on the auditprocedures conducted by us the provisions of section 185 of the Act are not applicable tothe Company. The Company has complied with the provisions of section 186 of the Act tothe extent applicable.

v. According to the information and explanations given to us the Company has notaccepted any deposits from the public to which the directives issued by the Reserve Bankof India and the provisions of Section 73 to 76 or any other relevant provisions of theAct and the Rules framed there under apply. Accordingly the provision of clause 3(v) ofthe Order is not applicable to the Company.

vi. According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records under section 148(1) of the Act forany activities conducted/ services rendered by the Company. Accordingly paragraph 3(vi)of the Order is not applicable to the Company.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income-tax goods and service tax cess and other material statutory dues havegenerally been regularly deposited during the year by the Company with the appropriateauthorities. As explained to us the Company does not have any dues on account of salestax service tax duty of customs duty of excise and value added tax. According to theinformation and explanations given to us and on the basis of our examination of therecords of the Company no undisputed amounts payable in respect of provident fundemployees' state insurance income-tax goods and service tax cess and other materialstatutory dues were in arrears as at 31 March 2021 for a period of more than six monthsfrom the date they become payable.

(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the following dues have not been deposited bythe Company on account of any disputes.

Name of the statute Nature of dues Amount Period to which the amount relates Forum where dispute is pending
(Rs. in crores)
The Income Tax Act 1961 Income Tax 2.6 2002-2003 Commissioner of Income Tax (Appeals)
The Income Tax Act 1961 Income Tax 13.28 2016-2017 Commissioner of Income Tax (Appeals)
Finance Act 1994 Service Tax 75.06 2007-2012 Customs Excise And Service Tax Appellate Tribunal (CESTAT)
Finance Act 1994 Service Tax 2.74 2012-13 Customs Excise And Service Tax Appellate Tribunal (CESTAT)
Finance Act 1994 Service Tax 0.64 2013-14 Customs Excise And Service Tax Appellate Tribunal (CESTAT)
Finance Act 1994 Service Tax 0.09 2014-15 Customs Excise And Service Tax Appellate Tribunal (CESTAT)
Andhra Pradesh Value Added Tax Value Added Tax 1.24 April 2008- October 2013 Andhra Pradesh High Court
Madhya Pradesh Value Added Tax Value Added Tax - 2013-2014 Appellate Authority of Commercial Taxes Bhopal
Madhya Pradesh Value Added Tax Value Added Tax 0.01 2014-2015 Appellate Authority of Commercial Taxes Bhopal
Madhya Pradesh Value Added Tax Value Added Tax 0.02 2015-2016 Appellate Authority of Commercial Taxes Bhopal
Madhya Pradesh Value Added Tax Value Added Tax 0.03 2016-2017 Appellate Authority of Commercial Taxes Bhopal
Maharashtra Value Added Tax Value Added Tax 0.87 2010-2011 Appeal _led with Maharashtra Sales Tax Tribunal
Maharashtra Value Added Tax Value Added Tax 0.45 2011-2012 Appeal with Deputy Commissioner of Sales Tax (Appeal)
Maharashtra Value Added Tax Value Added Tax 1.02 2012-2013 Appeal with Deputy Commissioner of Sales Tax (Appeal)
Maharashtra Value Added Tax Value Added Tax 1.79 2013-2014 Appeal with Deputy Commissioner of Sales Tax (Appeal)
Maharashtra Value Added Tax Value Added Tax 1.77 2014-2015 Appeal with Deputy Commissioner of Sales Tax (Appeal)
Maharashtra Value Added Tax Value Added Tax 2.05 2015-2016 Appeal with Deputy Commissioner of Sales Tax (Appeal)

viii. According to the information and explanations given to us and based on ourexamination of the records the Company has not defaulted in the repayment of loans orborrowings to financial institutions banks or debenture holders during the year. TheCompany did not have any borrowings from the government during the year. ix. According tothe information and explanations given to us and based on our examination of the recordsthe Company has utilised the money raised during the year by way of rights issue and termsloans for the purpose for which they were raised. During the year the Company has notraised moneys by way of initial public offer or further public offer.

x. 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 any instance of material fraud on the Companyby its officers or employees noticed or reported during the year nor have we beeninformed of such case by management.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.

xiii. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and the details of suchtransactions have been disclosed in the financial statements as required by theapplicable accounting standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records the Company has not made preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year under reviewand accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

xvi. According to the information and explanations given to us the Company hasregistered as required under Section 45-IA of the Reserve Bank of India Act 1934.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sagar Lakhani
Partner
Mumbai Membership No: 111855
23 April 2021 ICAI UDIN: 21111855AAAACA4353

Independent Auditors' Report

Annexure B to the Independent Auditors' report on the standalone financial statementsof Mahindra & Mahindra Financial Services Limited for the year ended 31 March 2021

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

Referred to in paragraph 2(A)(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date

Opinion

We have audited the internal financial controls with reference to financial statementsof Mahindra & Mahindra Financial Services Limited ("the Company") as of 31March 2021 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2021 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to the financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on

Auditing prescribed under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls with reference to financial statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements were established and maintainedand whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

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 withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A company's internal financial controls 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 controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial 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 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 standalone financial statements to future periods are subject to the riskthat the internal financial controls with reference to standalone financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sagar Lakhani
Partner
Mumbai Membership No: 111855
23 April 2021 ICAI UDIN: 21111855AAAACA4353

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