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SML ISUZU Ltd.

BSE: 505192 Sector: Auto
NSE: SMLISUZU ISIN Code: INE294B01019
BSE 00:00 | 26 Feb 481.85 -5.80
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481.50

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487.15

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475.10

NSE 00:00 | 26 Feb 480.90 -6.45
(-1.32%)
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482.00

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488.60

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OPEN 481.50
PREVIOUS CLOSE 487.65
VOLUME 1239
52-Week high 569.00
52-Week low 280.00
P/E
Mkt Cap.(Rs cr) 697
Buy Price 481.85
Buy Qty 190.00
Sell Price 493.00
Sell Qty 1.00
OPEN 481.50
CLOSE 487.65
VOLUME 1239
52-Week high 569.00
52-Week low 280.00
P/E
Mkt Cap.(Rs cr) 697
Buy Price 481.85
Buy Qty 190.00
Sell Price 493.00
Sell Qty 1.00

SML ISUZU Ltd. (SMLISUZU) - Auditors Report

Company auditors report

Opinion

We have audited the financial statements of SML Isuzu Limited ("theCompany") which comprise the balance sheet as at 31 March 2020 and the statement ofprofit and loss (including other comprehensive income) statement of changes in equity andstatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid 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 and loss and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the financial statements underthe provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

Description of Key Audit Matter 1. Going concern

See note 43(b) of the financial statements

The key audit matter How the matter was addressed in our audit
The Company has incurred a loss of INR 2106.21 lakhs during the year ended 31 March 2020 and as informed to us by Management the Company is expected to incur a loss during the year ending 31 March 2021 also. Further the macro-economic factors related to the overall slowdown in the auto sector and the significant impact of the COVID-19 pandemic continues to impact the business of the Company. Considering the current financial position of the Company it is dependent on having access to credit facilities to be able to maintain its working capital requirements and all these factors cast a significant doubt on the ability of the Company to continue as a Going Concern. We applied the following audit procedures in this area among others to obtain audit evidence:
- Reviewed Management's assessment of the cash flow requirements of the Company based on budgets and forecasts of future cash flows which were provided to us.
- Considering the liquidity of existing assets on the balance sheet.
- Considering the terms of the bank loans and trade finance facilities; and the amount available for drawdown.
- Considering potential downside scenarios and the resultant impact on available funds.
- Assessing the adequacy of disclosures in the financial statements relating to uncertainties and mitigation thereof.
As informed to us based on its past experience with its lenders and continued support from its promoter group the Company believes that it should be able to avail such facilities in an uninterrupted manner as and when required. We have further been informed that the Company intends to take necessary steps to protect revenues cut costs manage working capital balances and manage liquidity by deferring noncompulsory capital expenditures dividends etc. As explained to us Management believes that in view of the above there are adequate mitigating factors basis which no material uncertainty exists and accordingly the Company has prepared the financial statements on a going concern basis.
In view of the significance of this matter we have identified the assessment of going concern assumption as a key audit matter.

See note 40 of the financial statements

The key audit matter How the matter was addressed in our audit
Impairment of property plant and equipment and intangible assets
The Company considers its property plant and equipment and intangible assets as a single cash generating unit or CGU. The total carrying value of its CGU as at 31 March 2020 is INR 41645.71 lakhs. We applied the following audit procedures in this area among others to obtain audit evidence:
- Assessed the appropriateness of accounting policy for impairment of assets as per the relevant accounting standard.
As informed to us the Company was of the view that there existed indicators of impairment and it accordingly decided to test its CGU for impairment as per the requirements of Ind AS 36 on ‘Impairment of Assets'. As part of this testing the Company is required to determine the recoverable amount of its CGU and compare it to the corresponding carrying value to conclude whether or not there is an impairment. - Evaluated the design and implementation of key internal financial controls in relation to the impairment process including assessment of impairment indicators and determination of recoverable amount; and tested the operating effectiveness of such controls.
- Evaluated key inputs used in the Company's assessment for indicators of impairment and determination of the recoverable amount of its CGU by:
The Company has considered fair value less costs to sell (‘the fair value') of the CGU as its recoverable amount. It engaged an independent third party valuer to arrive at this fair value. Based on the report issued by this valuer the fair value of the CGU is higher than its carrying value and hence the Company has concluded that no impairment provision needs to be recorded in the financial statements. - Reading the report of the independent third party valuer engaged by the Company.
- Involving valuation specialists with specialised skills and knowledge who assisted in evaluating the reasonableness of the Company's valuation methodology and key assumptions used by the valuer in determination of the recoverable amount.
Assessment of impairment is complex as it involves significant judgment in determining the assumptions used to estimate the fair value of a CGU. Further several key assumptions relating to estimation of fair value are dependent on external factors.
Given the significant level of judgement involved and considering the significance of the carrying amount of the Company's CGU we have determined this to be a key audit matter.

3. Allegations received by the Company See note 44 of the financialstatements

The key audit matter How the matter was addressed in our audit
The Company had in an earlier year received allegations in respect of certain operational and financial matters from an employee and a former employee. We applied the following audit procedures in this area among others to obtain audit evidence:
- Obtained and read copies of the communications that contained the allegations and inquired from Management and the Audit Committee and their assessment of the said allegations.
The Company initially decided to internally investigate these allegations and subsequently engaged an external firm to perform an investigation particularly to evaluate the appropriateness of certain transactions.
- Read the copy of the reports issued by the internal investigation team that was set up to investigate allegations and evaluated the nature and extent of work performed by this team and the reasonableness of their findings/ observations.
In the process the Company had also appointed an Independent firm of engineers to perform additional verification as regards one of the matters that was part of the overall set of allegations.
- Obtained and evaluated the scope of work of the external firm which was subsequently engaged by the Company to perform an investigation.
- Read a copy of the reports issued by the two external firms engaged by Management and evaluated the nature and extent of work performed by these firms and the reasonableness of their findings/ observations.
The said investigation and additional verification was completed during the current year and final reports were issued by the respective firms outlining their findings and observations.
- Involved forensic specialists with specialized skill and knowledge who assisted us in performing the above work.
Based on its assessment of the said allegations and its assessment of the final reports issued by the two firms the Board of Directors the Audit Committee and Management of the Company concluded that while there may have been some control deficiencies there is no evidence available that indicates any material financial impropriety and consequently no adjustment is required to the financial statements of the Company.
- Inquired of the Company and sought its assessment of the findings that came out of the reports issued by the internal investigation team of the Company the external firm which carried out the investigation and the independent firm of engineers and of the consequent impact if any on the financial statements of the Company.

Other Information

The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and ourauditor's report thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Management's and Board of Directors' Responsibility for the FinancialStatements

The Company's Management and Board of Directors are responsiblefor the matters stated in section 134(5) of the Act with respect to the preparation ofthese financial statements that give a true and fair view of the state of affairsprofit/loss and other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements the Management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of thefinancial 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 inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the financial statementsmade by the Management and Board of Directors.

- Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

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) ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

(A) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The balance sheet the statement of profit and loss (including othercomprehensive income) the statement of changes in equity and the statement of cash flowsdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with theInd AS specified under section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2020 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to 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 theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31March 2020 on its financial position in its financial statements - Refer Note 17(B) andNote 31 of the financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

iv. The disclosures in the financial statements regarding holdings aswell as dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these financial statements since they do not pertainto the financial year ended 31 March 2020.

(C) With respect to the matter to be included in the Auditor'sReport under section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

For B S R & Associates LLP

Chartered Accountants ICAI Firm Registration No.: 116231W/W-100024

Ashwin Bakshi

Partner

Place: New Delhi Membership number: 506777
Date: 21 July 2020 UDIN: 20506777AAAABM6555

Annexure A to the Independent Auditor's report on the financialstatements of SML Isuzu Limited for the year ended 31 March 2020

Annexure A referred to in paragraph 1 under 'Report on Other Legal andRegulatory Requirements' section of the Independent Auditor's Report to the Members of SMLIsuzu Limited on the financial statements for the year ended 31 March 2020 we reportthat:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and

situation of fixed assets.

(b) The Company has a regular programme of physical verification of itsfixed assets by which all fixed assets are verified in a phased manner over a period ofthree years. In accordance with this programme certain fixed assets were verified duringthe year and no material discrepancies were noticed on such verification. In our opinionthis periodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.

(c) According to the information and explanations given to us theCompany has two immovable properties. Further according to the information andexplanations given to us and on the basis of our examination of the records of the Companyand confirmation received from the bank holding the title deed for one of the immovableproperties the title deed for one immovable property is in the name of Swaraj MazdaLimited i.e. the erstwhile name of the Company and the other is held in the name of theCompany itself.

(ii) The inventory except goods-in-transit and stock lying with someof the third parties has been physically verified by the management during the year andno material discrepancies were noticed on such verification. In our opinion the frequencyof such verification is reasonable. For stocks lying with some of the third parties at theyear-end written confirmations have been obtained in respect of a significant value ofsuch inventory.

(iii) According to the information and explanations given to us we areof the opinion that the Company has not granted any loans secured or unsecured toCompanies Firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013. Accordingly the provisions ofparagraph 3(iii) of the Order are not applicable to the Company.

(iv) The Company has not given any loans or made any investments orprovided any guarantee or security as specified under Section 185 and 186 of theCompanies Act 2013. Accordingly paragraph 3(iv) of the Order is not applicable.

(v) According to the information and explanations given to us theCompany has not accepted any deposits covered under Section 73 to 76 of the Act or otherprovisions of the Act and rules framed thereunder.

(vi) According to the information and explanations given to us theCentral Government has not prescribed the maintenance of cost records under Section 148(1)of the Act for any of the products manufactured/ services rendered by the Company.

(vii) (a) According to the information and explanations given to us andon the basis of our examination of the

records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees'State Insurance Income Tax Goods and Services Tax Duty of Customs Cess and othermaterial statutory dues have generally been regularly deposited during the year by theCompany with the appropriate authorities though there have been slight delays in two casesrelated to deposit of tax deducted at source. As explained to us the Company did not haveany dues on account of Sales Tax Service Tax Duty of Excise and Value Added Tax duringthe year.

According to the information and explanations given to us noundisputed amounts payable in respect of Provident fund Employees' State InsuranceIncome Tax Goods and Services Tax Duty of Customs Cess and other material statutorydues were in arrears as on 31 March 2020 for a period of more than six months from thedate they became payable.

(b) According to the information and explanations given to us exceptas stated below there are no dues of Goods and Services Tax Duty of Customs Income TaxSales Tax Service Tax Duty of Excise and Value Added Tax which have not been depositedby the Company on account of any dispute:

Name of the Statute Nature of the Dues Amount involved (Rs. lakhs) Amount deposited (Rs. lakhs) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Duty of Excise 1.94 Nil Oct 2004 to Mar 2005 Honorable Supreme Court of India
Central Excise Act 1994 Duty of Excise 5.70 Nil 2005-2006 Commissioner (Appeals)
Finance Act 1994 Service Tax 5.70 Nil 2005-2006 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Central Excise Act 1944 Duty of Excise 3.62 Nil Apr 2008 to Jun 2009 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Central Excise Act 1944 Duty of Excise 4.05 Nil Apr 2010 to Sep 2011 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Sub - total (A) 21.01 Nil
Central Sales Tax Act 1956 Sales Tax 218.23 87.30 Apr 2000 to Sep 2000 Sales Tax Appellate Tribunal Chandigarh.
Central Sales Tax Act 1956 Sales Tax 3.17 Nil 2012-2013 Senior Joint Commissioner of Commercial Tax West Bengal
Punjab VAT Act 2005 Value added tax 1.57 0.39 Aug 2007 Deputy Excise and Taxation Commissioner cum Joint Director Enforcement Patiala
Uttar Pradesh Trade Tax Act 1948 Sales Tax 15.94 7.20 1993 -1994 Additional Commissioner (Appeals) Lucknow
Uttar Pradesh Trade Tax Act 1948 Sales Tax 6.88 4.98 2016-2017 Assistant Commissioner Ghaziabad
Kerala Value Added Tax Rules 2005 Value added tax 1.42 0.43 2010-2011 Assistant Commissioner Special Circle Trivandrum
Kerala Value Added Tax Rules 2005 Value added tax 93.40 28.02 2011-2012 Assistant Commissioner Special Circle Trivandrum
Kerala Value Added Tax Rules 2005 Value added tax 2.56 0.76 2011-2012 Assistant Commissioner Special Circle Trivandrum
A P Value Added Tax Act 2005 Value added tax 3.55 0.88 2016-2017 Assistant Officer and Deputy Commercial Tax officer Vijayawada
The West Bengal Value added Tax Rules 2005 Value added tax 2.64 Nil 2009-2010 West Bengal Commercial Taxes Appellate and Revisional Board
The West Bengal Value added Tax Rules 2005 Entry tax 1.13 Nil 2012-2013 West Bengal Commercial Taxes Appellate and Revisional Board Bench- VI
Sub-total (B) 350.49 129.96
Income-tax Act1961 Income Tax 622.33 476.33 FY 2007-08 Honorable High Court of Punjab and Haryana
Income-tax Act1961 Income Tax 11.96 - FY 2013-14 Commissioner of Income Tax (Appeals)
Income-tax Act1961 Income Tax 157.81 - FY 2014-15 Honorable High Court of Punjab and Haryana
Income-tax Act1961 Income Tax 221.80 221.80 FY 2015-16 Commissioner of Income Tax (Appeals)
Income-tax Act1961 Income Tax 737.75 - FY 2016-17 Commissioner of Income Tax (Appeals)
Sub-total (C) 1751.65 698.13
Total (A+B+C) 2123.15 828.09

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of dues to banks. Furtheraccording to the information and explanations given to us the Company has not availed anyloans or borrowings from any financial institutions or the Government and did not have anyoutstanding debentures during the year.

(ix) In our opinion and according to the information and explanationsgiven to us the Company has not raised any money by way of initial public offer orfurther public officer (including debt instruments) during the year. Further in ouropinion and according to the information and explanations given to us except an amount ofapproximately Rs. 505 lakhs raised by way of term loans that was unutilized till end ofthe year the Company has utilized the money raised by way of term loans during the year.This includes unutilized funds that were raised in the previous year and were outstandingas at the end of that year. This also includes the funds that were temporarily invested inbank term deposits but were ultimately utilised for the stated end-use.

(x) According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations give to us and basedon our examination of the records of the Company the managerial remuneration has beenpaid or provided in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us theCompany is not a nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3 (xiv) of the order is not applicable.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

For B S R & Associates LLP
Chartered Accountants
ICAI Firm Registration No.: 116231W/W-100024
Ashwin Bakshi
Partner
Place: New Delhi Membership number: 506777
Date: 21 July 2020 UDIN: 20506777AAAABM6555

Annexure B to the Independent Auditor's report on the financialstatements of SML Isuzu Limited for the year ended 31 March 2020.

Report on the internal financial controls with reference to theaforesaid financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013

(Referred to in paragraph 1 (A) (f) under ‘Report on Other Legaland Regulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference tofinancial statements of SML Isuzu Limited ("the Company") as of 31 March 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2020 based on the internalfinancial controls with reference to 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 areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to 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 financial statements. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control

based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatementof the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements include those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial controls with Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to 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 financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

For B S R & Associates LLP
Chartered Accountants
ICAI Firm Registration No.: 116231W/W-100024
Ashwin Bakshi
Partner
Place: New Delhi Membership number: 506777
Date: 21 July 2020 UDIN: 20506777AAAABM6555

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