You are here » Home » Companies » Company Overview » Mahanagar Telephone Nigam Ltd

Mahanagar Telephone Nigam Ltd.

BSE: 500108 Sector: Telecom
NSE: MTNL ISIN Code: INE153A01019
BSE 00:00 | 23 Jul 21.00 -0.20
(-0.94%)
OPEN

21.25

HIGH

21.40

LOW

20.80

NSE 00:00 | 23 Jul 21.00 -0.20
(-0.94%)
OPEN

21.25

HIGH

21.40

LOW

20.80

OPEN 21.25
PREVIOUS CLOSE 21.20
VOLUME 173765
52-Week high 24.40
52-Week low 7.79
P/E
Mkt Cap.(Rs cr) 1,323
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 21.25
CLOSE 21.20
VOLUME 173765
52-Week high 24.40
52-Week low 7.79
P/E
Mkt Cap.(Rs cr) 1,323
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Mahanagar Telephone Nigam Ltd. (MTNL) - Auditors Report

Company auditors report

To

The Members of

Mahanagar Telephone Nigam Limited

Report on the Audit of the Standalone Ind- AS Financial StatementsQualified Opinion

We have audited the accompanying standalone Ind-AS financial statementsof MAHANAGAR TELEPHONE NIGAM LIMITED ("the Company") which comprise the BalanceSheet as at March 31 2020 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the year ended on that date and a summary of the significant accounting policies andother explanatory information (hereinafter referred to as "the standalone financialstatements").

In our opinion and to the best of our information and according to theexplanations given to us except for the effects of the matters described in the basis forQualified Opinion Section of our report the aforesaid standalone financial statementsgive the information required by the Companies Act 2013 ("the Act") in themanner so required and give a true and fair view in conformity with the Indian AccountingStandards prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended ("Ind AS") and other accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2020 the Loss and total comprehensive income changes in equity and its cash flowsfor the year ended on that date.

Basis for Qualified Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements section ofour report. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone Ind AS financial statementsunder the provisions of the Act and the Rules made there under and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our qualified audit opinion on the standalone Ind ASfinancial statements.

(i) The Net Worth of the Company has been fully eroded; The Company hasincurred net

cash loss during the current year ended March 31 2020 as well as inthe previous year and the current liabilities exceeded the current assets substantially.

Furthermore Department of Public Enterprises vide its OfficeMemorandum No. DPE/5(1)/2014-Fin. (Part-IX-A) has classified the status of the Company as"Incipient Sick CPSE". Department of Telecommunication (DOT) has also confirmedthe status vide its issue no. I/3000697/ 2017 through file no. 19-17/2017 - SU-II.

However the standalone Ind AS financial statements of the Company havebeen prepared on a going concern basis keeping in view the majority stake of theGovernment of India and accompanying management note.

Further Union Cabinet has also approved the "Revival plan of BSNLand MTNL" by reducing employee costs administrative allotment of spectrum for 4Gservices debt restructuring by raising of sovereign guarantee bonds monetization ofassets and in principle approval for merger of BSNL and MTNL. (Also refer note no. 76 tothe standalone Ind-AS financial statements)

(ii) Bharat Sanchar Nigam Limited (BSNL):

a) The Company has certain balances receivables from and payables toBharat Sanchar Nigam Limited (BSNL). The net amount recoverable of Rs. 3504.10 Crores issubject to reconciliation and confirmation. In view of non reconciliation andnonconfirmation and also in view of various pending disputes regarding claims and counterclaims we are not in a position to ascertain and comment on the correctness of theoutstanding balances and resultant impact of the same on the standalone Ind- AS financialstatements of the Company. (Also refer point no. (a) of note no. 63 to the standaloneInd-AS financial statements).

b) The Company has not provided a provision for doubtfulclaims inrespectof lapsed CENVAT Credit due to non-payment of service tax to service providerswithin the period of 180 days and due to transition provision under Goods and Service Tax(GST) where the aforesaid CENVAT credit amounting to Rs. 144.66 Crores has not beencarried forward and ineligible credits amounting to Rs. 51.65 Crores excessively carriedforward to TRANS-1 under GST laws resulting in overstatement of current assets andunderstatement of loss to that extent.

(iii) The Company has certain balances receivables from and payables toDepartment of Telecommunication (DOT). The net amount recoverable of Rs. 410.46 Crores issubject to reconciliation and confirmation. In view of non-reconciliation and nonconfirmation we are not in a position to ascertain and comment on the correctness of theoutstanding balances and resultant impact of the same on the standalone Ind-AS financialstatements of the Company. (Also refer point no. (a) of note no. 68 to the standaloneInd-AS financial statements).

(iv) Up to financial year 2011-12 License Fee payable to the DOT on IUCcharges to BSNL was worked out on accrual basis as against the terms of License agreementsrequiring deduction for expenditure from the gross revenue to be allowed on actual paymentbasis.

From financial year 2012-13 the license fee payable to the DOT hasbeen worked out strictly in terms of the license agreements. The Company continues toreflect the difference in license fee arising from working out the same on accrual basisas aforesaid for the period up to financial year 2011-12 by way of contingent liability ofRs. 140.36 Crores instead of actual liability resulting in understatement of currentliabilities and understatement of loss to that extent. (Also refer note no. 79 to thestandalone Ind-AS financial statements).

(v) The Company had allocated the overheads towards capital works in amanner which is not in line with the accepted accounting practices and Indian AccountingStandard - 16 "Property Plant and Equipment" prescribed under Section 133 ofthe Act the same results into overstatement of capital work in progress/ property plantand equipment and understatement of loss. The actual impact of the same on the standaloneInd-AS financial statements for year is not ascertained and quantified. (Also refer noteno. 38 39 and 41 to the standalone Ind-AS financial statements).

(vi) Except for the impairment loss of assets of CDMA units provided inearlier years no adjustment has been considered on account of impairment loss if anyduring the year with reference to Indian Accounting Standard - 36 "Impairment ofAssets" prescribed under Section 133 of the Act. In view of uncertainty inachievement of future projections made by the Company we are unable to ascertain andcomment on the provision required in respect of impairment in carrying value of cashgenerating units and its consequent impact on the loss for the year accumulated balanceof reserve and surplus and also the carrying value of the cash generating units. (Alsorefer note no. 70 to the standalone Ind- AS financial statements).

(vii) The Company does not follow a system of obtaining confirmationsand performing reconciliation of balances in respect of amount receivables from tradereceivables deposits with Government Departments and others claim recoverable fromoperators and others parties and amount payables to trade payables claim payable tooperators and amount payable to other parties. Accordingly amount receivables from andpayables to the various parties are subject to confirmation and reconciliation. Pendingsuch confirmation and reconciliations the impact thereof on the standalone Ind-ASfinancial statements are not ascertainable and quantifiable. (Also refer note no. 65 tothe standalone Ind-AS financial statements).

(viii) Unlinked credit of Rs. 75.69 Crores on account of receipts fromsubscribers against billing by the Company which could not be matched with correspondingreceivables is appearing as liabilities in the balance sheet. To that extent tradereceivables and current liabilities are overstated. (Also refer note no. 64 and 75 to thestandalone Ind-AS financial statements).

(ix) Property Plant and Equipment are generally capitalized on thebasis of completion certificates issued by the engineering department or bills received byfinance department in respect of bought out capital items or inventory issued from theStores. Due to delays in issuance of the completion certificates or receipt of the billsor receipt of inventory issue slips there are cases where capitalization of the PropertyPlant and Equipment gets deferred to next year. The resultant impact of the same on thestatement of profit and loss by way of depreciation and amount of Property Plant andEquipment capitalized in the

balance sheet cannot be ascertained and quantified.

(x) Certain Land and Buildings transferred to MTNL from DOT in earlieryears have been reflected as leasehold. In the absence of relevant records we are not ina position to comment on the classification capitalization and amortization of the sameas leasehold and also the consequential impacts if any of such classificationcapitalization and amortization not backed by relevant records. In the absence of relevantrecords impact of such classification on the standalone Ind-AS financial statementscannot be ascertained and quantified.

(xi) Department of Telecommunication (DOT) had raised a demand of Rs.3313.15 Crores in 2012-13 on account of one time charges for 2G spectrum held by theCompany for GSM and CDMA for the period of license already elapsed and also for theremaining valid period of license including spectrum given on trial basis.

As explained the demand for spectrum usage for CDMA has been revised byRs. 107.44 Crores on account of rectification of actual usage and subsequently the same iswithdrawn.

Also as explained pending finality of the issue by the Companyregarding surrender of a part of the spectrum crystallization of issue by the DOT in viewof the claim being contested by private operators and because of the matter beingsub-judice in the Apex Court on account of dispute by other private operators on thesimilar demands the amount payable if any is indeterminate. Accordingly no liabilityhas been created for the demand made by DOT on this account and Rs. 3205.71 Crores hasbeen disclosed as contingent liability till last year although no further demand is therefrom DOT till date. However as explained further the TDSAT while setting aside the levyof OTSC on spectrum alloted beyond 6.2 Mhz directed Govt. to review the demand forspectrum allotted after 1-7-2008 and that too wef 1-1-2013 in case the spectrum beyond 6.2Mhz was allotted before 1-1-2013. As explained as per the TDSAT orders also no furtherdemand is raised till now and as per management based on TDSAT direction the demand ifany cannot be more than Rs 455 crores the same is disclosed in contingent liability.

In view of the above we are not in a position to comment on thecorrectness of the stand taken by the Company and the ultimate implications of the same onthe standalone financial results of the Company. (Also refer note no. 59 to the standaloneInd-AS financial statements).

(xii) The Company has deducted/collected Liquidated Damages fromvendors on account of non-fulfilment of contracted conditions on which Goods and ServicesTax (GST) has not been paid. The actual impact of the same on the standalone Ind-ASfinancial statements for year is not ascertained and quantified.

In the absence of information the effect of which can't be quantifiedwe are unable to comment on the possible impact of the items stated in the point nos. (i)(ii)(a) (ii)(b) (iii)

(v) (vi) (vii)(viii) (ix) (x) (xi) and (xii) on the standaloneInd-AS financial statements of the Company for the year ended on 31st March2020.

We draw attention to the following notes on the standalone Ind-ASfinancial statements being

matters pertaining to Mahanagar Telephone Nigam Limited requiringemphasis by us. Our

opinion is not qualified in respect of these matters:

(i) Refer note no. 61 to the standalone Ind-AS financial statementsregarding the adequacy or otherwise of the provision and / or contingency reserve held bythe Company with reference to pending dispute with the Income Tax Department before theHon'ble Courts regarding deduction claimed by the Company u/s 80 IA of the Income Tax Act1961.

(ii) Point no. (a) of note no. 62 to the standalone Ind-AS financialstatements regarding accounting of claims and counter claims of MTNL with M/S M&NPublications Ltd. in a dispute over printing publishing and supply of telephonedirectories for MTNL in the year when the ultimate collection / payment of the samebecomes reasonably certain.

(iii) Amount receivable from BSNL & Other Operators have beenreflected as loans and other financial assets instead of bifurcating the same into tradereceivables and other financial assets. (Also refer note no. 10 15 and 18 to thestandalone Ind-AS financial statements).

(iv) The Amounts recoverable from Department of Telecommunication (DOT)in respect of settlement of General Provident Fund (GPF) of Combined Service Opteeabsorbed employees in MTNL; wherein DOT has not accepted/sanctioned the full amount of GPFincluding interest thereon claimed of the Company in respect of which correspondence ingoing on between the Company and DOT are continued to be shown as recoverable from DOT andpayable to GPF in the standalone Ind-AS financial statements and further explained inpoint no. (d) of Note no. 68 to the standalone Ind-AS financial statements.

(v) The payables towards license fees and spectrum usage charges havebeen adjusted with excess pension payouts to Combined Pensioners Optees recoverable fromDOT in respect of which matter is under consideration and correspondence in going onbetween the Company and DOT.

(vi) The License agreement between Company and DOT does not have anyguidance on change in method of calculation of Adjusted Gross Revenue (AGR) due tomigration to Ind-AS from I-GAAP. Provisioning and payment of liability in respect oflicense fees and spectrum usage charges payable to DOT has been done on the basis ofInd-AS based financial statements. The amount of difference in computation of AdjustedGross Revenue (AGR) is under consideration of DOT.

(vii) In certain cases of freehold and leasehold land the company ishaving title deeds which are in the name of the Company but the value of which are notlying in books of accounts of the Company.

(viii) Income arising on account of Revenue Sharing with BSNL inrespect of lease circuits provided has not been recognized in terms of Memorandum ofUnderstanding (MOU) between BSNL and MTNL. As per MOU revenue and expenditure will bebased on the price offered to the customers after applying the discount if any at thetime of acquiring the business. However Revenue has been recognized on the basis ofavailable information which is either based on the Company Card Rates or Old rates ofBSNL. In Some Cases

BSNL has given the information in respect of updated rated but the samehas not been considered at the time of booking of revenue sharing with BSNL. In theabsence of relevant updated records we are not in a position to comment on the impactthereof on the standalone Ind-AS financial statements.

(ix) Dues from the Operators being on account of revenue sharingagreements are not treated as debtors and consequently are not taken into account formaking provision for doubtful debts. (Also refer clause no. (k) of note no. 3 to thestandalone Ind-AS financial statements).

(x) In pursuance DoT letter No. F.No. 30-04/2019-PSU Affairs dt. 29October 2019 and decision of Board of Directors of MTNL through circular regulation on4th November 2019 the MTNL Voluntary Retirement Scheme has been introduced with effectfrom 4th November 2019 under which 14387 number of MTNL employees opted for VRS and theexpenditure of ex-gratia on account of compensation to be borne by the DOT/Government ofIndia through budgetary supports as per approval of cabinet. As such no provision of VRScompensation is considered in the FY 2019-2020. Balance amount payable to VRS optedemployees as on 31 March 2020 is shown in the financial statements of the company asreceivable from DOT and payable to VRS retirees to reflect the actual position withreference to VRS scheme of 2019 of MTNL. (Also refer note no. 78 to the standalone Ind ASfinancial statements).

Our opinion is not modified in respect of these matters.

Material uncertainty related to going concern

We draw attention to Note no. 76 in the financial statements whichindicates that the company has accumulated losses and its net worth has been fully/substantially eroded the company has incurred net loss/net cash loss during the currentand previous year(s) and the company's current liabilities exceeded its current assets asat the balance date. These events or conditions along with other matter as set forth inNote 76 indicate that a material uncertainty exists that may cast significant doubt onthe company's ability to continue as a going concern.

Further Union Cabinet has also approved the "Revival plan of BSNLand MTNL" by reducing employee costs administrative allotment of spectrum for 4Gservices debt restructuring by raising of sovereign guarantee bonds monetization ofassets and in principle approval for merger of BSNL and MTNL.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

In addition to the matters described in the basis of qualified opinionsection we have determined the matters described below to be the key audit matters to becommunicated in our report.

Sr. No. Key Audit Matter How our audit Addressed the key Audit Matter
1 Revenue Recognition: We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard.
There is an inherent risk around the accuracy of revenue recorded given the complexity of systems and the impact of changing pricing models to revenue recognition (tariff structures incentive arrangements discounts etc.)
Our audit approach including controls testing and substantive procedures covering in particular:
• Testing the IT environment in which billing rating and other relevant support systems reside including the change control procedures in
Refer Notes no. 57 to the Standalone Ind-AS Financial Statements. place around systems that bill material revenue streams.
• Testing the end to end reconciliation from business support systems to billing and rating systems to the general ledger. This testing includes validating material journals processed between the billing system and general ledger.
• Performing tests on the accuracy of customer bill generation on sample basis and testing of a sample of the credits and discounts applied to customer bills: and testing receipts for a sample of customers back to customer invoice.
2 Uncertain Taxation Matters: We have obtained details of completed tax assessments and demands up to March 31 2020 from management.
The Company has material uncertain tax matters under dispute which involves significant judgment to determine the possible outcome of these disputes.
We assessed the management's underlying assumptions in estimating the tax provisions and the possible outcome of the disputes.
Refer Notes no. 50 and 61 to the Standalone Ind-AS Financial Statements.
We also considered legal precedence and other rulings including in the company's own cases in evaluating management's position on these uncertain tax positions.
3 The Company holds investments comprising investments in Associates Joint Ventures and subsidiaries of Rs 106.13 Crores We assessed the net assets values of the investments as at 31 March 2020 with the Company's investment carrying values.
As a result of our work we agreed with management that the carrying values of the investments held by the Company are supportable in the context of the Company financial statements taken as a whole.
Investments in Associates Joint Ventures and subsidiaries accounted for at cost less any provision for impairment Investments are tested for impairment annually. If impairment exists the recoverable amounts of the investment in Associates Joint Ventures
and subsidiaries are estimated in order to determine the extent of the impairment loss if any. Any such impairment loss is recognized in the income statement.
Refer to Note no.9 of standalone Ind- AS Financial statements.
4 Contingent liabilities We have obtained an understanding of the Company's internal instructions and procedures in respect of estimation and disclosure of contingent liabilities and adopted the following audit procedures.
There are number of litigations pending before various forums against the company and the management's judgement is required for estimating the amount to be disclosed as contingent liability.
- understood and tested the design and operating effectiveness of controls as established by the management for obtaining all relevant information for pending litigation cases;
We identified this as a key audit matter because the estimates on which these amounts are based involve a significant degree of management judgement in interpreting the cases and it may be subject to management bias. (Refer to note no. 50 of standalone Ind- AS Financial statements.)
- discussed with the management any material developments and latest status of legal matters;
- read various correspondences and related documents pertaining to litigation cases and relevant external legal opinions obtained by the management and performed substantive procedures on calculations supporting the disclosures of contingent liabilities;
- examined management's judgements and assessment whether provisions are required;
- considered the management assessments of those matters that are not disclosed as the probability of material outflow is considered to be remote;
- reviewed the adequacy and completeness of disclosures;
Based on the above procedures performed the estimation and disclosures of contingent liabilities are considered to be adequate and reasonable. (Refer to note no. 50 of the Standalone Ind-AS financial statements).

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theCompany's Annual Report but does not include the standalone financial statements and ourauditor's report thereon.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Responsibilities of the Management and those charged with governancefor the Standalone Ind-AS Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible 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 responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind-ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than

for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such 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 goingconcern basis 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 thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's 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.

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 term of sub section (11) of section 143of the Companies Act

2013 we give in the ''Annexure A'' a statement on the mattersspecified in paragraph 3 and

4 of the Order to the extent applicable.

2. As required by section 143(5) of the Act we give in "AnnexureB" a statement on the matters

specified by the Comptroller and Auditor General of India for theCompany.

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

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income Statement of Changes in Equity and the Statement of Cash Flow dealtwith by this Report are in agreement with the relevant books of account.

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

e) Being the Government Company pursuant to the Notification No. GSR463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs Government of Indiaprovisions of sub-section (2) of section 164 of the Act are not applicable to theCompany.

f) The going concern matter described in material uncertainty relatedto going concern paragraph above in our opinion may have an adverse effect on thefunctioning of the company.

g) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure C". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.

h) As per the Notification No. GSR 463(E) dated 5 June 2015 issued bythe Ministry of Corporate Affairs Government of India Section 197 is not applicable tothe Government Companies. Accordingly reporting in accordance with requirement ofprovisions of section 197 (16) of the Act is not applicable on the Company.

i) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements.

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.

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

For Vinod Kumar and Associates For Kumar VijayGupta& Co.
Chartered Accountants Chartered Accountants
Firm Registration No.: 002304N Firm Registration No.: 007814N
(CA Mukesh Dadhich) (CA Pawan Kumar Garg )
Partner Partner
Membership No.: 511741 Membership No.: 097900
UDIN: 20511741AAAAHJ3366 UDIN:20097900AAAAAK3575
Place: New Delhi
Date: 22.07.2020

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

Referred to in our Independent Auditor's Report of even date to themembers of Mahanagar Telephone Nigam Limited on the Standalone Ind-AS Financial Statementsfor the year ended 31st March 2020.

(i) (a) Delhi unit (Both basic and Wireless) has maintained records offixed assets. However identification numbers and location of the Fixed Assets are notmentioned. It has been noticed that records of the Estates Department in respect of landand building do not match withthe records as per financial books.

In case of Mumbai units (both basic and WS) fixed assets registershave been maintained w.e.f. 01.04.2002. However the fixed assets records maintained bythe Mumbai units are not updated and reconciled with the financial records. Alsoidentification numbers and location of Fixed Assets are not mentioned.

Corporate office has maintained fixed assets records howeveridentification numbers and location of Fixed Assets are not mentioned.

(b) As per the accounting policy of the Company fixed assets arerequired to be physically verified by the management on rotation basis once in threeyears which in our opinion is reasonable and adequate in relation to the size of theCompany and the nature of its business. Due to Covid-19 pandemic and lockdown no physicalverification of fixed assets was conducted by the management during the year ended onMarch 31 2020. However all discrepancies noticed in earlier physical verification hasbeen accounted for as certified by the management. The accuracy reliability andcompleteness of the fixed assets verification procedure could not be verified by us.

(c) Title deeds of some of the immovable properties recorded in thebooks of the Company are in the name of Govt. of India P&T and President of Indiasince the operation of Delhi & Mumbai of Department of Telecom was converted as MTNL.Details of such properties are given hereunder:

(Amounts in Rs. Crores)

PARTICULARS DELHI UNIT MUMBAI UNIT
Free Hold Land
- Total Number of Cases 1 23#
- Gross Block 0.06 4.15
Lease Hold Land/Right of Use
- Total Number of Cases 89* 12#
- Gross Block 219.53 2.65
PARTICULARS DELHI UNIT MUMBAI UNIT
- Net Block 143.17 1.72
Building
- Total Number of Cases 53** 2##
- Gross Block 32.37 1.53
- Net Block 1.83 0.71

In respect of Delhi Units:

* In respect of 43 cases out of 89 where the lease hold land acquiredfrom DOT have been capitalized by MTNL and no data is available in respect of depreciationand net WDV of such assets as the same is not identifiable from the fixed assets register.

** No information is available in respect of lease hold buildingsallotted by the various govt. authorities to MTNL but the same has been capitalized byMTNL and due to non availability of information the aforesaid cases has not been includedin the above details.

In respect of Mumbai Units:

# In respect of 12 cases where the possession of freehold and leaseholdland are lying with the Company but the value of which are not lying in books of accountsof Mumbai units. Out of which tile deeds of 1 freehold lands and 6 leasehold lands are notin the name of the Company.

## In respect of 5 cases where the possession of freehold and leaseholdbuildings are lying with the Company but the value of which are not lying in books ofaccounts of Mumbai units. Out of which tile deeds of 1 leasehold building are not in thename of the Company.

Further in most of the cases value of the immovable properties as pertitle deeds are not matching with books of accounts and in respect of 9 cases court casesare pending with the various authorities out of which title deed of 1 freehold land and 1leasehold land are not in the name of the Company.

Furthermore in respect of 9 cases of freehold and leasehold land wheretotal area measuring 21160 square meter have been encroached by the various persons inrespect of which matter is either pending in court or perusing with the variousauthorities for clearing the encroachment. Out of total 9 cases title deed of 2 freeholdland measuring 1840 square meter and 1 leasehold land measuring 200 square meters are notin the name of the Company.

(ii) In respect of Delhi Units:

In our opinion physical verification of inventory has been conductedby the management at reasonable intervals. However due to Covid-19 pandemic and lockdownno physical verification of Inventories was conducted by the management as on March 312020.

In respect of Mumbai Units:

In our opinion physical verification of inventory has been conductedby the management at reasonable intervals. However due to Covid-19 pandemic and lockdownno physical verification of Inventories was conducted by the management as on March 312020.

Discrepancies noticed on physical verification of inventory as comparedto book records were not material and have been properly dealt with in the books ofaccounts in earlier periods.

(iii) The Company has not granted any secured or unsecured loans tocompanies firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013 ('the Act').

(iv) The Company has not entered any transaction involving compliancewith the provisions of Section 185 and 186 of the Companies Act 2013. Thus paragraph3(iv) of the Order is not applicable

(v) The Company has not accepted any deposits from the public withinthe meaning of Section 73 to Section 76 or any other relevant provisions of the CompaniesAct 2013 or rules framed there under.

(vi) As per information and explanation given to us Company isrequired to maintain the cost records under Section 148(1) of the Companies Act 2013. Asexplained the Company has not yet maintained the required cost records for year 2019-20.

(vii) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company amounts deducted/ accruedin the books of account in respect of undisputed statutory dues including provident fundemployees' state insurance income tax sales tax service tax goods and service taxduty of customs duty of excise value added tax cess and other material statutory dueswherever applicable have generally been regularly deposited with the appropriateauthorities.

However the Company has deducted/collected Liquidated Damages fromvendors on account of non-fulfilment of contracted conditions on which Goods and ServicesTax (GST) has not been paid.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome tax sales tax service tax goods and service tax duty of customs duty ofexcise value added tax cess or other statutory dues were in arrears as at 31st March2020 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us thereare no dues of income tax sales tax service tax duty of customs duty of excise valueadded tax which have not been deposited with the appropriate authorities on account of anydispute except for the following dues:

In respect of Delhi Units:

i. Sales Tax:

Name of the Statute Amount (Rs. in Cr.) (Net) Period to which amount relates Forum where the dispute is pending
Delhi Value Added Tax Act 2004 12.21 2007-08 Delhi Value Added Tax Tribunal
Delhi Value Added Tax Act 2004 62.60 2009-10 & 2010-11 (CWG 2010) Delhi Value Added Tax Tribunal
Central Sales Tax Act 1956 0.04 2012-13 Addl. Comm. Sales Tax
TOTAL 74.85

ii. Service Tax:

Name of the Statute Amount (Rs. in Cr.)(Net) Period to which amount relates Forum where the dispute is pending
Finance Act 1994 8.12 2005-06 Commissioner of Central Excise and Service Tax
Finance Act 1994 22.13 2006-08 Custom Excise and Service Tax Appellate Tribunal
Finance Act 1994 0.08 2000-03 Commissioner of Central Excise and Service Tax
Finance Act 1994 1.36 2008-12 Commissioner of Central Excise and Service Tax
TOTAL 31.69

iii. Labour Cess:

Name of the Statute Amount (Rs. in Cr.) (Net) Period to which amount relates Forum where the dispute is pending
Building and other Construction Workers Welfare Cess Act 1996. 9.73 1996 to 2001 Deputy Labour Commissioner

In respect of Mumbai Basic Units i. Income Tax:

Name of the Statute Amount (Rs. in Cr.) (Net) Period to which amount relates Forum where the dispute is pending
Income Tax Act 1961 Nil 2000-08 Hon'ble Supreme Court of India
TOTAL Nil

Sales Tax:

Name of the Statute Amount (Rs. in Cr.) (Net) Period to which amount relates Forum where the dispute is pending
Bombay Sales Tax Act 1959 0.17 1993-94 Maharashtra Sales Tax Tribunal Mumbai
Bombay Sales Tax Act 1959 5.27 1996-97 Hon'ble High Court of Bombay
Bombay Sales Tax Act 1959 170.08 1997-98 Hon'ble Supreme Court of India
Name of the Statute Amount (Rs. in Cr.) (Net) Period to which amount relates Forum where the dispute is pending
Bombay Sales Tax Act 1959 216.01 2003-04 Maharashtra Sales Tax Tribunal Mumbai
Bombay Sales Tax Act 1959 101.32 2004-05 Joint Commissioner of Sales Tax Mumbai
Bombay Sales Tax Act 1959 14.97 2009-10 Joint Commissioner of Sales Tax Mumbai
Bombay Sales Tax Act 1959 6.11 2011-12 Joint Commissioner of Sales Tax Mumbai
BombaySales Tax Act 1959 26.47 2012-13 Joint Commissioner of Sales Tax Mumbai
TOTAL 540.40

ii. Service Tax:

Name of the Statute Amount (Rs. in Cr.) (Net) Period to which amount relates Forum where the dispute is pending
Finance Act 1994 2.91 2012-13 to 2016-17 Custom Excise and Service Tax Appellate Tribunal
TOTAL 2.91

In respect of Mumbai MS Unit: Central Excise:

Name of the Statute Amount (Rs. in Cr.) (Net) Period to which amount relates Forum where the dispute is pending
Central Excise Act 1944 Nil 2004-05 Commissioner of Central Excise
Central Excise Act 1944 Nil 2006-07 Commissioner of Central Excise
Central Excise Act1944 Nil 2013-14 Commissioner of Central Excise
Central Excise Act 1944 Nil 2006-07 Commissioner of Central Excise
Central Excise Act 1944 Nil 2005-06 Commissioner of Central Excise
Total Nil

In respect of Corporate Office: Income Tax:

Name of the Statute Amount (Rs. in Cr.) (Net) Period to which amount relates Forum where the dispute is pending Remarks
Income Tax Act 1961 Nil A.Y 1998-99 to A.Y 2006-07 Hon'ble High Court of Delhi

Total disputed demand of Rs. 740.90 Crores either paid by the Company or deducted by the Income Tax Department from refund due to the Company

Income Tax Act 1961 Nil A.Y 2007-08 to A.Y 2009-10 Hon'ble Income Tax Appellant Tribunal and Commissioner of Income Tax (Appeal)
TOTAL Nil

(vii) The Company has not defaulted in the repayment of loans orborrowings to a financial institution bank Government or dues to debenture holders.

(viii) The Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments) during the year and term loanshave been generally applied for the purposes for which they were raised.

(ix) Based on audit procedures applied and according to the informationand explanations given to us we report that no fraud on or by the Company has beennoticed or reported during the course of our audit for the year ended on 31st March 2020.

(x) In view of the Government notification No. GSR 463 (E) dated 5thJune 2015; Government Companies are exempt from the applicability of Section 197 of theCompanies Act 2013. Accordingly clause 3 (xi) of the Order is not applicable to theCompany.

(xi) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Hence Clause 3 (xii) of the Order is notapplicable to the Company.

(xii) In our opinion and as per the information and explanation givento us the company has not entered into any transaction requiring compliance with Section177 and 188 of the Companies Act 2013. Hence Clause 3 (xiii) of the Order is notapplicable to the Company.

(xiii) Based on the information and explanation given to us theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year under review requiring compliance withSection 42 of the Companies Act 2013. Hence Clause 3 (xiv) of the Order is notapplicable to the Company.

(xiv) Based on the information and explanation given to us the Companyhas not entered into any non-cash transactions with directors or persons connected withhim. Hence Clause 3

(xv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanationsgiven to us Company is not required to register under Section 45 - IA of the Reserve Bankof India Act 1934. Hence Clause 3 (xvi) of the Order is not applicable to the Company.

For Vinod Kumar and Associates For Kumar Vijay Gupta & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.: 002304N Firm Registration No.: 007814N
(CA Mukesh Dadhich) (CA Pawan Kumar Garg )
Partner Partner
Membership No.: 511741 Membership No.: 097900
UDIN: 20511741AAAAHJ3366 UDIN:20097900AAAAAK3575
Place: New Delhi
Date: 22.07.2020

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

Referred to in our Independent Auditors' Report of even date to themembers of Mahanagar Telephone Nigam Limited on the Standalone Ind-AS Financial Statementsfor the year ended 31st March 2020.

Directions indicating the areas to be examined by the StatutoryAuditors during the course of audit of annual accounts of Mahanagar Telephone NigamLimited (Standalone) for the year 2019-20 issued by the Comptroller & AuditorGeneral of India under section 143(5) of the Companies Act 2013.

Based on the information and explanations given to us we report asunder:

Sr. No. Areas Examined Observation / Finding
1 Whether the company has system in place to process all the accounting transactions through IT systems If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. Yes Majority of the accounting transactions are done through the IT system. Although manual intervention is prevalent. Adequate security measures+ for manual intervention need to be strengthened with supervisory sanction only and properly documented. However Delhi Unit (Lease Circuit) is not integrated with the IT system.
2 Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by lender to a company due to the company's inability to repay the loan? If yes the financial impact may be stated. As certified by the management and those charged with governance we have been informed that there is no restructuring of loan/ wavier/ write off of debts/ loan/ interest during the year 2019-20.
3 Whether funds received/ receivable from the specific schemes from central/ state agencies were properly accounted for/ utilized as per its term and conditions? List the case of deviation. Yes the company has received the Swachh Action Plan contribution during FY 2017-18 is Rs. 21 Lakh FY 2018-19 is Rs. 35.39 Lakh and FY 2019-20 is Rs 35Lakh out of which Rs.53.35Lakh is pending utilization with the company.
4 Whether the amount of revenue of share (License fees and Spectrum Usage charges) recognized in the financial statement in accordance with the DoT? If so detailed statement & calculation sheet may be attached Yes AGR Audit Report and Calculation sheet attached herewith.

We have conducted the audit of accounts of Mahanagar Telephone NigamLimited for the year ended 2019-20 in accordance with the directions issued by theC&AG of India under section 143(5) of the Companies Act 2013 and certify that we havecomplied with the all directions issued to us.

For Vinod Kumar and Associates For Kumar Vijay Gupta & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.: 002304N Firm Registration No.: 007814N
(CA Mukesh Dadhich) (CA Pawan Kumar Garg )
Partner Partner
Membership No.: 511741 Membership No.: 097900
UDIN: 20511741AAAAHJ3366 UDIN:20097900AAAAAK3575
Place: New Delhi
Date: 22.07.2020

Annexure - C

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph (f) under 'Report on Other Legal andRegulatory Requirements'

section of our report of even date)

Report on the Internal Financial Controls under Clause (i) ofsub-section 3 of section 143 of theCompanies Act2013 ("the Act")

We have audited the internal financial controls over financialreporting of Mahanagar Telephone Nigam Limited ("the Company") as of 31stMarch 2020 in conjunction with our audit of the standalone Ind-AS financial statements ofthe Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is 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 issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material 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 judgment including the assessment of therisks of material misstatement of the standalone Ind-AS financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone Ind-AS financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of standalone Ind-AS financial statements in accordancewith generally accepted accounting principles and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directorsof the company; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the standalone Ind-AS financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based onour audit the following material weaknesses have been identified in the operatingeffectiveness of the Company's internal financial controls over financial reporting as atMarch 31 2020:

(i) The Company does not have an appropriate internal control systemfor identification of overheads to be capitalized with the cost of Property Plant andEquipment which could potentially result into under /over capitalization of PropertyPlant and Equipment and corresponding impact on the operational results of the Company.

(ii) The Company does not have appropriate internal control system forensuring capitalization of Property Plant and Equipment as and when the same is ready foruse due to delayed issue of completion certificate by engineering department or due todelay in receipt of bills from the vendors for bought out items or due to delay ofinventory issue slip by stores. Hence the date of capitalization is not reliable. Thiscould potentially result into delayed capitalization and corresponding impact on theoperational results due to lower charge of depreciation.

(iii) The Company does not have appropriate internal control system forensuring decommissioning and de-capitalization of Property Plant and Equipment in respectof assets which are no longer in use and held for disposal as scrap. This couldpotentially result into overstatement of gross block and corresponding impact on theoperational results due to higher charge of depreciation and lower provision forimpairment of assets.

(iv) The Company does not have an appropriate internal control systemto ensure that provisions made pending receipt of bills from vendors / contractors /operators / government departments at the quarter end and year end are duly reversed whenactual bills are received and accounted for. This could potentially result in the samebeing accounting twice.

(v) The Company does not have an appropriate internal control system totrack open purchase orders work orders agreements and contracts which have been enteredwith vendors / contractors / operators / government departments and are lying open. Thiscould have a bearing on efficiency of operations and recording of financial liabilitiesand provisions pertaining to the same.

(vi) The Company does not have an integrated ERP system. Differentsoftware packages used by the company are interfaced through software links or manualintervention leaving gaps between them. This could potentially result into impairedfinancial reporting.

(vii) The Company does not have an appropriate internal control systemfor reconciliation of vendors / contractors / operators / government departments accountswhich could potentially result in some changes in the standalone Ind-AS financialstatements. The cases identified by us have been appropriately qualified at various placesin our report.

(viii) The Company does not have effective internal audit system so asto cover all major areas with extensive scope. The extent and depth of coverage manner ofconduct and reporting in respect of internal audit is very weak. This could potentiallyresult into weak checks and balances and unreported financial irregularities ultimatelyresulting into distorted financial reporting.

(ix) The Company does not have an appropriate internal control systemfor reconciliation of items of unlinked debits and credits because of receipts from thesubscriber and the amount debited by the banks. This could potentially lead unreportedfinancial adjustments ultimately resulting into distorted financial reporting.

(x) The Company does not have an appropriate internal control systemfor invoicing which are due and payable based on manual invoicing. The invoicing systemsdoes not have reliability of measurement and reconciliation of items. This leads tomultiple revisions and errors in invoicing. This could potentially lead errors in revenuerecognition.

(xi) The Company does not have appropriate internal control system forensuring end use of issued inventory. The accounting is done based on the requisitionstatement of item and not actual installation or commission of item. This couldpotentially result into nonidentification of pilferage and also early capitalization ofequipments.

(xii) The Company does not have appropriate internal control system forensuring billing and recovery of water and electricity charges from the lessee. This couldpotentially result into non-recovery and delayed recovery of such charges causingfinancial loss of the absolute expenses and also finance cost on the delay in realization.This could also result in inaccurate expense values in the financial statements of thecompany.

A 'material weakness' is a deficiency or a combination ofdeficiencies in internal financial control over financial reporting such that there is areasonable possibility that a material misstatement of the company's annual or interimfinancial statements will not be prevented or detected on a timely basis.

In our opinion except for the effects / possible effects of thematerial weaknesses described above on the achievement of the objectives of the controlcriteria the Company has maintained in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as of March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

We have considered the material weaknesses identified and reportedabove in determining the nature timing and extent of audit tests applied in our audit ofthe March 31 2020 standalone Ind-AS financial statements of the Company and thesematerial weaknesses do not affect our opinion on the standalone Ind-AS financialstatements of the Company.

For Vinod Kumar and Associates For Kumar Vijay Gupta & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.: 002304N Firm RegistrationNo.: 007814N
(CA Mukesh Dadhich) (CA Pawan Kumar Garg )
Partner Partner
Membership No.: 511741 Membership No.: 097900
UDIN: 20511741AAAAHJ3366 UDIN:20097900AAAAAK3575
Place: New Delhi
Date: 22.07.2020

.