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Picturehouse Media Ltd.

BSE: 532355 Sector: Media
NSE: N.A. ISIN Code: INE448B01029
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NSE 05:30 | 01 Jan Picturehouse Media Ltd
OPEN 3.60
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VOLUME 508
52-Week high 3.78
52-Week low 0.72
P/E 14.40
Mkt Cap.(Rs cr) 19
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3.60
CLOSE 3.60
VOLUME 508
52-Week high 3.78
52-Week low 0.72
P/E 14.40
Mkt Cap.(Rs cr) 19
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Picturehouse Media Ltd. (PICTUREHOUSE) - Auditors Report

Company auditors report

To the Members of Picturehouse Media Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the standalone financial statements of Picturehouse Media Limited("the Company") which comprise the Balance Sheet as at 31st March 2020 and theStatement of Profit and Loss (including Other Comprehensive Income) the Statement of CashFlows and the Statement of Changes in Equity for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph below and inadequate disclosure of "Material UncertaintyRelated to Going Concern" referred to in the Basis for Qualified Opinion Paragraphsection of our report the aforesaid standalone 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 accounting principles generally acceptedin India including Indian Accounting Standards ('Ind AS') specified under section 133 ofthe Act of the state of affairs of the Company as at 31st March 2020 and its lossincluding other comprehensive income its changes in equity and cash flows for the yearended on that date.

Basis for Qualified Opinion

1. Attention is invited to Note No.29 to the Standalone Financial Statements inrelation to loans and advances made for film production (including interest accrued)amounting to Rs.3632.82 lakhs whose realisability is significantly dependent on timelycompletion of production of films and the commercial viability of the films underproduction etc. Management is of the view that loans and advances can be realised at thetime of release of the movies and accordingly the company is confident of realizing theentire amount of loans with interest and does not foresee any erosion in carrying value.We were unable to obtain sufficient appropriate audit evidence about the carrying amountsof loans and advances as at 31st March 2020 as the management was unable to provide usthe current status of production films and confirmation of balances from the borrowers.Consequently we were unable to determine whether any adjustments to the carrying amountsof loans and advances were necessary and to this extent loss for the year is understatedto this extent.

2. Attention is invited to Note No.29 to the Standalone Financial Statements inrelation to inventory i.e films production expenses amounting to Rs.4894.43 lakhs mainlyconsists of advances given to artists and co-producers. As the management has notcommenced the production of films the advances continued to be carried as inventory.However management states that it is evaluating options for optimal utilization of thesepayments. In the absences of demonstrable approach towards commencement and completion ofproduction of films and also in the absence of confirmation of balances from the parties.Consequently we were unable to determine whether any adjustments to the carrying amountsof inventory is necessary and to this extent loss for the year is understated to thisextent.

3. Attention is invited to Note no. 30 to the Standalone Financial Statements inrelation to investment in equity shares in PVP Capital Limited ('PVPCL' a Wholly OwnedSubsidiary Company) amounting to Rs.2521.74 lakhs. Considering erosion in the net worthof the subsidiary company and its dependence on the holding company to continue as a goingconcern and in the absence of visible cash flows defaults in repayment of its dues tobank non-payment of statutory dues the company is currently pursuing the realization ofdues to the company and settlement of existing lenders other than this the company hasnot been carrying any business activity further the regulatory authorities may cancel theregistration to carry the principal business activity as a Non- Banking Finance Companydue to non-maintenance of minimum net owned fund of Rs.200 lakhs as stated in said note tothe financial statements and other related factors indicates the existence of materialityuncertainty in carrying value of investments. Management asserts that no adjustment to thecarrying value is required as it is confident that Investee Company has ability to garnerthe required cash flows. Whereas we were unable to assess the financial ability of theinvestee company particularly from the perspective of meetings its obligations. Hence weare of the opinion that the entire carrying value of investment need to be provided forand to this extent the loss for year is understated to this extent.

4. Attention is invited to Note No.31 and 32 to the Standalone Financial Statements inrelation to preparation of financial statements on "Going Concern Basis withoutcarrying any major business activity incurring continuous losses from operations adversekey financial ratios non-payment of statutory dues impact of our observations made inpreceding paragraph the impact of outbreak of Coronavirus (COVID-19) on the businessoperations and other related factors indicates that there is an existence of materialuncertainty that will cast significant doubt on the company's ability to continue as agoing concern. Therefore company may not be able to realize its assets and discharge itsliabilities in the normal course of business. Notwithstanding this the financialstatements have been prepared as that of going concern and consequently the terminalvalues of various assets and liabilities have not been determined and we are thereforeunable to express our opinion whether the preparation of financial statements on a goingconcern assumption is appropriate or not.

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our Qualified Opinion.

Emphasis of Matter

Attention is invited to Note no. 37(b) to the Standalone Financial Statements BombayStock Exchange Limited (BSE) has imposed penalty on the company amounting to Rs. 7.59lakhs as per regulation 17 and 19 of the SEBI (LODR) Regulations 2015 for non compliancewith the requirements pertaining to the composition of Board regarding failure to appointWomen Director and for non-compliance with the constitution of Nomination and RemunerationCommittee. The company has disputed the same and filed an appeal before SecuritiesAppellate Tribunal (SAT).Pending disposal of the appeal the eventual obligation in thisregard is unascertainable at this stage. Based on the management's assessment that it hasgood case to succeed in dispute no provision is made in the Standalone FinancialStatements.

Our Opinion is not modified in respect of this matter.

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. In addition to the matter described in the Basis forQualified Opinion section we have determined the matters described below to be the keyaudit matters to be communicated in our Report.

Contingent Liabilities in relation to Service Tax Litigations

Key Audit Matter Auditor's Response
Our audit procedures included the following:
The Company has received certain demand orders and notices relating to service tax matters. The company is contesting these demands (refer note no.37 to the standalone financial statements). (i) Understanding the current status of the service tax litigations.
(ii) Examining recent orders and/or communication received from various service tax authorities and follow up action thereon.
There is high level of judgment required in estimating the level of provisioning. The management's assessment is supported by the facts of matter their own judgment and advices from legal and independent service tax consultants whereever considered necessary. Accordingly unexpected adverse outcomes may significantly impact the management's reported loss and the Balance Sheet. (iii) Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal advice; and
We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of these matters which requires application of judgment in interpretation of law. Accordingly our audit was focused on analysing the facts of subject matter under consideration and judgements/interpretation of law involved. (iv) Review and analysis of evaluation of the contentions of the management through discussions collection of details of the subject matter under consideration the likely outcome and consequent potential outflows on service tax issues.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the management discussion and analysisBoard's Report including annexures to Board's Report and Report on Corporate Governancebut does not include the standalone financial statements and our auditor's report thereon.The above reports are expected to be made available to us after the date of the auditor'sreport.

Our opinion on the standalone financial statements does not cover the other informationand we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

When we read the above reports if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards specified under section 133 of theAct read with relevant rules issued thereunder. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; the selection and application of appropriate accounting policies;making judgments and the estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone 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.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an Auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional 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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls with reference to financialstatements in place and the operating 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 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.

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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.

Other Matter:

Further to the continuous spreading of COVID-19 across India the Indian Governmentannounced a strict 21- day lockdown on 24th March 2020 which has further extended till31st July 2020 across the India to contain the spread of the Virus. This has resulted inrestriction on physical visit to the client locations and the need for carrying outalternative audit procedures as per the Standards on Auditing prescribed by the Instituteof Chartered Accountants of India (ICAI).

As a result of the above the entire audit was carried out based on remote access ofthe data as provided by the management. This has been carried out based on the advisory on"Specific Considerations while conducting Distance Audit/Remote Audit/ Online Auditunder current COVID-19 situation" issued by the Auditing and Assurance StandardsBoard of ICAI. We have been represented by the management that the data provided for ouraudit purposes is correct complete reliable and are directly generated by the accountingsystem of the company without any further manual modifications.

We bring to the attention of the users that the audit of the financial statements hasbeen performed in the aforesaid conditions.

Our audit opinion is not modified in respect of the above matter.

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 Act we give in the "Annexure A" statement on the matters specified in theparagraph 3 and 4 of the order.

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 purpose of our audit.

b) Except for the effects of the matter described in the Basis for Qualified OpinionParagraph above in our opinion proper books of account as required by law have been keptby the Company so far as appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flows and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account.

d) Except for the effects of the matter described in the Basis for Qualified OpinionParagraph above in our opinion aforesaid Standalone Financial Statements comply with theIndian Accounting Standards specified under Section 133 of the Companies Act 2013 readwith Rule 7 of the Companies (Accounts) Rules 2014

e) The matter described in the Basis for Qualified Opinion Paragraph above in ouropinion may have an adverse effect on the functioning of the company.

f) On the basis of written representations received from the directors as on 31st March2020 taken on record by the Board of Directors none of the directors is disqualified ason 31st March 2020 from being appointed as a director in terms of Section 164(2) of theAct.

g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion Paragraph above.

h) With respect to the adequacy of the Internal financial control over financialreporting of the company and operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and

i) In accordance with the requirements of section 197(16) of the Companies Act 2013as amended in our opinion and to the best of our information and according to theexplanations given to us during the year the company has not paid remuneration to thedirectors in accordance with the provisions of section 197 of the Companies Act 2013.Therefore remuneration paid to the directors over and above the limits laid down underthis section doesn't arise.

j) With respect to the other matters to be included Auditor's Report in accordance withRule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the bestof our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Financial Statements. Refer Note No.37 to the StandaloneFinancial Statements.

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses and

iii. There are no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Brahmayya & Co.
Chartered Accountants
Firm Regn. No.000511S
Sd/-
Place : Chennai K.Jitendra Kumar
Date : 31st July 2020 Partner
Membership No.201825
UDIN: 20201825AAAADV1342

Annexure - A to the Independent Auditors' Report

Referred to in Clause 1 of "Report on Other Legal and RegulatoryRequirements" Paragraph of the Independent Auditors' Report of even date the membersof Picturehouse Media Limited on the Standalone Financial Statements as of and for theyear ended 31st March 2020.

1. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us fixed assets have been physically verified by the management atreasonable intervals; no material discrepancies were noticed on such verification.

(c) The Company does not have any immovable properties in its name and hence clause (c)of paragraph 3(i) of the Order is not applicable to the Company.

2. As explained to us by the management the company is a service company namely movieproduction. The movie production/ making of content require various types qualities ofcontent related consumable and inputs. Due to the multiplicity and complexity of theitems it is not practicable to maintain the quantitative records/ continuous stockregister. All the purchases of content related consumable/consumables are treated asconsumed. In view of this the company does not maintain stock register and also does notcarry out physical verification of stock. However the management physically verifies thefinished content copyrights of Programs/ Film rights with reference to titledocuments/agreements in hand at the end of the year.

3. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies Firms Limited Liability Partnershipor other parties covered in the register maintained under section 189 of the CompaniesAct 2013. Therefore the provisions of clause (iii) (iii)(a) (iii)(b) and (iii)(c) ofParagraph 3 of the Order are not applicable to the company.

4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans given investments made guarantees given and securities given.

5. In our opinion and according to the information and explanation given to us theCompany has accepted Unsecured Loan from LLP during the year and has complied with theprovisions of Sections 73 to 76 and other relevant provisions of the Act and the rulesframed thereunder to the extent applicable. Further no order has been passed by Companylaw Board (CLB) or National Company Law Tribunal (NCLT) or Reverse Bank of India or anycourt or any other Tribunal against the Company.

6. To the best of our knowledge and as explained the Central Government has notprescribed the maintenance of cost records under section 148(1) of the Act for theservices of the Company.

7. (a) According to the information and explanations give to us and on the basis of ourexamination of the records Undisputed statutory dues including Goods and Service Tax(GST) Provident Fund Employees' State Insurance Income tax Sales tax Service taxDuty of Customs Duty of Excise Value Added Tax Cess and other material statutory duesas applicable have not been regularly deposited with the appropriate authorities andthere have been significant delays.

Undisputed amounts payable in respect thereof which were outstanding at the yearendfor a period of more than six months from the date they became payable are as follows:

Statement of Arrears of Statutory Dues Outstanding dues More than Six Months (Rs. inLakhs)

Name of the Statue Nature of Dues Amount Period to which relates Date of payment
The Finance Act 1994 Service Tax 4.69 RCM payable as on 31.03.2017 Yet to be remitted
The Income Tax Act 1961 Tax Deducted at Source 384.21 April 2016 to August 2019 Yet to be remitted
The Income Tax Act 1961 Interest on Tax Deducted at Source 151.19 April 2016 to March 2020 Yet to be remitted
Goods and Service Act 2017 Goods and Service Tax 7.25 April 2019 to August 2019 Yet to be remitted
Goods and Service Act 2017 Interest on GST Payable 5.96 April 2017 to March 2019 Yet to be remitted

(b) According to the information and explanations given to us the details of dues ofService Tax which is not deposited on account of dispute as on 31st March 2020 is givenbelow:

(Rs. in Lakhs)

Name of the Statue Nature of Dues Tax amount Disputed Period to which relates Forum where dispute is pending
The Finance Act 1994 Service Tax 1604.76 (includes penalty of Rs.802.43) F.Y2011-12 to F.Y 2014-15 Customs Excise and Service Tax Appellate Tribunal
The Finance Act 1994 Service Tax 155.42 lakhs and penalty of Rs.15.64 lakhs F.Y2015-16 to FY2017-18 (Till June 2017) Commissioner of CGST and Central Excise

8. In our opinion and according to the information and explanations given to us thecompany does not have loans or borrowings from Government or dues to debenture holders andthe company has not default in repayment of loans to financial institution during theyear. Accordingly paragraph 3(viii) of the order is not applicable.

9. The company has not raised monies by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Therefore provisionsof clause (ix) of Paragraph 3 of the Order are not applicable.

10. According to the information and explanations given to us no fraud by the Companyand no fraud on the Company by its officers or employees has been noticed or reportedduring the course of our audit.

11. According to the information and explanations given to us and based on ourexamination of the records of the Company during the year company has not paid anymanagerial remuneration as per section 197 of the Companies Act 2013. Therefore theprovisions of clause 3(xi) of the companies (Auditor's Report) Order 2016 are notapplicable to the company for the year under audit.

12. In our opinion and according to the information and explanations given to us thecompany is not a nidhi company. Therefore the provisions of clause 3(xii) of the companies(Auditor's Report) Order 2016 are not applicable to the company for the year under audit.

13. According to the information and explanations given to us and based on ourexamination of the records of the Company the transactions with the related parties arein compliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Standalone Financial Statements as required by theapplicable accounting standards.

14. According to the information and explanations given 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 duringthe year. Therefore the provisions of clause 3(xiv) of the companies (Auditor's Report)Order 2016 are not applicable to the company for the year under audit.

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 provisions ofClause (xv) of Paragraph 3 of the Order are not applicable.

16. The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Brahmayya & Co.
Chartered Accountants
Firm Regn. No.000511S
Sd/-
Place : Chennai K.Jitendra Kumar
Date : 31st July 2020 Partner
Membership No.201825
UDIN: 20201825AAAADV1342

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 ofPicturehouse Media Limited ("the Company") as of 31st March 2020 in conjunctionwith our audit of the Standalone Financial Statements of the Company for the year ended onthat 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').

These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's 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 judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Standalone Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of StandaloneFinancial 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 StandaloneFinancial Statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting with reference to the standalone financial statements including the possibilityof collusion or improper management override of controls material misstatements due toerror or fraud may occur and not be detected. Also subject to note no.31 to thesefinancial statements in relation to preparation of financial statements on "goingconcern" the projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing weaknesses have been identified in the operating effectiveness of the company'sinternal financial control over financial reporting with reference to the standalonefinancial statements as at 31st March 2020:

"The company's internal financial control with regard to assessment of carryingvalue of investments loans and advances and inventory as more fully explained in note no.29 and 30 to these financial statements were not operating effectively and couldpotentially result in the not providing adjustments that may be required to be made to thecarrying value of such assets and also company needs to strengthen its documentationrelating to disbursement of loans".

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.

In our opinion except for the possible effects of the material weakness describedabove on the achievement of the objectives of the control criteria the company hasmaintained in all material respects adequate internal financial controls over financialreporting and such internal financial controls over financial reporting were operatingeffectively as 31st March 2020 based on internal control over financial reportingestablished 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.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statements of the company and we have issued a qualified opinion on thestandalone financial statements.

For Brahmayya & Co.
Chartered Accountants
Firm Regn. No.000511S
Sd/-
Place : Chennai K.Jitendra Kumar
Date : 31st July 2020 Partner
Membership No.201825
UDIN: 20201825AAAADV1342

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