To the Members of SICAL LOGISTICS LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of SICAL LOGISTICS LIMITED("the Company") which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss the Statement of Changes in Equity and the Statement of CashFlows for the year ended on that date and notes to the financial statements including asummary of 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 except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020the loss and total comprehensive loss and changes in equity and its cash flows for theyear ended on that date.
Basis for Qualified Opinion
Investment /Advances to Sical Iron Ore Terminal Limited (SIOT)
The Company has an investment amounting to Rs 82.90 crores and has an outstanding Loanamounting to Rs 851.07 crores due from Sical Iron Ore Terminal Limited (SIOT) one of thesubsidiaries of the Company.
Independent Auditors of SIOT have reported that due to acute liquidity crunch coupledwith delay in completing the project along with other matters indicates that a materialuncertainty exists that may cast significant doubt on SIOT's ability to continue as agoing concern and there are impairment indications that cast a doubt that the carryingvalue of the Cash generating Unit (CGU) is likely to exceed its recoverable amount.
Pending conclusion of matters of material uncertainty related to the SIOT project weare unable to comment whether any provision is required towards possible impairment forthe said exposure.
The Company has incurred losses during the Financial Year has excess of currentliabilities over current assets loans that have fallen due for repayment loans whichhave fallen due of subsidiary companies for which the company is the guarantor. Theseevents indicate that a material uncertainty related to the going concern assumption existsand the Company's ability to continue as a going concern is dependent on the financialsupport from the promoter and generation of the expected cash flows through operations tobe able to meet its obligations as and when they arise. However the Company is confidentof meeting its obligations in the normal course of business and accordingly the accountsof the Company have been prepared on a Going Concern basis.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013 as amended ("the Act"). Ourresponsibilities 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 bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence obtained by us is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
Delay in servicing debt obligations
We draw attention to Note No 14.3 to the Financial Statement wherein the Company hasnot serviced debt on due dates to the banks and financial institutions. Also the Companyis facing difficulty in arranging for working capital.
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.
|Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (revenue accounting standard) ||The following audit procedures were performed in this area among others to obtain sufficient appropriate audit evidence: |
|Recognition of revenue is complex due to several types of customer contracts including port handling contracts surface mining and overburden removal contracts integrated and retail logistics contracts etc. || Assessed the process to identify the impact of adoption of the revenue accounting standard. |
|The application of the revenue accounting standard involves certain key judgments relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. || Evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to implementation of the revenue accounting standard. |
|Refer Notes 1.5 and 17 to the Financial Statements || Challenged the key judgment made by the management relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. the standard on |
| || Evaluated impact of the a sample basis on continuing and new contracts and comparing the same with the management's evaluation and assessment of the standard. |
| || Evaluating the adequacy of the financial statement disclosures including disclosures of key assumptions judgments and sensitivities. |
|Existence and impairment of Trade Receivables || |
|Trade Receivables are significant to the Company's financial statements. The collectability of trade receivables is a key element of the Company's working capital management which is managed on an ongoing basis by its management. ||The following audit procedures were performed in this area among others to obtain sufficient appropriate audit evidence: |
|In few cases trade receivables are overdue as matters are pending with Arbitration Tribunal/ Conciliation Committee. Owing to interpretation in certain contractual terms the receivables are overdue and are referred for decision by Arbitration Tribunal/Conciliation Committee. However Management is confident of recovering the dues. || Evaluated the design and implementation of key controls in place around the calculation of loss provisioning including the validation of management estimates. |
|In calculating the Expected Credit Loss as per Ind AS 109 "Financial Instruments" the company has also considered the estimation of probable future customer default and has taken into account an estimation of possible effect from the pandemic relating to Covid-19. || Reviewed and challenged the information used to determine the impairment allowance by considering cash collection performance against historical trends and the level of impairment allowance over time. |
|Given the magnitude and judgment involved in the impairment assessment of trade receivables we have identified this as a key audit matter. || Evaluated management's assumptions in determining the provision for impairment of trade receivables by analyzing the ageing of receivables contractual terms assessing significant overdue trade receivables and specific local risks combined with the legal documentations where applicable. |
| || Based on the above we do not see a need for any further provision. Furthermore we have evaluated the adequacy of the financial statement disclosures made in Note 1.11 and 7.1 to the financial statements and found appropriate. |
|Adoption of IND AS 116 Leases ||Our audit procedures on adoption of Ind AS 116 include: |
|As described in Note 1.19 to the financial statements the Company has adopted Ind AS 116 - Leases (Ind AS 116) in the current year. The application and transition to this accounting standard is complex and is an area of focus in our audit. || Assessed and tested new processes and controls in respect of the lease accounting standard (Ind AS 116). |
|Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognize a right- of-use (ROU) asset and a lease liability arising from a lease on the balance sheet. The lease liabilities are initially measured by discounting future lease payments during the lease term as per the contract/ arrangement. Adoption of the standard involves significant judgements and estimates including determination of the discount rates and the lease term. Additionally the standard mandates detailed disclosures in respect of transition. Refer Note 35 of_financial statements. || Assessed the Company's evaluation_ on the identification of leases based on the contractual agreements and our knowledge of the business; |
| || Evaluated the reasonableness of the discount rates applied in determining the lease liabilities. |
| ||Upon transition as at 1 April 2019: |
| ||l Evaluated the method of transition and related adjustments; |
| || Tested completeness of the lease data by reconciling the Company's operating lease commitments to data used in computing ROU asset and the lease liabilities. |
| ||On a statistical sample we performed the following procedures: |
| || assessed the key terms and conditions of each lease with the underlying lease contracts; and |
| || evaluated computation of lease liabilities and challenged the key estimates such as discount rates and the lease term. |
| ||Assessed and tested the presentation and disclosures relating to Ind AS 116 including disclosures. |
|Tax litigations provisions and contingencies || |
|The Company has material uncertain tax positions and litigations including matters under dispute pending at various forums which involves significant judgment to determine the possible outcome of these disputes. ||The audit procedures performed in this area included among others to obtain sufficient appropriate audit evidence: - |
| || Tested the effectiveness of key controls around the recording and assessment of tax provisions and contingent liabilities. |
| || We used our own tax specialists to assess the value of the provisions and contingent liabilities in light of the nature of the exposures applicable regulations and related correspondences with the authorities. |
| || We assessed the relevant historical and recent judgments passed by the court authorities. |
| || Obtained Management's assessment of the open cases and compared the same to the assessment of our tax specialists to assess the reasonableness of the provision or contingency. |
| || Considered the adequacy of the Company's disclosures made in relation to taxation related provisions and contingencies in the financial statements. |
|Recognition and measurement of deferred taxes || |
|The recognition and measurement of deferred tax items requires determination of temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Temporary differences may be either taxable temporary differences or deductible temporary differences. ||The audit procedures performed in this area included among others to obtain sufficient appropriate audit evidence: - |
|The Company has recognized Deferred Tax Asset and the audit questions the creation of the same. || We tested the effectiveness of key controls around the recognition and measurement of deferred tax. |
| || Assessing the deferred tax models including testing the mathematical accuracy of the calculation assessment of the items leading to recognition of deferred tax in light of prevailing tax laws and applicable financial reporting standards. The Company has provided Management Representation justifying the creation of Deferred Tax Asset. |
| || Considered the adequacy of the Company's disclosures made in relation to taxation related provisions and contingencies in the financial statements. |
|Inventory || |
|Management judgment is required to establish the carrying value of inventory particularly in relation to determining the appropriate level of provisions in relation to obsolete and Surplus items. ||Physical Verification of Inventory was not conducted on 31st March 2020 owing to lock down. Accordingly necessary Alternative Audit Procedures have been conducted to conclude that inventory is free of material misstatements. With respect to the Net Realizable value of Inventory the company has provided Management Representations that there is no significant impact on account of Covid as all contracts are based on fixed prices. |
| ||Audit procedures include testing the inventory provisions we assessed the management control and estimation of inventory provisions and their appropriateness. |
| ||Based on the audit procedure performed no material discrepancies were identified. |
Information Other than the Standalone Financial Statements and Auditors' Report Thereon
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 reportthereon.
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 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 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 preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act read with the rule 3 of the Companies (IndianAccounting Standards) Rules 2015 and Companies (Indian Accounting Standards AmendmentRules 2016). This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintenance of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statement that give a true andfair view and are free from material misstatement whether due 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.
Board of Directors is also responsible for overseeing the Company's financial reportingprocess.
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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated 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.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding 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.
Report on Other Legal and Regulatory Requirements
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" statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 Comprehensiveloss Statement of Changes in Equity and the Cash Flow Statement dealt with by this Reportare in agreement with the books of account
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(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 matter to be included in the Auditors' Report under section197(16) of the Act as amended: In our opinion and to the best of our information andaccording to the explanations given to us the remuneration paid by the Company to itsdirectors during the year is in accordance with the provisions of section 197 of the Act.
(h) 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 pending litigations on its financialposition in its standalone financial statements Refer Note 24 to the standalonefinancial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts Refer Note 12.2 to the standalone financial statements;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
Referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements of ourReport of even date i.
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. According to the informationand explanations given to us no material discrepancies were noticed on such physicalverification.
c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties of theCompany are held in the name of the Company.
ii. Physical verification of inventory has been conducted at reasonable intervals bythe management and no material discrepancies were noticed on such verification. However ason 31st March 2020 the physical verification was not conducted owing to Covid 19 lockdown the Company has employed necessary cut off procedures in this regard. Accordinglynecessary alternative Audit Procedures have been conducted to conclude that inventory isfree of material misstatement.
iii. In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms or otherparties covered in the register maintained under section 189 of the Companies Act. (Basedon the above para matters referred in clause iii(a) iii(b) and iii(c) of paragraph 3 ofCompanies (Auditors Report) Order 2016 are not applicable).
iv. 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 Companies Act 2013in respect of loans investments guarantees and security.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year. Accordingly reporting under thisclause does not arise.
vi. The Central Government has not prescribed the maintenance of cost records undersection 148 (1) of the Companies Act 2013. Accordingly clause vi of paragraph 3 ofCompanies (Auditor's Report) Order 2016 is not applicable.
vii. a) According to the records of the Company and information and explanations givento us the Company is regular in depositing undisputed statutory dues including providentfund Employees' State Insurance Income Tax Duty of Customs Goods and Service Tax Cessand any other statutory dues with the appropriate authorities. There are no undisputedstatutory dues outstanding for more than six months.
b) As at March 31 2020 according to the records of the Company the following are theparticulars of the disputed dues on account of sales tax income tax customs duty wealthtax service tax and cess which have not been deposited on account of dispute:
|S. No Period ||Nature of Dues ||Not Paid (Rs In Lakhs) ||Forum where Pending |
|1 2001-09 ||Service Tax ||1818.92 ||Madras High Court |
|2 2015-16 ||Income Tax ||242.66 ||CIT(A) Bangalore |
|3 1995-96 ||Income Tax ||133.56 ||Madras High Court |
viii. Based on our audit procedures and according to the information and explanationsgiven to us by the management we are of the opinion that the Company has defaulted inrepayment of loans or borrowings to financial institutions banks and debenture holdersas per the following particulars.
|Name of the Lender ||Principal ||Interest |
| ||Amount (Rs in Crores) ||Period (Maximum Days) ||Amount (Rs in Crores) ||Period (Maximum Days) |
|Loans from Banks || || || || |
|Bank of Baroda ||0 ||0 ||2.25 ||0 |
|Canara Bank ||8.61 ||156 ||3.61 ||156 |
|Corporation Bank ||3.51 ||152 ||1.19 ||152 |
|DCB Bank ||0.84 ||91 ||0.19 ||91 |
|Kotak Mahindra Bank ||0.53 ||137 ||0.22 ||137 |
|RBL Bank ||7.49 ||117 ||3.26 ||117 |
|YES Bank (Equipment Loan) ||0.46 ||222 ||0.09 ||222 |
|YES Bank (Term Loan) ||68.98 ||245 ||12.75 ||245 |
|Loan from NBFCs || || || || |
|Cholamandalam Invst & Finance Co Ltd ||1.4 ||210 ||0.27 ||210 |
|Daimler Financial Services India Private ||2.1 ||191 ||0.26 ||191 |
|Limited || || || || |
|HDB Financial Service ||0.01 ||118 ||0 ||118 |
|Reliance Capital ||0.52 ||120 ||0.03 ||120 |
|Siemens ||0.51 ||125 ||0.14 ||125 |
|SREI ||5.81 ||150 ||1.41 ||150 |
|Tata Motor Finance Limited ||3.47 ||130 ||0.71 ||130 |
|Volvo Financial Services India Private ||2.96 ||120 ||0.41 ||120 |
|Limited || || || || |
|Non-Convertible Debentures || || || || |
|IDFC First Bank ||- ||- ||5.52 ||95 |
|Others || || || || |
|Penal Interest and Overdue Interest on ||- ||- ||8.18 ||- |
|Various loans || || || || |
|TOTAL ||107.2 || ||40.49 || |
The Company did not have any loans or borrowings from the Government during the year.
ix. The Company has not raised money by way of initial public offer or further publicoffer during the Current year and the term loans were applied for the purposes for whichthose were raised.
x. In our opinion and according to the information and explanations given to us nofraud on or by the Company has been noticed or reported during the financial period.
xi. In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013. xii. In our opinion the Company is not a Nidhi Company. Accordingly clause
xii of Para 3 of Companies (Auditor's Report) Order 2016 is not applicable.
xiii. In our opinion and according to the information and explanation given to us alltransactions with the related parties are in compliance with sections 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the standalonefinancial statements as required by the applicable accounting standards.
xiv. According to the information and explanations given to us during the year theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures and hence reporting under clause (xiv) of the Order is notapplicable to the Company.
xv. ln our opinion and according to the information and explanations given to us theCompany has not entered into any non - cash transactions with directors or personsconnected with the Directors. Accordingly clause xv of Para 3 of Companies (Auditor'sReport) Order 2016 is not applicable.
xvi. In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-lA of the Reserve Bank of IndiaAct 1934. Accordingly clause xvi of Para 3 of Companies (Auditor's Report) Order 2016is not applicable.
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 M/s SICALLOGISTICS LIMITED ("the Company") as of March 31 2020 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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 judgement 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For SRSV & Associates |
| ||Chartered Accountant |
| ||F.R.No. 015041S |
| ||V. Rajeswaran |
| ||Partner |
|Place: Chennai ||Membership .No. 020881 |
|Dated: August 17 2020 ||UDIN No. : 20020881AAAAEO4963 |