ON STANDALONE IND AS FINANCIAL STATEMENTS
TO THE BOARD OF DIRECTORS OF NOIDA TOLL BRIDGE COMPANY LIMITED OPINION
We have audited the accompanying standalone Ind AS financial statements of NOIDATOLL BRIDGE COMPANY LIMITED ("the Company") which comprise the BalanceSheet as at March 31 2020 the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the standalone financial statements including a summaryof the significant accounting policies and other explanatory information (hereinafterreferred to as "the Standalone Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("The Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2020 and its losses(including other comprehensive income) its cash flows and the changes in equity for theyear ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport.
We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the standalone financial statements.
EMPHASIS OF MATTER
We draw attention to the following:
(a) Note No. 30 to the standalone financial statements in which pending the outcome ofthe Company's appeal before the Hon'ble Supreme Court against the order of the Hon'bleHigh Court of Allahabad stalling the levy and collection of toll fee based on a legalopinion the Board has placed reliance on the provisions of the Concession Agreementrelating to compensation and other recourses and taken a stand that the underlying valueof the intangible and other assets is not impaired.
(b) Note No 34 (iii) to the standalone financial statements which relates to incometax demands aggregating Rs. 11633.78 crores raised on the Company for the assessmentyears 2006-2007 to 20142015 and 2016-17 to 2017 2018 and also an equivalentamount of penalty for the said assessment years together resulting in a total demand ofRs.22527.08 crores. The Management of the Company is of the view that both demands aredevoid of any justification or merit and that the Company is confident of getting afavourable decision. Consequently the Company has not made any provision in itsStandalone Financial Statements.
(c) Note No. 31 (iv) & 31 (v) to the standalone financial statements in whichrelates to the Hon'ble NCLAT judgment dated March 12 2020 giving approval to October 152018 as the cut-off date for initiation of resolution process. Accordingly the Companyhas during the year ended March 31 2020 not made a provision for interest on itsoutstanding loan from ICICI Bank Limited and IL&FS Transportation Networks Limitedaggregating to Rs.8.79 crores and has not accrued interest income of Rs.0.05 crores on theloan given to subsidiary (ITNL Toll Management Services Limited).
Further the Company has also reversed interest costs for the period October 16 2018to March 31 2019 aggregating to Rs. 3.66 crores on borrowings from the above entities.And has reversed interest income on loan given to subsidiary (ITMSL) for the periodOctober 16 2018 to March 31 2019 aggregating to Rs. 0.08 crores.
(d) Note No 32 to standalone financial statements which describes the Management'sassessment to the impact of COVID -19 pandemic and the resultant lockdowns on thesignificant uncertainties involved in developing some of the estimates involved inpreparation of financial statements including but not limited to its assessment ofliquidity and going concern recoverable value of its property plant and equipmentintangible assets and the net realizable value of other assets. Based on informationavailable as of this date Management believes that no further adjustments are required tothe financial statements.
Our opinion is not modified in respect of the above matters.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr. No. Key Audit Matter ||Auditor's Response |
|1. Evaluation of uncertain tax positions ||Principal Audit Procedures |
|The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||Obtained details of completed tax assessments and demands for the year ended March 31 2020 from management. We also reviewed management's stand in the Appeal Petitions filed by the Company. We discussed the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. We also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. |
|Refer Notes 34(iii) and 35(ii) to the Standalone Financial Statements || |
|2. Suspension of Toll Operations at Noida DND Toll Flyway as per the Order of the Hon'ble Supreme Court. ||Principal Audit Procedures |
|On the Public Interest Litigation filed in 2012 challenging the validity of the Concession Agreement and seeking Concession Agreement to be quashed the Hon'ble Allahabad High Court followed by Hon'ble Supreme Court has directed the Company to stop collecting the user fee. Consequently collection of user fee from the toll users have been suspended since October 2016. ||We have reviewed the Concession Agreement initially entered into by the Company with Noida Authority. Together with the Order of Hon'ble Supreme Court dated November 2016 denying interim stay to the company from collecting user fee. |
| ||Also gone through the stand taken by the Company and the proposal of modification of the Concession Agreement which the Company has submitted with Noida Authority. |
| ||We have also reviewed the orders of the Arbitration Proceedings on the claims and counter claims filed by both the Company and Noida Authority. |
| ||Reviewed the Order dated April 12 2019 of Hon'ble Supreme Court directing stay on the Arbitral Proceedings and also Company's application filed in Hon'ble Supreme Court on January 31 2020 seeking vacation of interim stay. The application for the vacation of interim stay has not yet been listed. |
|3. Evaluation of National Company Law Tribunal (NCLT) Order: ||Principal Audit Procedures |
|IL&FS is the promoter and majority shareholder of ITNL and ITNL is the promoter of NTBCL. On October 01 2018 NCLT has passed an order under the provisions of Section 241 and 242 of the Companies Act 2013. ||We have reviewed the orders uploaded at the NCLT site relating to the company and have also obtained all the updates done at the stock exchange by the company in relation to the NCLT matter and have also obtained and reviewed the Hon'ble NCLAT's final order dated March 12 2020. The said order confirms crystallization of claims as of Cut-Off Date i.e. October 15 2018 for initiation of resolution process of the Company. |
|Noida Toll Bridge Co Limited being a group company is also a party to it. || |
|National Company Law Appellate Tribunal (NCLAT) passed an interim order dated October 15 2018 granting a moratorium on all creditor actions against IL & FS as well as all of its group companies. On March 12 2020 the Hon'ble NCLAT vide its order has approved the revised resolution plan submitted by the new board of directors and has also approved October 15 2018 as the cutoff date for initiation of resolution process of the Company. || |
|4. Status of Outdoor Advertising ||Principal Audit Procedures |
|The Company has received demand notices from New Okhla Industrial Development Authority (Noida) amounting to Rs.845 Lakhs towards arrears of outdoor advertising on account of increase in the revenue share & license fees. ||Our audit approach was appraisal of arrangement / agreements and legal stand taken by the company: |
| ||Reviewed the Advertisement Policy of Noida and the permission letter received by the company for the display of outdoor advertisement. Correspondence between Company and Noida was also reviewed wherein the Company has requested to keep the demand in abeyance as the matter has been referred to Arbitration. |
| ||Company has also served copy of NCLAT Order dated October 15 2018 wherein moratorium has been granted to the company against all creditors. There is no further correspondence in this regard. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the 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 our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these standalone Ind AS financial statements that give a true and fairview of the financial position financial performance (including other comprehensiveincome) cash flows and change in the equity of the Company in accordance with theaccounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing 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 standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone Ind AS financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting 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 auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor's Report) Order 2016 ("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 the mattersspecified in paragraph 3 and 4 of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome and the Cash Flow Statement and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of accounts.
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct.
(f) 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".
(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 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of the pending litigations on its financialposition in its Standalone Financial Statements Refer Note 35 to standalonefinancial statements;
ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
THE ANNEXURE REFERRED TO IN THE INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THECOMPANY ON THE STANDALONE IND AS FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31 2020
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As per the information and explanations given to us fixed assets have beenphysically verified by the Management at reasonable intervals and no discrepancy wasnoticed.
(c) According to the information and explanations given to us the Company does not ownany freehold immovable properties and lease / sub lease deeds of leasehold land areregistered with Appropriate Authorities.
(ii) As per the information and explanations given to us inventories are physicallyverified during the year by the management. In our opinion the frequency of suchverification is reasonable. No material discrepancies were noticed on physicalverification.
(iii) The Company has granted loans to Companies covered in the register maintainedunder section 189 of the Companies Act 2013 (the Act') in respect of which:
a) In our opinion terms and conditions on which the loans have been granted to thebodies corporate listed in the register maintained under Section 189 of the Act were notprima facie prejudicial to the interest of the Company.
b) In the case of loans granted to the bodies corporate listed in the registermaintained under section 189 of the Act the borrowers have been regular in the payment ofthe principal and interest as stipulated.
c) There are no overdue amounts in respect of the loan granted to a body corporatelisted in the register maintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provision of section 185 and 186 of the Companies Act 2013in respect of grant of loans making investments and providing guarantees and securitiesas applicable.
(v) The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2020 and therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.
(vi) The company is not required to maintain the cost records pursuant to the Rulesmade by the Central Government under section 148 of the Act. Thus reporting under clause3(vi) of the order is not applicable to the Company.
(vii) a) According to the information and explanations given to us and on the basis ofour examination of the books of account the Company has been generally regular indepositing undisputed statutory dues including Provident Fund Employees State InsuranceIncome-Tax Sales-Tax Service Tax Custom Duty Excise Duty Value Added Tax Cess andany other statutory dues applicable to it with the appropriate authorities during theyear.
According to the information and explanations given to us no undisputed amount ispayable as at March 31 2020 for a period of more than six months from the date theybecame payable.
b) According to the information and explanations given to us there are no dues ofIncome Tax Wealth Tax Sales Tax Services Tax Duty of Custom Duty of Excise and ValueAdded Tax and other material statutory dues which has not been deposited with theappropriate authorities on account of any dispute other than as given below:
|Name of the Statute ||Nature of the dues ||Amount (in Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax ||Income Tax ||10181.75* ||AY 2007-08 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax ||12973.83* ||AY 2008-09 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax ||14190.24 ||AY 2009-10 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax ||15109.81 ||AY 2010-11 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax ||15865.45 ||AY 2011-12 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax ||17588.74* ||AY 2012-13 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax ||18936.55* ||AY 2013-14 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax ||29156.23 ||AY 2014-15 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax ||1089330.00 ||AY 2006-07 to AY 2014-15 ||Income Tax Appellate Tribunal Delhi |
|Income Tax ||Income Tax (Penalty) ||1089330.00 ||AY 2006-07 to AY 2014-15 ||Pending before AO |
|Income Tax ||Income Tax ||35700.33 ||AY 2016-17 ||CIT (Appeals) Delhi |
|Income Tax ||Income Tax ||38348.50 ||AY 2017-18 ||CIT (Appeals) Delhi |
|Deputy Commissioner Service Tax ||Service Tax ||31.00 ||FY February 2016 to March 2017 ||Pending before Commissioner of Central Tax (Appeals) Noida |
*Net of amount paid under protest
(viii) In our opinion and according to the information and explanations given to usthe company has defaulted in repayment of dues to financial institutions and banks sinceMay 2018. The details of overdue interest and overdue principal of the Company'sborrowings are as follows:
|Sr. No. Bank / Financial Institution ||Overdue as on 31/03/20 (*) (Rs. In Lakhs) |
| ||Interest Principal |
|1. ICICI Bank Limited ||1144.00 2000.00 |
(*) As per original repayment schedule. On September 27 2018 ICICI Bank Limited hassent a notice for loan recall of Rs.4500 Lakhs and interest due thereon and also notice ofacceleration of the facility.
(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans during the year and hence reporting underclause 3 (ix) of the Order is not applicable to the Company.
(x) To the best of our knowledge and belief and according to the information andexplanations given to us no fraud by the Company or no material fraud on the Company byits officers or employees has been noticed or reported during the Year.
(xi) In our opinion and according to the information and explanations given to us andbased on our examination of records of the Company the Company has complied with therequisite provisions of the Section 197 read with Schedule V to the Companies Act 2013.It may be noted that no managerial remuneration has been paid/ provided by the company inview of losses incurred.
(xii) To the best of our knowledge and belief and according to the information andexplanations given to us the Company is not a Nidhi company. Accordingly paragraph3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause 3 (xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations give 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 to its directors and hence provisions ofsection 192 of the Companies Act 2013 are not applicable to the Company.
Accordingly clause 3 (xv) of the Order is not applicable.
(xvi) To the best of our knowledge and the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE - B TO THE INDEPENDENT AUDITOR'S REPORT
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION143 OF THE COMPANIES ACT 2013 ("THE ACT")
We have audited the internal financial controls over financial reporting of NoidaToll Bridge Company Limited ("the Company") as of March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control 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 (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols 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 INTERNAL 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 or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
INHERENT LIMITATIONS 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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.