To the Members of
MANGALORE REFINERY AND PETROCHEMICALS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of MANGALORE REFINERYAND PETROCHEMICALS LIMITED ("the Company") which comprise the StandaloneBalance Sheet as at March 31 2020 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 significant accounting policies and other explanatoryinformation (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 accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) prescribed under Section 133 of theCompanies Act2013 read with Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and the relevant rules issued thereunder of the state ofaffairs of the Company as at March 31 2020 and its loss (including 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 Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.
Emphasis of Matter
We draw your attention to Note no.52 to the Standalone Financial Statements whichdescribes the uncertainties due to outbreak of novel coronavirus (COVID-19) that hascaused significant business disruptions worldwide. The extent to which the COVID-19pandemic will have impact on the Company's financial performance is dependent on futuredevelopments which are highly uncertain. Our opinion is not modified in respect of thismatter.
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. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|KEY AUDIT MATTER ||HOW OUR AUDIT ADDRESSED IT |
|Inventories || |
|Inventory consisting of Stock of Raw Materials in the form of crude oil and Finished Goods and intermediates in the form of petroleum products form a significant portion of the Assets. ||We understood and tested the design and operating effectiveness of controls as established by the management in determination and valuation of the inventory. |
|This year due to the COVID-19 Pandemic the Auditors could not be physically present to inspect at the time of stock taking. ||The stocks were physically verified by the Internal auditors of the company and documents relating to the same were examined by test check. |
|Inventory is valued by the company at lower of cost or Net realisable value as given in Note No. 16 to the Financial statements. The Crude oil purchase and petroleum product prices fell sharply as discussed in the note to the financial statements and had to be written down to Realisable value. ||We have verified the subsequent sale of inventory on test check basis to confirm the existence and valuation of inventory and performed rollback procedures to confirm the existence of inventory as at March 31 2020. |
| ||Assessed the appropriateness of Company's accounting policy for valuation of inventory and compliance of the policy with the requirements of the prevailing accounting standard Ind AS 2 and the actual cost determination was done correctly and considered various factors including the actual selling price prevailing around and subsequent to the year-end to ensure that the Realisable value was estimated correctly. |
| ||Compared the cost of the finished goods with the estimated net realizable value and checked if the finished goods were recorded at net realizable value where the cost was higher than the net realizable value the inventory was written down. |
| ||Reviewed the management judgement applied in calculating the value of inventory taking into account the subsequent selling price and management assessment of the present and future demand for the inventory. |
| ||Assessed the adequacy of the relevant disclosure in the notes to the financial statements. Audit risk assessment and sampling were designed to gain assurance on the "Completeness" "Accuracy & Valuation" of financial statement at the assertion level and appropriate audit procedures were adopted. |
|Contingent Liabilities Claims against the company and disputed taxes || |
|As per Ind AS 37- Provisions Contingent Liabilities and Contingent Assets a contingent liability is a possible obligation arising from past events the outcome of which will be confirmed only on the occurrence or non- occurrence of one or more uncertain future events (Ind AS 37). ||As per the standard once recognized as a contingent liability an entity should continually assess the probability of the outflow of the future economic benefits relating to that contingent liability. If the probability of the outflow of the future economic benefits changes to more likely than not then the contingent liability may develop into an actual liability and would need to be recognized as a provision. |
|There are several claims and litigations against the company which in the judgement of the management would not eventually lead to a liability. Hence no provision is made in the accounts for the year under audit. Should there be an adverse outcome the Company may be liable to pay the disputed amount which may carry interest and/ or penalty as decided by the adjudicating authority/statutory authority/court of law. ||We have reviewed the list of claims and litigations against the company and considered the present status and probability of the outflow of the future economic benefits from the available records and taken written representations. |
|Deferred Tax Asset || |
|As per Ind AS 12- Income Taxes The amounts of income taxes recoverable in future periods in respect of deduct- ible temporary differences and the carry forward of unused tax losses and cred- its. The reversal of deferred tax assets depends upon the management esti- mates and future realisable profits which have a degree of uncertainty. ||On review of the Deferred Tax Asset the following factors were considered: |
| ||a. Existence of sufficient taxable temporary difference. |
| ||b. Convincing other evidence that sufficient taxable profits will be available in the future. |
| ||Based on the future projections and representations provided to us the Company's judgement on recoverability of Deferred Tax Asset as mentioned in Note No.25 of the Standalone Financial Statements is fair and reasonable. |
|Impairment of Assets || |
|As per Ind AS 36- Impairment of Assets for investments in subsidiaries joint ventures or associates impairment has to be done when the carrying amount of such investment in the separate financial statement is higher than the carrying amount in the consolidated financial statements of the investee's net assets including associated goodwill. ||We have reviewed assumptions considered by the Board of Directors of ONGC Mangalore Petrochemicals Limited for projecting the future cash flows and the basis of criteria for the underlying preparation of these projections. |
|ONGC Mangalore Petrochemicals Limited being the subsidiary of Mangalore Refinery and Petrochemicals Limited has incurred continuous losses which has led to erosion of its net worth. The management of ONGC Mangalore Petrochemicals Limited has estimated that it will make profits in the upcoming years based on the assumptions and projections which have been approved by the Board of directors of ONGC Mangalore Petrochemicals Limited. ||Based on the representations provided to us by the management and the Statutory auditor of the subsidiary company impairment has not been made to the investments made in the subsidiary as at the end of the financial year (Refer note no.11 of the Standalone Financial statements). |
Information Other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including Annexuresto Board's Report Management Discussion and Analysis Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditor's report thereon. The above referred information isexpected to be made available to us after the date 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.
When we read the information if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance andtake appropriate actions necessitated by the circumstances and the applicable laws andregulations.
Responsibilities of Management and those Charged with Governance for the StandaloneFinancial 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 totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian accountingstandards specified under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the 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.
Those 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 scepticism 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 company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or 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 auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in Annexure A a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
2. Based on the verification of Records of the Company and based on informationand explanations given to us we give here below a report on the Directions issued by theComptroller and Auditor General of India in terms of Section 143(5) of the Act:
a. The company processes all the accounting transactions through IT system. As therewere no accounting transactions processed outside the IT system for the year ended 31stMarch 2020 closure no financial implications arise to impact the integrity of accounts.
b. There is no restructuring of an existing loan or cases of waiver/write off ofdebts/loans/interest etc. made by a lender to the Company due to the Company's inabilityto repay the loan.
c. Government grants in the form of interest free loans received from the StateGovernment have been properly accounted and utilized as per terms and conditions.
3. 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 Cash Flow Statement dealt with by this Report are in agreement with the booksof account.
d. In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e. Disqualification of directors stated under Section 164(2) of the Act is notapplicable to a Government Company as per notification no. GSR 463(E) of the Ministry ofCorporate Affairs dated 05/06/2015.
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.
g. As per notification no. GSR 463(E) of the Ministry of Corporate Affairs dated05/06/2015 provisions of section 197 as regards managerial remuneration are notapplicable to the Company since it is a Government Company.
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 in our opinionand to the best of our information and according to the explanations given to us:
a. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note No. 46 to the standalonefinancial statements;
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
c. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
Annexure - A to the Independent Auditor's Report
(Referred to in our report of even date)
(i) In respect of the Company's fixed assets:
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. All the assets have not been physically verified by the management during the yearbut there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and nature of its assets. As per the reportssubmitted by the Company no material discrepancies have been noticed on suchverification.
c. According to the information and explanation given to us and the records of theCompany examined by us the title deeds of immovable properties are held in the name ofthe Company. In respect of immovable properties taken on lease and disclosed asright-of-use-assets in the standalone financial statements the formal lease agreementsfor lands amounting to Rs. 1305.60 Million are yet to be executed. Refer Note no. 6.3 tothe standalone financial statements.
(ii) We are informed that the inventory of stores and spares are physically verifiedduring the year by the management on a continuous basis as per programme of perpetualinventory. Inventories of other items have been physically verified at the year end. Thefrequency of the verification in our opinion is reasonable having regard to the size ofthe company and nature of its business. As per the reports submitted by the Company nomaterial discrepancies have been noticed on such verification.
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 theCompanies Act 2013.
(iv) According to the information and explanations given to us in respect of loansinvestments guarantees and security the Company has complied with provisions of Section185 and Section 186 of the Companies Act 2013.
(v) According to the information and explanations given to us the Company has notaccepted any deposits within the meaning of sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed thereunder.
(vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by the Central Government for maintenance of cost records underSubsection (1) of Section 148 of the Companies Act 2013 and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. However we havenot made a detailed examination of the records.
(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 generally regular in depositingundisputed statutory dues including Provident Fund Income Tax Goods and Services TaxSales Tax Duty of Excise and other statutory dues applicable to it during the year withappropriate authorities. According to the information and explanations given to us therewere no undisputed amounts payable in respect of Provident Fund Income Tax Sales TaxDuty of Excise and other statutory dues outstanding as at 31st March 2020 fora period of more than six months from the date they became payable.
b. According to information and explanations given to us and as per our verification ofrecords of the Company the disputed tax which are not deposited with the appropriateauthorities as at 31st March 2020 are given below.
(Amount in Rs. Millions)
|NAME OF THE STATUTE ||NATURE OF THE DUES ||TOTAL DEMAND ||TOTAL TAX PAID UNDER PROTEST/ ADJUSTED ||AMOUNT NOT DEPOSITED ||PERIOD (FINANCI AL YEAR) ||FORUM WHERE THE DISPUTE IS PENDING |
| || ||296.31 ||296.31 || ||AY 1993- 03 ||Bombay High Court |
| || ||10.93 ||10.93 || ||AY 1993- 03 ||Income Tax Appellate Tribunal- Mumbai |
|Income Tax Act 1961 * ||Income Tax / Interest / Penalty ||138.61 || ||138.61 ||AY 2008- 09 ||Commissioner of Income Tax Mangaluru |
| || ||1.08 || ||1.08 ||AY 2009- 10 ||Commissioner of Income Tax Mangaluru |
| || ||0.73 || ||0.73 ||AY 2017- 18 ||Commissioner of Income Tax Mangaluru |
| || ||6237.08 ||267.40 ||5969.68 || |
1997-98 to 2016-17
|Central Excise Act 1944 ** ||Central Excise Duty / Service Tax / Interest / Penalty || |
|10.43 ||2014-15 to 2016-17 ||Commissioner (Appeals) |
| || ||2.07 ||2.07 ||Nil ||2002-03 to 2015-16 ||Joint Secretary MOF |
| || ||5.82 ||0.50 ||5.32 ||2020-11 ||Commissioner of Central Excise Mangalore |
|The Customs Act 1962 ||Custom Duty / Interest / Penalty ||7013.39 ||2507.58 ||4577.67 ||1997-98 to 2016-17 ||CESTAT |
| || ||71.86 || || ||1996-97 to 2007-08 ||Supreme Court |
| || ||3.34 ||0.76 ||2.58 ||2017-18 ||Commissioner (Appeals) (Customs) Karnataka |
|The Karnataka Sales tax Act1957/ ||Tax/ Interest/ Penalty ||4341.60 ||4341.60 ||- ||1999-00 to 2009-10 ||Appellate Tribunal |
| || ||16.42 ||12.42 ||4.00 ||2009-10 to 2011-12 ||Karnataka High Court |
|Central Sales Act 1956 || ||34.97 ||22.66 ||12.31 ||2003-04 ||Gujarat Value Added Tax Tribunal |
* The Company has opted to settle the Disputed demand under the Income tax Act 1961through the Direct Tax Vivad Se Vishwas Act 2020 and its applicable rules andaccordingly a sum of Rs. 282.01 Million (against a demand of Rs. 447.65 Millions) payableunder the said scheme is included in Rs. 1084.76 Million which has been charged as prioryear tax in the Statement of Profit and Loss during the current year. (Note No. 14.1 to
** In respect of Central excise and service tax matters amounting to a sum of Rs. 2.31Million the company has opted to settle the disputed demand under the Sabka Vishwas(Legacy Dispute Resolution) Scheme 2019
(Note No. 15.4 to Financial statements).
(viii) According to the information and explanation given to us and the records of theCompany examined by us the Company has not defaulted in repayment of loans or borrowingto any bank or Government during the year. (ix) The Company has not raised money by way ofinitial public offer or further public offer (including debt instruments) during the year.The term loans borrowed were applied for the purpose for which they were raised.
(x) According to the information and explanations given to us and the books of accountexamined by us no instance of fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.
(xi) As per notification no. GSR 463(E) of the Ministry of Corporate Affairs dated05/06/2015 provisions of section 197 as regards managerial remuneration are notapplicable to the Company since it is a Government Company.
(xii) As the Company is not a Nidhi Company and the Nidhi Rules2014 are not applicableto it; the provisions of Clause 3(xii) of the Order are not applicable to the Company.
(xiii) The Company has entered into transactions with related parties in compliancewith the provisions of Sections 177 and188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under theapplicable accounting standards.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with thedirectors during the year.
(xvi) 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 provisions of Clause 3(xvi) of the Order are not applicable to theCompany.
Annexure -B to the Independent Auditors' Report
(Referred to in our report of even date)
Report on the Internal Financial Controls with reference to these Standalone FinancialStatements under Clause (i) of Sub-section 3 of section 143 of the Companies Act 2013("the Act")
We have audited the internal financial controls with reference to financial statementsof MANGALORE REFINERY AND PETROCHEMICALS LIMITED ("the Company") as of 31stMarch2020 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 is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI'). 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the standalone financial statements 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 (ICAI) and the Standards on Auditing prescribed underSection 143(10) of the Companies Act2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to these standalone financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to these standalone financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to the standalone financial statements assessing therisk that a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone financial statements 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 internal financial controls system withreference to the standalone financial statements of the Company.
Meaning of Internal Financial Controls with Reference to the Standalone FinancialStatements
A company's internal financial control with reference to the standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of Standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control with reference to the standalone financial statements includes thosepolicies and procedures that
1. Pertain to the maintenance of records that in reasonable detail accuratelyand fairly reflect the transactions and dispositions of the assets of the company;
2. Provide reasonable assurance that transactions are recorded as necessary topermit preparation of Standalone financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
3. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with Reference to the StandaloneFinancial Statements
Because of the inherent limitations of internal financial controls with reference tothe standalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to the standalone financial statements to future periods aresubject to the risk that the internal financial control with reference to the standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures 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 controlsystem with reference to the standalone financial statements and such internal financialcontrols with reference to the standalone financial statements were operating effectivelyas at 31st March 2020 based on the internal control with reference to standalonefinancial 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 S. VENKATRAM & CO. LLP ||For MANOHAR CHOWDHRY & ASSOCIATES |
|Chartered Accountants ||Chartered Accountants |
|Firm Registration Number: 004656S/S200095 ||Firm Registration Number: 001997S |
|sd/- ||sd/- |
|C.A. KRISHNAMURTHY M ||C.A. MURALI MOHAN BHAT |
|Partner ||Partner |
|Membership no: 083875 ||Membership no: 203592 |
|UDIN: 20083875AAAAAP7748 ||UDIN: 20203592AAAABZ5457 |
|Place: Bangalore ||Place: Mangalore |
|Date: 9th June 2020 ||Date: 9th June 2020 |