To the Members of Nitta Gelatin India Limited Report on the Audit of the StandaloneFinancial Statements Opinion
1. We have audited the accompanying standalone financial statements of Nitta GelatinIndia Limited (the Company') which comprise the Balance Sheet as at 31 March 2020the Statement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (Act') in the manner so required and give a true and fairview in conformity with the accounting principles generallyacceptedinIndiaincludingIndianAccountingStandards (Ind AS') specified under section133 of the Act of the state of affairs of the Company as at 31 March 2020 and its profit(including other comprehensive income) its cash flows and the changes in equity for theyear ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the
Standards on Auditing specified under section 143(10) of the Act. Our responsibilitiesunder those standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI') together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
Key Audit Matters
4. Key audit matters are those matters that in our professional judgementwere of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
5. We have determined the matter(s) described below to be the key audit matters to becommunicated in our report.
|Key audit matters ||How our audit addressed the key audit matter |
|(a) Provisions and contingent liabilities relating to litigations (Refer note 3.31 of the accompanying standalone financial statements): ||Our audit work included but was not limited to the following procedures: |
|Following are the significant matters relating to litigations that are outstanding as at 31 March 2020: || Obtained an understanding of the management process for: |
|i. Customs duty - Rs.1968.36 lakhs ||- identification of legal and tax matters initiated against the Company |
|ii. Water cess - Rs. 653.01 lakhs ||- assessment of accounting treatment for each such litigation identified under Ind AS 37 accounting principles and - measurement of amounts involved. |
|iii. Other tax matters - Rs. 1248.67 lakhs The eventual outcome of these legal proceedings is dependent on the outcome of future events and unexpected adverse outcomes could significantly impact the Company's reported profits and balance sheet position. || Evaluated the design and tested the operating effectiveness of key controls around above process. |
|The amounts involved are material and the application of accounting principles as given under Ind AS 37 || Obtained an understanding of the nature of litigations pending against the Company and discussed the key developments during the year for key litigations with the management and respective legal counsels handling such cases on behalf of the Company. |
|Provisions Contingent Liabilities and Contingent Assets in order to determine the amount to be recorded as a liability or to be disclosed as a contingent liability in each case is inherently subjective and needs careful evaluation and judgement to be applied by the management. ||Tested the independence objectivity and competence of such management experts involved. |
| || On a sample basis obtained and reviewed the necessary evidence which includes correspondence with the external legal counsels and where necessary inspected minutes of case proceedings available in public domain to support the decisions and rationale for creation of provisions and / or disclosure of contingent liabilities in respect of each such litigation selected for testing. |
| || Obtained independent opinion/confirmations directly from the external legal counsels to confirm management's assessment of outstanding litigation and asserted claims. |
|Key judgements are also made by the management in estimating the amount of liabilities provisions and/or contingent liabilities related to aforementioned litigations. Considering the degree of judgement significance of the amounts involved inherent high estimation uncertainty and reliance on external legal and tax experts this matter has been identified as a key audit matter for the current year audit. || Reviewed each attorney response obtained as above to ensure that the conclusions reached are supported by sufficient legal rationale and adequate information is included for the management to determine the appropriate accounting treatment of such cases in the financial statements. |
| || Assessed the appropriateness of methods used and the reliability of underlying data for the underlying calculations made for quantifying the amounts involved. Tested the arithmetical accuracy of such calculations. |
| || Involved our tax specialists to assess the Company's interpretation and application of relevant tax laws to evaluate the appropriateness of key assumptions used and the reasonableness of estimates in relation to uncertain tax positions taking into account past precedents. |
| || Evaluated the disclosures made under provisions and contingent liability for their appropriateness in accordance with the applicable accounting standards. |
|(b) Impairment assessment of the carrying value of Property Plant and Equipment ||Our audit work included but was not restricted to the following procedures: |
|(Refer note 3.01 of the accompanying Standalone financial statements) || Obtained an understanding of the management process and performed a walk through to evaluate design effectiveness and tested operating effectiveness of key controls around identification of impairment indicators impairment testing of property plant and equipment which include identification of cash generating units at which level such impairment testing is required to be performed. |
|As at 31 March 2020 the Company is carrying Property Plant and Equipment (PPE') aggregating to Rs. 11561.31 lakhs in its financial statements. These balances are subject to a test of impairment by the management where impairment indicators exist. || Obtained the business plans of the Company used in the valuation of the identified cash-generating unit to corroborate the future cash flows used in value-in-use determination. |
|As mentioned in note No. 3.01 to the standalone financial statements as per impairment testing of the carrying value of PPE carried out by the management as at 31 March 2020 in the manner prescribed under Ind AS 36 || Involved valuation specialists to test the Management's assumptions used for determining the value-in-use of the cash generating unit and obtained adequate supporting documents with respect to the impairment loss recognised in the current year. |
| Impairment of Assets an impairment loss of _310.73 lakhs recognized in the current year. Fair value and value-in-use of such PPE for the determination of the recoverable amounts involves significant judgement and high estimation uncertainty relating to identification of appropriate cash-generating unit future cash flow projections made by the management using internal and external assumptions and using appropriate discount rate. As a result of such judgements and significance of the amounts involved the matter has been identified as a key audit matter in the current year audit. || Performed sensitivity analysis in respect of the key assumptions used including revenue growth rates cost reduction targets and discount rate to verify appropriateness of such assumptions. |
|This matter is also considered as fundamental to the understanding of the users of the financial statements || Compared the actual results of estimates made in prior period to assess accuracy of management's estimates. |
| || Assessed appropriateness of the disclosures made by the management for impairment assessment of carrying value of PPE. |
|(c) Inventory existence ||Our audit work included but was not restricted to the following procedures: |
|(Refer note 3.07 the accompanying Standalone financial statements) || Obtained understanding of management process of inventory management and inventory physical verification performed subsequent to year end; |
|As at 31 March 2020 the Company held inventories of Rs. 8328.84 lakhs as disclosed in Note 3.07 to the standalone financial statements. Inventories mainly consist of raw materials work in progress finished goods stores and spares and others. As per the Company's inventory verification plan management performs physical verification of inventory at all locations under the supervision of finance team at each quarter. || Evaluated the design effectiveness of controls over inventory management process/inventory physical verification and tested key controls for their operating effectiveness; |
|Due to Covid-19 outbreak and related lock-down restrictions management was unable to perform the year end physical verification of inventories on 31March 2020. || Inspected the physical count procedures carried out by the management subsequent to year end; |
|The physical verification was carried out subsequent to year end on different dates in various locations and performed roll-back procedures from date of count to the reporting date to arrive at the physical stock as on reporting date. || During the above inspection we noted whether the instructions given by management to stock count teams were followed including ensuring proper segregation of stock separate identification of goods received after year end identification of obsolete inventory if any etc. |
|Considering the above we have reassessed our audit approach with respect to assessing the existence and condition of physical inventory as at year end and adopted alternate audit procedures as further described in our audit procedures. || Obtained management's inventory count records (count sheets) and reconciliation with the Company's perpetual inventory records. |
|Considering the significance and size of the Inventory at the year end reliance on roll-back and other alternate procedures existence of inventory is considered as a key audit matter for the current year audit. || Tested the reconciliation of differences if any between management physical count and inventory records including accounting of such variances basis management approval; |
| || Tested management's roll-back of the inventory count performed at locations on sample basis from date of count to 31 March 2020 and tested completeness arithmetical accuracy and validity of the data used for the procedures; |
| || Performed physical inventory count for certain location subsequent to year end; and |
| || Appointed independent auditor's experts for observing inventory counts at certain locations. |
Information other than the Financial Statements and Auditor's Report thereon
6. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
7. The accompanying standalone financial statements have been approved by the Company'sBoard of Directors. The Company's Board of Directors isresponsibleforthemattersstatedinsection134(5)ofthe Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of
71 the financial position financial performance including other comprehensive incomechanges in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Ind AS specified under section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgements and estimates that arereasonable and prudent; and design implementation and maintenance of adequateinternalfinancialcontrolsthatwereoperatingeffectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
8. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
9. Those Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
10. 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 auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgement and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control;
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls;
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management;
Concludeontheappropriatenessofmanagement's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 auditor'sreport. 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; 12. Wecommunicate with those charged with governance regarding among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors in excess of limits laid down under section197 read with Schedule V to the Act by Rs. 98.66 lakhs for which requisite approval ofthe shareholders has been obtained by the Company by passing a special resolution in theAnnual General Meeting held on 02 August 2019 in accordance with the provisions of section197(1) read with Schedule V of the Act as also mentioned in Note 3.29 to the accompanyingstandalone financial statements. 16. As required by the Companies (Auditor's Report)Order 2016 (the Order') issued by the Central Government of India in terms ofsection 143(11) of the Act we give in the Annexure I a statement on the matters specifiedin paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure I as required by section 143(3) of the Actbased on our auditwe report to the extent applicable that: a) we have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit of the accompanying standalonefinancial statements;
b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) the standalone financial statements dealt with by this report are in agreement withthe books of account;
d) in our opinion the aforesaid standalone financial statements comply with Ind ASspecified under section 133 of the Act;
e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2020 from being appointed as a director in terms of section 164(2) of the Act;
f) we have also audited the internal financial controls with reference to financialstatements of the Company as on 31 March 2020 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 08June 2020 as per Annexure II expressed unmodified opinion; and
g) with respect to the other matters to be included in the Auditor's Report inaccordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. the Company as detailed in note 3.31 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position as at 31 March 2020;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2020;
iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31March2020; and
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.
Annexure I to the Independent Auditor's Report of even date to the members of NittaGelatin India Limited on the standalone financial statements for the year ended 31 March2020
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that: (i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management during the yearand no material discrepancies were noticed on such verification. In our opinion thefrequency of verification of the fixed assets is reasonable having regard to the size ofthe Company and the nature of its assets.
(c) The title deeds of all the immovable properties (which are included under the headProperty plant and equipment') are held in the name of the Company except for thefollowing properties which were transferred as a result of amalgamation of companies asstated in note 3.41 to the standalone financial statements wherein the tittle deeds are inthe name of the erstwhile company:
|Nature of property ||Total Number of Cases ||Whether leasehold/ freehold ||Gross block as on 31 March 2020 (Rs. in lakhs) ||Net block on 31 March 2020 (Rs. in lakhs) ||Remarks |
|Land ||1 ||Leasehold ||622.69 ||558.45 ||The title deeds are in the name of Reva Proteins Limitederstwhile subsidiary company that was merged with the Company except for 12486.25 square meters of land at Jhagadia Industrial Estate Bharuch District Gujarat (Net Book Value of Rs. 71.83 lakhs) as stated in Note No 3.01 to the standalone financial statements whose title deed are in the name of GIDC. |
|Building ||1 ||Freehold ||1668.23 ||787.79 ||The title deeds are in the name of Reva Proteins Limited erstwhile subsidiary Company that was merged with the Company. |
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies between physicalinventory and book records were noticed on physical verification.
(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.
(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of investments and guarantees. Further in our opinion theCompany has not entered into any transaction covered under Section 185 and Section 186 ofthe Act in respect of loans and security.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost pursuant to theRules made by the Central Government for the maintenance of cost records under sub-section(1) of Section 148 of the Act in respect of Company's products and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained.However we have not made a detailed examination of the cost records with a view todetermine whether they are accurate or complete.
(vii)(a) The Company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax service tax duty ofcustoms duty of excise value added tax and other material statutory dues as applicableto the appropriate authorities. Undisputed amounts payable in respect of cess which wasoutstanding at the year-end for a period more than six months from the date they becamepayable are as follows:
Statement of arrears of statutory dues outstanding for more than six months:
|Name of the statute ||Nature of dues ||Amount (Rs. in lakhs) ||Period to which the amount relates ||Due Date ||Remarks |
|The Kerala Irrigation and Water Conservation Act 2003 and The Water (Prevention and Control of Pollution) Cess Act 1977 ||Water cess ||8.92 ||July2011 August 2011 April 2016 May 2016 and January 2017 to September 2017 ||Notice dated 14 November 2011 ||Payment of dues is made based on the order of assessment received under the Water (Prevention and Control of Pollution) |
(b) The dues outstanding in respect of income-tax sales-taxservice-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:
Statement of Disputed Dues:
|Name of the statute ||Nature of dues ||Amount (Rs. in lakhs) ||Amount paid under Protest (Rs. in lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income-tax Act 1961 ||Income tax ||178.83 ||11.61 ||AY 2009-10 to 2014-15 ||Commissioner of Income Tax (Appeals) |
|Kerala Value Added Tax Act 2003 ||Value Added Tax ||711.04 ||- ||FY 2011-12 ||Deputy Commissioner of Sales Tax (Appeals) |
|Kerala Value Added Tax Act 2003 ||Value Added Tax ||12.37 ||12.37 ||FY 2009-10 ||Deputy Commissioner of Sales Tax (Appeals) |
|Kerala Value Added Tax Act 2003 ||Value Added Tax ||48.56 ||14.31 ||FY 2010-11 ||Deputy Commissioner of Sales Tax (Appeals) |
|Central Sales Tax Act 1956 ||Central Sales Tax ||88.70 ||15.23 ||FY 2010-11 2011-12 2013-14 and 2014-15 ||Deputy Commissioner of Sales Tax (Appeals) |
|Name of the statute ||Nature of dues ||Amount (Rs. in lakhs) ||Amount paid under Protest (Rs. in lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Customs Act 1962 ||Custom duty ||1968.36 ||65.78 ||FY 2011-12 to FY 2016-17 ||Customs Excise and Service Tax Appellate Tribunal Bangalore |
|Central Excise Act 1944 ||Central excise ||350.75 ||- ||FY 2003-04 to 2014-15 ||Customs Excise and Service Tax Appellate Tribunal Bangalore |
|Central Excise Act 1944 ||Central excise ||7.21 ||0.36 ||FY 2010-11 to 2012-13 ||Customs Excise and Service Tax Appellate Tribunal Bangalore |
|Finance Act 1994 ||Service tax ||35.50 ||1.39 ||FY 2010-11 to 2012-13 ||Commissioner (Appeals) |
|Finance Act 1994 ||Service tax ||3.68 ||0.18 ||FY 2011-12 ||Customs Excise and Service Tax Appellate Tribunal Bangalore |
|Finance Act 1994 ||Interest on service tax demands ||32.28 ||- ||FY 2010-11 to 2012-13 ||Commissioner (Appeals) |
(viii) The Company has not defaulted in repayment of loans or borrowings to financialinstitution or bank during the year. The Company has neither taken any loans or borrowingsfrom government nor has any dues payable to debenture-holders during the year.
(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.
(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.
(xi) As stated in Note No 3.29 to the standalone financial statements the Company haspaid managerial remuneration in excess of the limits laid down under section 197 of theCompanies Act 2013 read with Schedule V of the Act by Rs. 98.66 lakhs for whichrequisite approval of the shareholders has been obtained by the Company by passing aspecial resolution in the Annual General Meeting held on 02 August 2019 in accordance withthe provisions of section 197(1) read with Schedule V of the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable Ind AS.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Independent Auditor's Report on the internal financial controls with reference to thestandalone financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 (the Act')
1. In conjunction with our audit of the standalone financial statements of NittaGelatin India Limited (the Company') as at and for the year ended 31 March 2020 wehave audited the internal financial controls with reference to financial statements of theCompany as at that date. Responsibilities of Management and Those Charged withGovernance for Internal Financial Controls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the Guidance Note') issued by the Institute of Chartered Accountants ofIndia (ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the Company's business including adherenceto the Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Financial Statements
3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India (ICAI') prescribed under Section 143(10) of the Act to theextent applicable to an audit of internal financial controls with reference to financialstatements and the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the Guidance Note') issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements were established and maintained and if such controlsoperated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.
Meaning of Internal Financial Controls with Reference to Financial Statements
6. A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements
7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such controls were operatingeffectively as at 31 March 2020 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note issued by ICAI.
|For Walker Chandiok & Co LLP |
|Chartered Accountants |
|Firm's Registration No.: 001076N/N500013 |
|Krishnakumar Ananthasivan |
|Membership No.: 206229 |
|UIN: 20206229AAAABI4894 |
|Place: Kochi |
|Date:08 June 2020 |