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Manipal Finance Corporation Ltd.

BSE: 507938 Sector: Financials
NSE: N.A. ISIN Code: INE798E01013
BSE 00:00 | 30 Aug Manipal Finance Corporation Ltd
NSE 05:30 | 01 Jan Manipal Finance Corporation Ltd
OPEN 7.75
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VOLUME 500
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Buy Price 0.00
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OPEN 7.75
CLOSE 7.75
VOLUME 500
52-Week high 9.88
52-Week low 5.23
P/E
Mkt Cap.(Rs cr) 6
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Manipal Finance Corporation Ltd. (MANIPALFINCOR) - Auditors Report

Company auditors report

TO THE MEMBERS OF MANIPAL FINANCE CORPORATION LIMITED Report on the Audit of theFinancial Statements Qualified Opinion

We have audited the accompanying financial statements of MANIPAL FINANCE CORPORATIONLIMITED (CIN: L65910KA1984PLC005988) ("the Company") which comprises theBalance Sheet as at 31st March 2021 the Statement of Profit and Loss(including Other Comprehensive Income) the Statement of Changes in Equity and theStatement of Cash Flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information(hereinafter referred to as "the Financial Statements")

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matter described in the Basis of QualifiedOpinion paragraph the aforesaid Financial Statements give the information required by theCompanies Act 2013 (the "Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit and total comprehensiveincome and its cash flows for the year ended on that date.

Basis for Qualified Opinion

1. We draw attention to Note No. 27.01 of the financial statements. The Company hasincurred losses and its majority of funds are blocked in Non Performing Assets raising adoubt about the Company to continue as a going concern. The Company has presented a schemeof arrangement for restructure of liabilities as detailed in Note No. 13.01 of thefinancial statements and subsequently withdrawn the same for reasons given therein. TheCompany is exploring the possibility of presenting the new scheme of arrangement asdetailed in the aforesaid Notes. The account however have been prepared on a "goingconcern basis" in view of management perception as detailed in Note No. 27.01 asaforesaid. However we are unable to comment on the ultimate reaiisability of Company'sassets including the Property Plant and Equipment under lease. Accordingly we are alsounable to comment on the Company's ability to settle its debts/liabilities (includingDeposits Subordinated debts and Secured Redeemable Debentures.

2. We draw the attention to Note 13.01 of the Financial Statements. The Company hasstopped (i) repayment of matured debentures & matured subordinated debts and (ii)payment of interest on debentures and subordinated debts from ls: day of July2002 and proposed a scheme of arrangement before the Hon'ble High Court of Karnataka asreferred to in the aforesaid Note (which is since withdrawn and we are informed that theCompany is exploring the possibility of presenting a new scheme of arrangement}. Furtherthe Company has also stopped repayment of deposits matured for repayment from theaforesaid date. All the debts of the Company i.e. debentures subordinated debts anddeposits are matured for repayment. The Company has provided for interest ondeposits/debentures/debts up to 30th June 2002 and not thereafter.

There are also many instances of settlement of debentures debts and public deposits atthe discounted rates with partial/full waiver of interest which has been done with mutualconsent. We are also informed that the remaining depositors/ debenture holders / debtholders have approached the Company for settlement of the dues and the Company is in theprocess for the same.

As per the information given to us various consumer courts (including the AppellateAuthorities/Courts acting under the Consumer Protection Act) have passed the orders forthe repayment of certain deposits/debentures/debts with interest and other costs. Thederailed information on these orders have not been made available to us. However we areinformed that the Company has settled the dues of such customers in many cases which alsoincludes settlement at discounted rates with partial/full waiver of interest and many ofthe remaining such persons have approached the Company for settlement.

We draw attention to the Statement made by the Management of the Company in Note No.13.01 of the Financial Statement which is as follows: "Considering the facts that theCompany has settled the dues of depositors/debenture holders/debt holders at thediscounted rates as stated above that the remaining customers have approached the Companyfor settlement of their dues that the orders issued by the various consumer courtsincluding the appellate authorities/courts therein that the Company has settled the manyof such consumer court cases that the total debts of the Company have reducedconsiderably because of settlement as aforesaid and that the Company is exploring thepossibility of framing the new scheme of arrangement it is not feasible for the Companyto ascertain accurately its liability on any given date".

Considering all the facts as given above we qualify our opinion that it is notfeasible for us to ascertain accurately the liability of the Company as on the date of theBala nee Sheet.

We conducted our audit of the Financial Statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Companies Act 2013. Ourresponsibilities under those Standards are further described in the Auditors'Responsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the ethical requirements that arerelevant to our audit of the Financial Statements under the provisions of the CompaniesAct 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion on the Financial Statements.

Emphasis of matter:

1. We draw the attention to Note 17.01(b) of the Financial Statements. The Companyduring the year with a view towards restructuring its liabilities has settleddeposits/debentures/subordinated debts at discounted rates. The same has been done withdue consent of the parties to deposits debentures and debts. The interest write backarising out of such settlement is considered as Exceptional Income in the Statement ofProfit and Loss. Principal write back arising out of such settlement is considered ascapital receipt and taken directly to Capital Reserve (viz: Capital Reserve 2) in theBalance Sheet. This has been done as per the accounting policy followed by the Company asstated in Note no. II (m) of 'Significant accounting policies and key accounting estimatesand judgements'. The Company had made similar settlements during the earlier years alsoby giving the similar accounting treatment Our opinion is not modified in this matter.

2. We draw attention to Note 27.17 of the Financial Statements The Company has earnedProfit during the year and also during immediate previous financial year i.e. year ending31st March 2020 due to Exceptional income as disclosed in Note 26. Our opinion is notmodified in this matter.

3. We draw attention to Note 27.16 of the financial statements as regards to themanagement evaluation of COVID-19 impact on the future performance of the Company. Ouropinion is not modified in this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

Except for the matter described in the 'Basis for Qualified Opinion' and 'Emphasis ofMatter' section we have determined that there are no other key audit matters tocommunicate in our report.

Other Information (other than the Financial Statements and Auditors' 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 Corporate Governance Report (including shareholders information) andSchedule to Balance Sheet of a Non-Banking Financial Company (as required in terms ofParagraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank)Directions 1998) but does not include thefmancial statements and our auditors' reportthereon. The above information is expected to be made available to us after the date ofthis auditors' report

Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

When we read the Board's Report including Annexures to Board's Report the CorporateGovernance Report (including shareholders information) and Schedule to Balance Sheet of aNon-Banking Financial Company (as required in terms of Paragraph 9BB of Non-BankingFinancial Companies Prudential Norms (Reserve Bank) Directions 1998) if we conclude thatthere is a material misstatement therein we are required to communicate the matter tothose charged with governance.

Responsibility of Management for the Financial Statements

The Company's Board of Directors is responsible for the matters in section 134(5) ofthe Companies Act 2013 ("the Act") with respect to the preparation andpresentation of these financial statements that give a true and fair view of the financialposition financial performance total comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) specified under Section 133 ofthe Act read with Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness

of the accounting records relevant to the preparation and presentation of thefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the company's financialreporting process. Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditors' report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Financial Statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatements of the FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to providebasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe Financial Statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditors'report. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the FinancialStatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Financial Statements.

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 the independence and to communicate withthem all 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 financial statements of the currentperiod and are therefore the key audit matters. We describe these matters in our auditor'sreport unless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies {Auditor's Report) Order 2016 {"the Order")issued by the Central Government of India in terms of sub-section (11} of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by the Master Direction DNSS PPD.03/66.15.001/2016-17 dated 29.09.2016(RBI/DNBS/2016-17/48) issued by the Reserve Bank of India Department of Non-BankingSupervision Central Office we will be giving a statement of matters specified in paragraph3(A) & 3(B) of the order at a later date.

3. In terms of press release issued by Reserve Bank of India dated 27.06.2001 we statethat:

a) The Certificate of Registration as issued by the Reserve Bank of India is not inforce since same was cancelled during December 2004.

b) The Company has not obtained credit rating.

c) The capital adequacy ratio is negative and accordingly the Company's Loans advancesand investments are above the credit exposure limits.

d) The Company has not filed the prudential returns and annual returns as per reviseddirectives. However the Company has filed such returns as per the directives as prevailedtill 31st March 2011

i.e prudential returns on half yearly basis and annual return once a year.

e) The public deposits are matured for repayment but remained unpaid by the Company.However the company has settled some of the deposits at discounted rates without interest.The Company has not provided/paid interest on deposits after 30th June 2002.

f) The Company has not created floating charge in favour of the depositors on thestatutory liquid assets invested.

g) The Company has not closed any of its branches during the year. Therefore thequestion of making

any comments therein does not arise.

4. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained ail the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books

(c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) Our Qualifications as given under paragraph titled "Basis for qualifiedopinion" may have adverse effect on the functioning of the Company if the managementperception as detailed in note 27.01 of financial statement does not materialize. Howeverour observation as given under paragraph titled "Emphasis of matter'' will not haveadverse effect on the functioning of the Company.

(f) The qualification/observations relating to the maintenance of accounts and othermatters connected therewith are as stated in the "Basis for Qualified Opinionparagraph" and "Emphasis of Matter paragraph" above.

(g) The Management of the Company is of the opinion that its directors are notdisqualified u/s 164(2) of the Companies Act 2013 for the reasons as stated in Note27.11of the financial statements. Accordingly the directors have given the writtenrepresentations that they are not disqualified to be the directors of the Company u/s164(2) of the Companies Act 2013 which has been taken on record by the Board ofDirectors. Accordingly we are not expressing opinion on the aforesaid aspect.

(h) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses a qualified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

(i) With respect to the other matters to be included in Auditors' Report in accordancewith the requirements of section 197(16) of the Act as amended :

The Company has not paid any managerial remuneration to its directors other thansitting fees. In our opinion and to the best of our information and according to theexplanations given to us the remuneration (i.e. sitting feesjso paid by the Company toits directors during the year is in accordance with the provisions of section 197 of theAct

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

i. The Company has stated vide 27.10 and 27.18 of the financial statement that theimpact of pending litigations on its financial position is not ascertainable for thereasons as stated in the aforesaid notes.

ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable iosses which has been confirmed by themanagement vide note 27.19 of the financial statement.

iii. The Company has not transferred any amount to the credit of Investor Education andProtection Fund during the year under audit for the reason as given by the managementvide Note 1301 and 27.20 of financial statement. Accordingly commenting on delay intransferring the amounts to the aforesaid fund does not arise.

For SRIRAMULU NAIDU & CO
Place: MANIPAL CHARTERED ACCOUNTANTS
Date :30th June 2021 Firm's Registration Number: 008975S
Sd/-
CA Sriramulu Naidu
PARTNER
Membership Number: 018244
UDIN:21018244AAAAKN3652

ANNEXURE "A" TO INDEPENDENT AUDITOR'S REPORT (Issued to the Members ofMANIPAL FINANCE CORPORATION LIMITED)

REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS" OF EVEN DATE

As required by the Companies (Auditor's Report) Order 2016 (hereinafter referred to as"the order") issued by the Central Government under section 143(11) of theCompanies Act 2013 and on the basis of such checks as we considered appropriate andaccording to the information and explanations given to us we further report that

1. a) I he Company has maintained proper records showing full particulars includingquantitative

details and situation of fixed assets i.e. Property Plant and Equipment.

b) We draw attention to Note 27.14 of the financial statements. According to theinformation and explanations given to us the fixed assets i.e. Property Plant andEquipment other than those under lease have been physically verified by the managementduring the period and no material discrepancies were noticed on such verification ascompared to available records. In respect of leased assets physical verification has notbeen done during the year.

c) According to the information given to us and on the basis of our examination alltitle deeds of free hold immovable properties are held in the name of the company. Thetitle deeds of lease hold immovable properties are supported by Memorandum of agreemententered into with the lessor. We are informed that the original title deeds in respect ofimmovable properties of land and buildings (both freehold and lease hold) whose titledeeds have been pledged as security for debentures are lying with the Debenture Trusteeas evidenced by the records produced before us and accordingly we have given our report asabove based on the examination of copies of the above said documents.

2. According to the information and explanations given to us the inventories whichconsist of shares and securities have been physically verified by the management duringthe year at reasonable intervals. No material discrepancy was noticed on physicalverification of stocks by the management as compared to book records.

3. As per the information and explanation given to us the company during the year hasnot granted loans secured or unsecured to/from companies firms LLP or other partiescovered in the register maintained under section 189 of the Act. Hence further commentingon clause

(iii) of para 3 of the said order does not arise.

4. According to the information and explanations given to us the Company has not givenloans made any investments or provided any guarantee or security during the year underaudit. Accordingly the question of reporting on compliance of section 185 and 186 of theAct does not arise. Therefore the paragraph 3(iv) of the Order is not applicable to theCompany.

5 In our opinion and according to the information and explanation given to us theCompany has

complied with the directives issued by the Reserve Bank of India the provision ofSection 73 to 76 of the Companies Act 2013 Companies (Acceptance of Deposit) Rules 2014and Non Banking Financial Companies (Reserve Bank Directions) with regard to acceptance ofdeposit from public subject to the exception of renewal of deposits up to 18.01.2000 withmaturity dates falling beyond 31s' December 2003 non-payment of principal/interest as and when it became due. Our other observations are being made in main auditreport under the head

'Basis for qualified opinion". However no fresh deposits have beenaccepted/renewed during the year under audit. We are informed by the management that thecompany has not received any order by Company Law Board or National Company Law Tribunalor Reserve Bank of India or any Court or any other Tribunal in respect of deposits exceptthe orders from various Consumer Courts (including the Appellate Authorities/Courts actingupon under Consumer Protection Act) regarding repayment of proceeds ofdebentures/debts/deposits with interest and other costs. The detailed information on theseare not made available to us. Therefore we are not in a position to comment on thecompliance of aforesaid orders. However we are informed that the Company has settled thedues of many of such cases which also includes settlement at discounted rates. TheCompany has also received the order from Reserve Bank of India during December 2004canceling the certificate of registration.

6. The Central Government has not prescribed maintenance of cost records under clause(d) of Sub section (1) of Section 148 of the Companies Act 2013. Therefore the questionof making further comments therein does not arise.

7. a) According to the information and explanation given to us the company is regularin

depositing undisputed statutory dues (i.e. provident fund employees' state insuranceincome tax goods and services tax customs duty and other material statutory duesapplicable to it) with the appropriate authorities and there are no arrears ofoutstanding statutory dues as at the last day of the financial year concerned for a periodof more than six months from the date they became payable.

b) According to the records of the company there are no dues of Sales Tax Income TaxCustom Duty Service Tax Goods and Services Tax Excise Duty Value added tax which havenot been deposited due to any dispute.

8. Based on our audit and according to the information and the explanations given tous we are of the opinion that the company has during the year defaulted in payment ofdues to the debenture holders amounting Rs.4838 thousands (P Y Rs. 5891 thousands).Interest on debentures not paid/provided since 1st day of July 2002. However ascheme of arrangement was submitted before the Hon'ble High Court of Karnataka to repaythe debenture with interest thereon in the manner mentioned in the Note No. 13.01 to thefinancial statements. But the scheme is since withdrawn and the Company is exploring thepossibility of presenting a new scheme of arrangement as detailed in Note No.13.01 asaforesaid.

9. In our opinion and according to the information and explanation given to us nomoneys were raised by the Company by way of initial public offer or further public offer(including debt instruments) during the year under audit. The Company has also not raisedany term loan during the year under audit. Hence further commenting on clause (ix) of para3 of the said order does not arise.

10. Based on the audit procedures performed and the information and explanations givento us we report that no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year nor have we been informed of suchcase by the management.

11. According to the information and explanation given to us no managerialremuneration has been paid during the year under audit. Therefore the clause (xi) of para3 of the order is not applicable to the Company

12. The Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order isnot applicable.

13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Section 177 and 188 of the Act wherever applicable and the details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

14. According to the information and explanations given to us and based on ourexamination of the records of the Company the company has issued 7% Non-CumulativeRedeemable Preference Shares through private placement. In our opinion the requirementsof $. 42 of the Act regarding Private placement of shares made during the year underreview have been complied with. Further in our opinion the amounts raised have been usedfor the purposes for which the funds were raised.

15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Therefore the question ofcompliance with Section 192 of the Companies Act 2013 does not arise. Accordingly theparagraph 3(xv) of the Order is not applicable.

16. The Company was registered under Section 45-IA of the Reserve Bank of India Act1934. However The Certificate of Registration as issued by the Reserve Bank of India isnot in force since same was cancelled during December 2004

"REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF EVEN DATE

Report on the Internal Financial Controls under Clause (h) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ManipaiFinance Corporation Limited ("the Company") as of 31st March 2021 inconjunction with our audit of the financial statements of the Company for the year endedon that date

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over financial Reportingissued by the Institute of Chartered Accountants of India ('ICAT) These responsibilitiesinclude design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of Internal Financial Controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered accountants ofIndia. 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 about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the 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 Company's internal financial controls systemover financial reporting.

Meaning of internaf Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention of timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitation of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Basis for issue of qualified opinion

We draw attention to Note 27.14 of the Financial Statements. The Company has notverified the Fixed Assets under lease falling under the head "leased machineries andequipment" & "leased vehicles and furniture" of Note 9 of the FinancialStatement.

Qualified Opinion

In our opinion except for the effect of the matter described in the Basis for QualifiedOpinion paragraph the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internaf financial controlsover financial reporting were operating effectively as at 31" March 2021 based onthe internal controls over financial reporting criteria established by the companyconsidering the essential components of internal control stated in the Guidance Note onAudit of internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants Of India.

PLACE: Manipal For SRIRAMULU NAIDU & CO
DATE: 30!h June2021 CHARTERED ACCOUNTANTS
Registration Number: 008975S
Sd/-
CA SRIRAMULU NAIDU
Partner
Membership No. 018244
UDIN:21018244AAAAKN3652

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