To the Members of
Prozone Intu Properties Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Prozone Intu Properties Limited("the Company") which comprise the standalone balance sheet as at 31 March2020 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "standalone financial statements").
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 andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 its loss (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules there under and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the standalone financial statements.
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.
Investments in subsidiaries and joint venture companies and loans to subsidiaries andjoint venture companies (refer note 5 and 13 to the standalone financial statements)
|The Key Audit Matter ||How the matter was addressed in our audit |
|The carrying amount of the investments in subsidiaries and joint venture companies held at fair value through other comprehensive income (FVOCI) represents 89.32% and the loans to subsidiaries and joint venture companies represents 7.00% of the Company's total assets respectively. Valuation of investment in subsidiaries and joint venture companies The Company has investments in subsidiaries and joint venture companies which are considered to be associated with significant risk in respect of valuation of such investments. The investments are carried at FVOCI. The valuation process involves significant judgement by the Company including involvement of independent external valuers in estimating the underlying assumptions to be applied. The fair values of the investments is assessed based on the relative fair value of the underlying properties comprising of residential commercial and retail units in these underlying entities located principally in Aurangabad Coimbatore Nagpur Indore and Jaipur. This assessment is based on the projected cash flows of the real estate projects in these underlying entities which involve significant estimates and judgement due to the inherent uncertainty involved in forecasting future cash flows. ||Valuation of investment in subsidiaries and joint venture companies Our audit procedures included: |
| || We have inspected the valuation reports obtained from independent external valuers of the Company; We have evaluated the qualifications and competence of the valuers and held inquiries with the valuers to understand their valuation methods and assumptions and basis used where relevant; |
| || We considered the valuation methodologies used against those applied by valuers for similar property types. We tested the integrity of inputs of the projected cash flows used in the valuation to underlying leases and other documents; |
| || We have involved internal valuation specialists who have evaluated the discount capitalisation and terminal yield rates used in the valuation by comparing them against historical rates and available industry data taking into consideration comparability and market factors; |
|The Key Audit Matter ||How the matter was addressed in our audit |
|There is significant judgment involved in also estimating the || We performed a sensitivity analysis over key assumptions including the discount and growth rates; |
|discount rate terminal occupancy future lease rentals Covid-19 impact on rentals capitalisation rate average unit size and average selling price. The fair value of the properties is further adjusted from the perspective of equity shareholders to arrive at the equity value. A change in the assumptions will have an impact on the valuation. In addition considering the significance of the investments in subsidiaries and joint venture vis-a-vis the total assets of the Company this is considered to be key to our overall audit strategy and planning. || |
| || We have considered the cash flow projections reflect the most recent forecast as approved by the Company in consultation with the valuer; and |
| || We have considered the adequacy of disclosures in respect of the investment in subsidiaries and joint venture companies. |
|Recoverability of loans to subsidiaries and joint venture companies ||Recoverability of loans to subsidiaries and joint venture companies |
|The Company has extended loans to subsidiaries and joint venture companies which require assessment for recoverability at each period end. Financial assets which include non- current and current loans to subsidiaries and joint venture companies aggregated to ' 6885.40 lakhs at 31 March 2020. Due to the nature of the business in the real estate industry the Company is exposed to risk in respect of the recoverability of the loans and advances granted to the aforementioned related parties. There is also judgment involved as to the recoverability of the working capital and project specific loans. ||Our procedures included: |
| || We tested the controls in place for issuing new loans and evidenced the Board of Directors approval obtained. We obtained Company's assessment of the recoverability of the loans which includes cash flow projections over the duration of the loans. These projections are based on underlying property development appraisals; |
| || We tested cash receipts received in relation to these loans during the year through to bank statement; |
| || Assessed the net worth of subsidaries and joint ventures companies on the basis of the latest available financial statements; and |
| || We have obtained independent confirmations to test completeness and existence of loans and advances held by related parties as on 31 March 2020. |
Revenue recognition (refer note 25 to the standalone financial statements)
|The Key Audit Matter ||How the matter was addressed in our audit |
|The Company is engaged in providing consultancy services related to developing owning and operating of shopping malls commercial units and residential premises to its subsidiaries. Revenue is recognised at a point in time upon satisfaction of its performance obligations which is typically upon rendering of services based on the contractual terms with its subsidiaries. We have identified revenue as a key audit matter because revenue is one of the key performance indicators of the Company. Revenue also gives rise to an inherent risk and could be subject to manipulation to meet targets or expectations. Revenue is computed based on employee's costs plus margin of the total employee's costs for employees working on the payroll of the Company. For employees working on the payroll of its subsidiaries revenue is computed based on margin of the total employee's costs. The margin is determined based on recovery of operating expenses incurred by the Company. This computation involves significant judgement and estimates in terms of time spent by the respective employees on the ongoing or completed projects and ascertaining the amount to be charged. || We tested the design implementation and operating effectiveness of key controls over revenue recognition; |
| || We performed substantive analytical procedures such as recomputation of revenue; |
| || We performed test of details involving basis of allocation of employee's costs to its subsidiaries; |
| || We analysed time sheets maintained by the Company relating to its employees working on the ongoing/completed projects and obtained rationale for the margin charged to its subsidiaries; |
| || We inspected agreements entered into between the Company and its subsidiaries to assess revenue is correctly accounted for; |
| || We assessed and challenged key judgments involved in interpreting the contractual terms; |
| || We evaluated journal entries for any evidence of override of controls and obtained evidence for any individually unusual and/or significant revenue journals; |
|The Key Audit Matter ||How the matter was addressed in our audit |
| || We reconciled the employee costs with the underlying document such as salary register; and |
| || We read the Transfer pricing report done by independent person and provided to us for justifying Arm Length Price. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's and Board of Directors' Responsibility for the Standalone FinancialStatements
The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the Management and Board of Directorsare responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors is 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 standalonefinancial 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 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 in the standalone financial statementsmade by the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 auditors' 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 (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
2.(A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this report are in agreement with thebooks of account;
d) in our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act;
e) on the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 Match 2020 from being appointed as a director in terms of Section164(2) of the Act and
f) with respect to the adequacy of the internal financial controls with reference tothe standalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors' 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 pending litigations as at 31 March 2020 onits financial position in its standalone financial statements - Refer Note 32 to thestandalone financial statements;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. there are no amounts which are required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended 31 March 2020; and
iv. the disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2020 .
(C) With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act we report that:
In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
| ||For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 |
|Place: Mumbai |
Date: 8 July 2020
|Mansi Pardiwalla Partner Membership No: 108511 UDIN: 20108511AAAADY5520 |
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT -
31 March 2020
With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 31 March2020 we report the following:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets including property plant and equipmentand investment property.
(b) The Company has a regular programme of physical verification of its fixed assetsincluding property plant and equipment and investment property by which all fixed assetsincluding property plant and equipment and investment property are verified annually. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. In accordance with the policy theCompany has physically verified its fixed assets including property plant and equipmentand investment property during the year and we are informed that no material discrepancieswere noticed on such verification and the same have been dealt with in the books ofaccount.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertycomprising of building as disclosed in Note 4 to the standalone financial statements wasvested to the Company as per the Composite Scheme of Arrangement and Amalgamation duringthe year ended 31 March 2012 are not held in the name of the Company. Details of the sameis as below:
|Land / building ||Number of cases ||Freehold ||Notes in the standalone financial statements ||Gross block (' in lakhs) ||Net block (' in lakhs) ||Remarks |
|Building ||1 ||Freehold ||4 ||95.22 ||77.65 ||Held in the name of erstwhile demerged Company. |
(ii) The Company does not currently hold any physical inventory. According to paragraph3(ii) of the Order is not applicable to the company
(iii) The Company has granted unsecured loans to seven companies covered in theregister maintained under Section 189 of the Companies Act 2013 ('the Act'). The Companyhas not granted any loans secured or unsecured to limited liability partnership firmsor other parties covered in the register required to be maintained under Section 189 ofthe Act.
(a) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the rate of interest and otherterms and conditions of unsecured loans granted by the Company to the companies covered inthe register required to be maintained under Section 189 of the Act are not prima facieprejudicial to the interest of the Company.
(b) According to the information and explanations given to us the terms of lendingarrangements do not stipulate any repayment of principal and payment of interest andunsecured loans granted to companies covered in the register maintained under Section 189of the Act are repayable on demand. The borrowers have been regular in payment ofprincipal and interest (if any) as demanded. The unsecured loans granted to the companiescovered in the register maintained under section 189 of the Act were not demanded by thecompany on the due date as stated below:
|Name of the companies ||Unsecured loans granted (Rs in lakhs) ||Due date ||Remarks |
|Omni Infrastructure Private Limited ||1923.33 ||31 March 2020 ||The interest free unsecured loan was not demanded on due date. |
|Moontown Trading Company Private Limited ||277.80 ||31 March 2020 || |
(c) There are no overdue amounts of more than 90 days in respect of the unsecured loansgranted to the companies covered 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 not granted any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act. The Company has complied with the provisions ofSection 186 of the Act in respect of the loans given investments made and guarantee givenduring the year. The Company has not provided any security to the parties covered underSection 186 of the Act. Accordingly the provisions of Section 186 of the Act in respectof securities given are not applicable to the Company.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits as per the directives issued by the Reserve Bank ofIndia and the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the rules framed there under. Accordingly paragraph 3(v) of the Order is notapplicable to the Company.
(vi) The Central Government has not prescribed the maintenance of cost records underSection 148(1) of the Act. Accordingly paragraph 3(iv) of the Order is not applicable tothe Company.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Goods andService tax Professional tax Income-tax Cess and other material statutory dues havebeen regularly deposited during the year by the Company with the appropriate authorities.As explained to us the Company did not have any dues on account of Employees' StateInsurance.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Goods and Service tax Profession tax Income-taxCess and other material statutory dues were in arrears as at 31 March 2020 for a period ofmore than six months from the date they became payable except the following:
|Name of the Statute ||Nature of the Dues ||Amount (in lakhs) ||Period to which the amount relates ||Due Date ||Date of payment ||Remarks |
|Employees' Provident Funds and Miscellaneous Provisions Act 1952 ||Provident Fund ||0.18 ||April 2019 to September 2019 ||Various ||Not yet paid ||The Company has made provision as per the Supreme Court Order. |
(b) According to the information and explanations given to us there are no dues ofGoods and Services tax which have not been deposited with the appropriate authorities onaccount of any dispute. According to the information and explanations given to usfollowing dues of Income tax have not been deposited by the Company on account ofdisputes:
|Name of the statute ||Nature of the dues ||Amount of demand under dispute (Rs.) ||Amount under dispute not deposited (Rs.) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income-tax (interest thereon not ascertainable at present) ||14.87 ||14.87 ||AY 2010-2011 ||Income Tax Appellate Tribunal (Appeals) |
|Income Tax Act 1961 ||Income-tax (interest thereon not ascertainable at present) ||10.86 ||10.86 ||AY 2017-2018 ||Commissioner of Income-tax (Appeals) |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to banks during theyear. The Company did not have any dues to debenture holders and loans or borrowings fromany financial institution or government during the year.
(ix) According to the information and explanations given to us and based on ourexaminations of the record of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) and have notobtained any term loans during the year. Accordingly paragraph 3(ix) of the Order is notapplicable to the Company.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the remuneration paid by the company to itsdirectors during the current year is in accordance with the provisions of Section 197 readwith Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.Accordingly paragraph 3(xii) of the Order is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usthe Company has entered into transactions with related parties in compliance with theprovisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the standalone financial statements as required byIndian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of the Act.
(xiv) 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 partially convertible debenturesduring the year. Accordingly paragraph 3(xiv) of the Order is not applicable to theCompany.
(xv) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.
|Place: Mumbai ||For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Mansi Pardiwalla Partner |
|Date: 8 July 2020 ||Membership No: 108511 |
| ||UDIN: 20108511AAAADY5520 |
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT - 31 March 2020
Report on the Internal Financial Controls with reference to the aforesaid Standalonefinancial statements under Clause (i) of Subsection 3 of Section 143 of the Companies Act2013 ("the Act") (Referred to in paragraph (A) (f) under 'Report on Other Legaland Regulatory Requirements'section of our report of even date)
We have audited the internal financial controls with reference to standalone financialstatements of Prozone Intu Properties Limited ("the Company") as of 31 March2020 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 31 March 2020 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal controls with referenceto standalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. 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 the Company's policies the safeguardingof its 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 with respect to standalone financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to standalone financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to standalone financial statements were established and maintainedand whether 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 with respect to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with respect tostandalone financial statements included obtaining an understanding of internal financialcontrols with respect to standalone financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditors' judgement including the assessment of the risks of materialmisstatement of the standalone 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 systemwith reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to Standalone FinancialStatements
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 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 with reference to StandaloneFinancial Statements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
| ||For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 |
|Place: Mumbai Date: 8 July 2020 ||Mansi Pardiwalla Partner Membership No: 108511 UDIN: 20108511AAAADY5520 |