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SML ISUZU Ltd.

BSE: 505192 Sector: Auto
NSE: SMLISUZU ISIN Code: INE294B01019
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OPEN 581.15
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OPEN 581.15
CLOSE 575.05
VOLUME 3133
52-Week high 842.80
52-Week low 464.55
P/E
Mkt Cap.(Rs cr) 861
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SML ISUZU Ltd. (SMLISUZU) - Auditors Report

Company auditors report

TO THE MEMBERS OF SML ISUZU LIMITED

Report on the Audit of the Financial Statements

Opinion

1. We have audited the accompanying financial statements of SML Isuzu Limited(‘the Company') which comprise the Balance Sheet as at 31 March 2021 the Statementof Profit and Loss (including Other Comprehensive Income) the Statement of Cash Flows andthe Statement of Changes in Equity for the year then ended and a summary of thesignificant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (‘Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards (‘Ind AS') specified under section 133 of the Act of the stateof affairs of the Company as at 31 March 2021 and its loss (including other comprehensiveincome) its cash flows and the changes in equity forthe yearended on thatdate.

3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (‘ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the 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.

4. Emphasis of Matters

a) Uncertainties related to Covid-19

We draw attention to Note 43 to the accompanying financial statements which describesthe uncertainties relating to the effects of the COVID-19 pandemic and management'sevaluation of its impact on the Company's operations and the accompanying financialstatements as at 31 March 2021 the impact of which is significantly dependent on futureoperations as they evolve. Our opinion is not modified in respect of this matter.

b) Ongoing factfinding process

We draw attention to Note 44 to the accompanying financial statements which describesthat there is an ongoing fact-finding process being carried out by the management throughan internal committee set-up for the purpose in relation to certain observation/ concernsreceived by the Company. As further explained in the said note based on its preliminarywork done the committee is of the view that there is no evidence available whichindicates any material financial impropriety and the management is confident that thepossible impact of such allegations is confined to alleged transactions which are notmaterial to the accompanying financial statements. Consequently no adjustment is requiredto be made to the financial statements for the quarter and year ended 31 March 2021.Ouropinion is not modified in respect of this matter.

Key Audit Matters

5. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

6. We have determined the matters described below to be the key audit matters to becommunicated in our report.

Key audit matter How our audit addressed the key audit matter
Going Concern: Our audit procedures included but were not limited to the following in relation to assessment of appropriateness of going concern basis of accounting:
As disclosed in Note 43 of the financial statements the Company has incurred a loss of INR 13337.09 lakhs during the year ended 31 March 2021 and has negative cash flows from operations. Also as at 31 March 2021 the current liabilities exceed its current assets by 7790.96 lakhs. a) Obtained an understanding of the management's process for identifying all events or conditions that could impact the company's ability to continue as a going concern and the process followed to assess the mitigating factors existing for such events or conditions.
Further the COVID-19 pandemic outbreak continues to impact the business operations of the Company. b) Obtained management's future cash flow projections which include projected revenues and profits and tested the reasonableness of the assumptions underlying the preparation of these forecasts such as growth rate market condition based on historical data trends and also considered the possible future impact of COVID -19 pandemic on such assumptions.
While the above indicates doubt about the company's ability to continue as a going concern however as detailed in aforesaid note to the accompanying financial statements the Company has taken into consideration the following mitigating factors in its assessment determining of appropriateness of using the going concern basis of accounting: c) Performed independent sensitivity analysis to the key assumptions mentioned above to determine inputs leading to high estimation uncertainty of the cash flow projections.
• positive net worth position of Rs 25556.82 lakhs; d) In order to corroborate management's future business plans and to identify potential contradictory information we read the board minutes supervisory board minutes and discussed the business plans with management.
• unutilised sanctioned credit limits from banks and trade finance facilities; e) Reviewed the historical accuracy of the cash flow projections prepared by the management in prior periods.
• cost cutting measures taken by the Company to manage its working capital; f) Inspected the terms of the approved unutilized loans sanction letters and trade finance facilities; and the amountavailablefordrawdown.
• managing liquidity by deferring non- compulsory capital expenditures dividends etc. g) Evaluated the appropriateness and adequacy of the disclosures made by the Company in the accompanying financial statements in respect of going concern.
Management has prepared future cash flow forecasts taking into cognizance the above developments as future growth rate and market conditions including impact of COVID-19 pandemic therein to assess whether the Company would be able operate as a going concern for a period of at least twelve months from the date of financial statements and considering above mentioned mitigating factors management concluded that the going concern basis of accounting used for preparation of the accompanying financial statements is appropriate with no material uncertainty over going concern.
We have considered the assessment of management's evaluation of going concern basis of accounting as a key audit matter due to the pervasive impact thereof on the financial statements and the significant judgements and assumptions that are inherently subjective and dependent on future events involved in the overall conclusion.
Impairment of orooertv plant and eauioment and intanqible assets Our audit procedures included but were not limited to the following procedures:
Refer note 2 (o) for the accounting policy for impairments of assets. a) Obtained an understanding of management's process and evaluated design and tested operating effectiveness of controls around identification of indicators of impairment (internal or external) under Ind AS and around valuation of the CGU to determine its recoverable value.
The Company considers its property plant and equipment and intangible assets as a single cash generating unit (CGU). The total carrying value of its CGU as at 31 March 2021 is INR 38090.55 lakhs. b) Assessed the professional competence objectivity and capabilities of the valuation specialist engaged by the management.
In accordance with Ind AS 36 Impairment of assets the management identified that impairment indicators existed owing to the fact that the Company has been incurring losses and the impact of Covid-19 on the business operations of the Company. c) Assessed the appropriateness of methodology and valuation model used by the management's valuation specialist to estimate the recoverable value of the CGU.
Due to existing impairment indicators the Company has engaged an independent third- party valuer to assess the fair value of the CGU. 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 as at 31 March 2021. d) Assessed the reasonableness of management's estimates relating to expected useful lives of property plant and equipment and intangible assets.
Fair value and value-in-use of such PPE for the determination of the recoverable amounts involves significant judgement and high estimation uncertainty. e) Involved auditor's experts to assess the appropriateness of the approach and valuation model used by the independent valuer in determining the recoverable value of the CGU.
Considering the materiality of the amounts involved significant judgment and high estimation uncertainty in determining the fair value and value-in-use/recoverable value of such PPE and intangible assets and such estimates and judgements being inherently subjective this matter is determined as a key audit matterfor the current year audit. f) Evaluated the appropriateness and adequacy of the disclosures made by the Company in accordance with the requirements of applicable Indian Accounting Standards.

Information other than the Financial Statements and Auditor's Report thereon

7. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

8. The accompanying financial statements have been approved by the Company's Board ofDirectors. The Company's Board of Directors is responsible for the matters stated insection 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the Ind AS specifiedunder section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

9. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

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

Auditor's Responsibilities for the Audit of the Financial Statements

11. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detecta 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.

12. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations orthe override of internal control;

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the 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 made by management;

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern;

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation;

13. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about thematteror 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.

Other Matter

16. The financial statements of the Company for the year ended 31 March 2020 wereaudited by the predecessor auditor BSR & Associates LLP who have expressed anunmodified opinion on those financial statements vide their audit report dated 21 July2020.

Report on Other Legal and Regulatory Requirements

17. As required by section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act.

18. As required by the Companies (Auditor's Report) Order 2016 (‘the Order')issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure I statement on the matters specified in paragraphs 3 and 4 of the Order.

19. Furtherto our comments in Annexure I as required by section 143(3) of the Actbased on our audit we report to the extent applicable that:

a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit of theaccompanying financial statements;

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 financial statements dealt with by this report are in agreement with the booksof account;

d) in ouropinion the aforesaid financial statements comply with I nd AS specifiedunder section 133 of the Act;

e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2021 from being appointed as a director in terms of section 164(2) of the Act;

f) we have also audited the internal financial controls with reference to financialstatements of the Company as on 31 March 2021 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date and our report dated19 May 2021 as perAnnexure II expressed unmodified opinion; and

g) with respect to the other matters to be included in the Auditor's Report inaccordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:

i. the Company as detailed in note 31 to the financial statements has disclosed theimpact of pending litigations on its financial position as at 31 March 2021;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2021;

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2021;

iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these financial statements. Hence reporting underthis clause isnotapplicable.

Annexure I to the Independent Auditor's Report of even date to the members of SML IsuzuLimited on the financial statements forthe year ended 31 March 2021.

Based on the audit procedures performed forthe purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are included under the head‘Property plant and equipment') are held in the name of the Company.

(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit and stocks lying withthird parties. For stocks lying with third parties at the year-end written confirmationshave been obtained by the management. No material discrepancies were noticed on theaforesaid verification.

(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion the Company has not entered into any transaction covered underSections 185 and 186 of the Act. Accordingly the provisions of clause 3(iv)ofthe Orderare not applicable.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) The Central Government has not specified maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products/ services.Accordingly the provisions of clause 3(vi) of the Order are not applicable.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax goods and services tax cess and other material statutory dues as applicablehave generally been regularly deposited to the appropriate authorities though there hasbeen a slight delay in a few cases. Further no undisputed amounts payable in respectthereof were outstanding at the year-end for a period of more than six months from thedate they became payable.

(b) The dues outstanding in respect of income-tax sales-tax service-tax duty ofcustoms duty of excise goods and services tax and value added tax on account of anydispute are as follows:

Statement of Disputed Dues

Name of the Statute Nature of the Dues Amount (Rs. lakhs) Amount paid under protest (Rs. lakhs) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1994 Duty of Excise 1.94 Nil October 2004 - March 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 1994 Duty of Excise 3.62 Nil April 2008 - June 2009 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Central Excise Act 1994 Duty of Excise 13.42 Nil Oct 2007 - June 2017 Commissioner (Appeals)
Central Excise Act 1994 Duty of Excise 4.05 Nil April 2010 - September 2011 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Sub - total (A) 34.43 Nil
Central Sales Tax Act 1956 Sales Tax 218.23 87.30 April 2000 - September 2000 Sales Tax Appellate Tribunal Chandigarh
Central Sales Tax Act 1956 Sales Tax 3.17 0.50 2012-13 Senior Joint Commissioner of Commercial Tax West Bengal
Central Sales Tax Act 1956 Sales Tax 7.84 Nil 2015-16 Senior Joint Commissioner of Commercial Tax West Bengal
Punjab VAT Act 2005 Value added tax 1.57 0.39 August 2007 Deputy Excise and Taxation Commissioner cum Joint Director Enforcement Patiala
U.P. VAT Act 2008 Sales Tax 15.94 7.20 1993-1994 Additional Commissioner (Appeals) Lucknow
U.P. VAT Act 2008 Value added tax 900.00 Nil 2015- 16 and 2016- 17 Assistant Commissioner Commercial Tax UP
Kerala Value Added Tax Rules 2005 Value added tax 1.42 0.43 2010-11 Assistant Commissioner Special Circle Trivandrum
Kerala Value Added Tax Rules 2005 Value added tax 93.40 28.02 2011-12 Assistant Commissioner Special Circle Trivandrum
Kerala Value Added Tax Rules 2005 Value added tax 2.56 0.76 2011-12 Assistant Commissioner Special Circle Trivandrum
A P Value Added Tax Act 2005 Value added tax 3.55 0.88 2016-17 Assistant Officer and Deputy Commercial Tax officer Vijayawada
The West Bengal Value Added Tax Rules 2005 Value added tax 0.64 0.12 2009-10 West Bengal Commercial Taxes Appellate and Revisional Board
The West Bengal Value Added Tax Rules 2005 Entry tax 1.13 0.84 2012-2013 West Bengal Commercial Taxes Appellate and Revisional Board Bench VI
The West Bengal Value Added Tax Rules 2005 Value added tax 2.01 Nil 2016-2017 Senior Joint Commissioner of Commercial Tax West Bengal
Sub - total (B) 1251.46 126.44
Income-tax Act 1961 Income Tax 622.33 476.33 FY 2007-08 Flonorable Fligh Court of Punjab and Haryana
Income-tax Act 1961 Income Tax 157.81 Nil FY 2014-15 Honorable High Court of Punjab and Haryana
Income-tax Act 1961 Income Tax 221.80 221.80 FY 2015-16 Commissioner of Income Tax (Appeals)
Income-tax Act 1961 Income Tax 737.75 Nil FY 2016-17 Commissioner of Income Tax (Appeals)
Income-tax Act 1961 Income Tax 84.77 Nil FY 2017-18 Commissioner of Income Tax (Appeals)
Sub-total (C) 1824.46 698.13
Total (A+B+C) 3110.35 824.57

(viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution during the year. There are no loans or borrowings payable togovernment during the year. The Company did not have any outstanding debentures during theyear.

(ix) The Company did not raise moneys by way of initial public offer orfurther publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.

(x) No fraud by the Company or on the company by its officers or employees has beennoticed or reported during the period covered by our audit except for one instance ofconcerns received by the Company relating to certain service claims aggregating toapproximately Rs 65 lakhs which is currently being investigated as explained in Note 44to the financial statements. While the verification is currently ongoing based on itspreliminary findings the internal fact-finding committee set up for the purpose is of theview that there is no evidence available which indicates any material financialimpropriety.

(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable I nd AS.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

Annexure II to the Independent Auditor's Report of even date to the members of SMLIsuzu Limited on the financial statements for the year ended 31 March 2021

Independent Auditor's Report on the internal financial controls with reference to thefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 {‘the Act')

1. In conjunction with our audit of the financial statements of SML Isuzu Limited(‘the Company') as at and for the year ended 31 March 2021 we have audited theinternal financial controls with reference to financial statements of the Com pany as atthat date.

Responsibilities of Management and Those Charged with Governance for Internal FinancialControls

2. The Company's Board of Directors are responsible for establishing and maintaininginternal financial controls based on the Internal Financial Controls with reference toFinancial Statements criteria established by the Company considering the essentialcomponents of internal financial controls stated in the Guidance Note issued by the ICAIestablished by the management of the Company. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of the Company's businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Financial Statements

3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India (‘ICAI') prescribed under Section 143(10) of the Act to theextent applicable to an audit of internal financial controls with reference to financialstatements and the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (‘the Guidance Note') issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements were established and maintained and if such controlsoperated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes 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. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

5. 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 withreference to financial statements.

Meaning of Internal Financial Controls with Reference to Financial Statements

6. 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 FinancialStatements

7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such controls were operatingeffectively as at 31 March 2021 based on the Internal Financial Controls with referenceto Financial Statements criteria established by the Company considering the essentialcomponents of internal financial controls stated in the Guidance Note issued by the ICAIestablished by the managementof the Company.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Sandeep Mehta
Partner
Membership No.: 099410
UDIN: 21099410AAAACC1014
Place: Chandigarh
Date: 19 May 2021

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