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Spandana Sphoorty Financial Ltd.

BSE: 542759 Sector: Financials
NSE: SPANDANA ISIN Code: INE572J01011
BSE 00:00 | 03 Dec 453.30 6.15
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NSE 00:00 | 03 Dec 454.05 7.30
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OPEN 446.90
PREVIOUS CLOSE 447.15
VOLUME 41466
52-Week high 830.00
52-Week low 384.00
P/E 23.98
Mkt Cap.(Rs cr) 2,920
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 446.90
CLOSE 447.15
VOLUME 41466
52-Week high 830.00
52-Week low 384.00
P/E 23.98
Mkt Cap.(Rs cr) 2,920
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Spandana Sphoorty Financial Ltd. (SPANDANA) - Auditors Report

Company auditors report

To the Members of Spandana Sphoorty Financial Limited

REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Spandana Sphoorty Financial Limited ("the Company") which comprise theBalance sheet as at March 31 2020 the Statement of Profit and Loss including thestatement of Other Comprehensive Income the Cash Flow Statement and the Statement ofChanges in Equity for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS 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 2020its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SA) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the'Auditor's Responsibilities for the Audit of the standalone Ind AS FinancialStatements' section of our report. We are independent of the Company in accordancewith the 'Code of Ethics' issued by the Institute of Chartered Accountants of India("ICAI") together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the Rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalone Ind ASfinancial statements.

Emphasis of matter

We draw attention to Note 40.1.b to the standalone Ind AS financialstatements which describes the economic and social disruption as a result of the COVID-19pandemic of the Company's business and financial metrics including the Company'sestimates of impairment of loans to customers and that such estimates may be affected bythe severity and duration of the pandemic. Our opinion is not modified in respect of thismatter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe year ended March 31 2020. These matters were addressed in the context of our audit ofthe standalone Ind AS financial statements as a whole and in forming our opinion thereonand we do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's Responsibilities for the Audit of the standalone Ind AS FinancialStatements' section of our report including in relation to these matters.Accordingly our audit included the performance of procedures designed to respond to ourassessment of the risks of material misstatement of the standalone Ind AS financialstatements. The results of our audit procedures including the procedures performed toaddress the matters below provide the basis for our audit opinion on the accompanyingstandalone Ind AS financial statements.

Key audit matters How our audit addressed the key audit matter
(a) Impairment of financial assets at balance sheet date (expected credit losses)
(as described in notes 7 and 40.1 of the standalone Ind AS financial statements)
Ind AS 109 requires the Company to provide for impairment of its financial assets (designated at amortised cost and fair value through other comprehensive income) as at the reporting date using the expected credit loss (ECL) approach. ECL involves an estimation of probability- weighted loss on financial instruments over their life considering reasonable and supportable information about past events current conditions and forecasts of future economic conditions which could impact the credit quality of the Company's financial assets (loan portfolio). • Read and assessed the Company's accounting policy for impairment of financial assets and its compliance with Ind AS 109 and the governance framework approved by the Board of Directors pursuant to Reserve Bank of India guidelines issued on March 13 2020.
• Read and assessed the Company's policy with respect to moratorium pursuant to the RBI circular and tested the implementation of such policy on a sample basis.
• Tested the operating effectiveness of the controls for staging of loans based on their past-due status. Tested samples of performing (stage 1) loans to assess whether any loss indicators were present requiring them to be classified under stage 2 or 3.
In the process a significant degree of judgement has been applied by the management for:
• Staging of financial assets (i.e. classification in 'significant increase in credit risk' ("SICR") and 'default' categories);
• Tested the assumptions used by the Company for grouping and staging of loan portfolio into various categories and default buckets for determining the probability of default (PD) and loss given default (LGD) rates. Tested the input data used for determining the PD and LGD rates and agreed the data with the underlying books of accounts and records.
• Grouping of the loan portfolio under homogenous pools in order to determine probability of default on a collective basis;
• Determining effect of less frequent past events on future probability of default;
• Estimation of management overlay for macro-economic factors which could impact the credit quality of the loans. • Tested assumptions used by the management in determining the overlay for macro-economic factors
Pursuant to the Reserve Bank of India circulars dated March 27 2020 and May 23 2020 issued as part of the COVID-19 Regulatory Package ("RBI circular") allowing lending institutions to offer moratorium to borrowers on payment of instalments falling due between March 1 2020 and August 31 2020 the Company has extended moratorium to its borrowers in accordance with its Board approved policy. (including COVID-19 pandemic).
• Tested the arithmetical accuracy of computation of ECL provision performed by the Company in spreadsheets.
• Assessed disclosures included in the standalone Ind AS financial statements in respect of expected credit losses including the specific disclosures made with regards to the management's evaluation of the uncertainties arising from COVID-19 and its impact on ECL estimation.
In management's view and considering the guidance provided by the Institute of Chartered Accountants of India providing moratorium to borrowers at a mass scale based on RBI directives by itself is not considered to result in a SICR for such borrowers. The Company has recorded a management overlay as part of its ECL to reflect among other things an increased risk of deterioration in macro-economic factors caused by COVID-19 pandemic. Given the unique nature and scale of the economic impact of this pandemic and its timing being close to the year-end the management overlay is based on various uncertain variables which could result in actual credit loss being different than that being estimated. In view of the high degree of management's judgement involved in estimation of ECL accentuated by the COVID-19 pandemic it is considered as a key audit matter.
(b) IT systems and controls We performed the following procedures for testing IT general controls and for assessing the reliability of electronic data processing assisted by specialized IT auditors:
The financial accounting and reporting systems of the Company are fundamentally reliant on IT systems and
IT controls to process significant transaction volumes. Automated accounting procedures and IT environment controls which include IT governance general IT controls over program development and changes access to programs and data and IT operations are required to be designed and to operate effectively to ensure accurate financial reporting. The aspects covered in the IT General Control audit were (i) User Access Management (ii) Program Change Management (iii) Other related ITGCs - to understand the design and test the operating effectiveness of such controls;
Assessed the changes that were made to the key systems during the audit period and assessing changes that have impact on financial reporting;
Any gaps in the IT control environment could result in a material misstatement of the financial accounting and reporting records.
Tested the periodic review of access rights. We inspected requests of changes to systems for appropriate approval and authorization.
Therefore due to the pervasive nature and complexity of the IT environment the assessment of the general IT controls
preparation of the financial information is considered to be a key audit matter. Performed tests of controls (including other compensatory controls wherever applicable) on the IT application controls and IT dependent manual controls in the system.
Tested the design and operating effectiveness of compensating controls where deficiencies were identified and where necessary extended the scope of our substantive audit procedures.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the Directors' Report including theAnnexures thereto (but does not include the standalone Ind AS financial statements and ourauditor's report thereon) which we obtained prior to the date of this auditor'sreport and the Management Discussion and Analysis Report which is expected to be madeavailable to us after that date.

Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information identified above and indoing so consider whether such other information is materially inconsistent with thestandalone Ind AS financial statements or our knowledge obtained in the audit or otherwiseappears to be materially misstated. If based on the work we have performed on the otherinformation that we obtained prior to the date of this auditor's report we concludethat there is a material misstatement of this other information we are required to reportthat fact. We have nothing to report in this regard.

When we read the Management Discussion and Analysis Report if weconclude that there is a material misstatement therein we are required to communicate thematter to those charged with governance and to comply with the relevant applicablerequirements of the standard on auditing for auditor's responsibility in relation toother information in documents containing audited financial statements.

Responsibilities of Management and Those Charged with Governance forthe standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standaloneInd AS financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) specified under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended.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 accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those Charged with Governance are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the standalone Ind ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SA will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements.

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 thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the 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 conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

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 standalone IndAS financial statements for the financial year ended March 31 2020 and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and 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 havebeen kept 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 theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 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 controlsover financial reporting of the Company with reference to these standalone Ind ASfinancial statements and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 31 2020 has been paid/provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act;

(h) 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 as amended in our opinion and to the best of our information and according tothe explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - Refer Note 47 to thestandalone Ind AS financial statements;

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

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

For S. R. BATLIBOI & CO. LLP

Chartered Accountants ICAI Firm Registration Number: 301003E/E300005

per Viren H. Mehta

Partner

Membership Number: 048749 UDIN: 20048749AAAAII5017

Mumbai June 2 2020

ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ONOTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE Re: SpandanaSphoorty Financial Limited

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

of fixed assets.

(b) All fixed assets have not been physically verified by themanagement during the year but there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by themanagement the title deeds of immovable properties included in property plant andequipment are held in the name of the Company.

(ii) The Company's business does not involve inventories andaccordingly the requirements under clause 3(ii) of the Order are not applicable to theCompany and hence not commented upon.

(iii) (a) The Company has granted loans to two companies covered in theregister maintained under section 189 of the

Act. In our opinion and according to the information and explanationsgiven to us the terms and conditions of the grant of such loans are not prejudicial tothe Company's interest.

(b) The Company has granted loans that are re-payable on demand tocompanies covered in the register maintained under section 189 of the Act. We are informedthat the Company has not demanded repayment of any such loan during the year and thusthere has been no default on the part of the parties to whom the money has been lent.However there have been slight delays in payment of interest by such companies.

(c) There are no amounts of loans granted to companies firms or otherparties listed in the register maintained under section 189 of the Act which are overduefor more than ninety days.

(iv) In our opinion and according to the information and explanationsgiven to us there are no loans investments guarantees and securities given in respectof which provisions of section 185 and 186 of the Act are applicable and hence notcommented upon.

(v) 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) To the best of our knowledge and as explained the CentralGovernment has not specified the maintenance of cost records under section 148(1) of theAct for the services of the Company.

(vii) (a) Undisputed statutory dues including provident fundemployees' state insurance income-tax goods and service

tax duty of custom duty of excise value added tax cess and otherstatutory dues applicable to the Company have not generally been regularly deposited withthe appropriate authorities though the delays in deposit have not been serious.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax goods and service tax duty of custom duty of excise value added tax cessand other statutory dues applicable to the Company were outstanding at the year end fora period of more than six months from the date they became payable.

(b) According to the records of the Company the dues outstanding ofincome-tax sales-tax service tax duty of custom duty of excise value added tax andcess on account of any dispute are as follows:

Name of the Statute Nature of dues Amount under dispute (')* Amount paid (')** Period to which it relates Forum where dispute is pending
Chapter V of the Finance Act 1994 Service Tax 56852171 9926956 Financial year from 2006-07 to 2014-15 Customs Excise & Service Tax Appellate Tribunal
Income tax Act 1961 Income Tax 475376736 69223626 Financial year 2016-17 CIT (A)

* Excluding interest and penalty as applicable ** Paid under protest

(viii) According to the information and explanations given by themanagement the Company delayed repayment of loans or borrowings from financialinstitutions and banks during March 2020 to the extent of Rs.392.3 million and such dueswere in arrears as on the balance sheet date. The lender wise details are tabulated asunder:

Bank / Financial institution Amount of delay as on Balance sheet date* (' in Mn) Period of delay since Remarks
IndusInd Bank Limited 65.2 March 24 2020 According to the information and explanations provided to us by the management these repayments were not made by the Company on the respective dates in view of the discussions with the banks and financial institutions for re-schedulement of repayment dates subsequent to the nation-wide lockdown announced by the Central Government on March 24 2020 on account of the Novel Coronavirus (COVID-19) pandemic and also pursuant to COVID-19 Regulatory package announced by Reserve Bank of India on March 27 2020 regarding moratorium on loans from March 12020. However all these amounts were subsequently paid in April 2020 irrespective of receipt of moratorium approval from these institutions
Hinduja Leyland Finance 6.9 March 26 2020
Bank of Baroda 125.0 March 28 2020
Yes Bank Limited 20.5 March 28 2020
Kotak Mahindra Bank Limited 20.8 March 29 2020
Yes Bank Limited 12.5 March 29 2020
Kotak Mahindra Bank Limited 20.8 March 30 2020
Yes Bank Limited 31.3 March 30 2020
Bank of Baroda 41.7 March 312020
IDFC Bank Limited 47.6 March 312020

The Company has not defaulted in repayment of dues to debentureholders. The Company did not have any dues of loans or borrowing to government during theyear.

(ix) In our opinion and according to the information and explanationsgiven by the management the Company has utilised the monies raised by way of initialpublic offer in the nature of equity shares for the purposes for which they were raised.

Further monies raised by the Company by way of term loans were appliedfor the purpose for which those were raised though idle/surplus funds which were notrequired for immediate utilization were gainfully invested in liquid assets payable ondemand.

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud by theCompany or no material fraud on the Company by the officers and employees of the Companyhas been noticed or reported during the year.

(xi) According to the information and explanations given by themanagement the managerial remuneration has been paid and provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.

(xii) In our opinion the Company is not a nidhi company. Thereforethe provisions of clause 3(xii) of the Order are not applicable to the Company and hencenot commented upon.

(xiii) According to the information and explanations given by themanagement transactions with the related parties are in compliance with section 177 and188 of the Act where applicable and the details have been disclosed in the notes to thefinancial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the Company.

(xv) According to the information and explanations given by themanagement the Company has not entered into any non-cash transactions with directors orpersons connected with the directors as referred to in section 192 of the Act.

(xvi) According to the information and explanations given to us wereport that the Company has registered as required under section 45-IA of the ReserveBank of India Act 1934.

For S. R. BATLIBOI & CO. LLP

Chartered Accountants ICAI Firm Registration Number: 301003E/E300005

per Viren H. Mehta

Partner

Membership Number: 048749 UDIN: 20048749AAAAII5017

Mumbai June 2 2020

ANNEXURE 2 REFERRED TO IN PARAGRAPH 2 (F) UNDER THE HEADING"REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of Spandana Sphoorty Financial Limited ("the Company") as of March 312020 in conjunction with our audit of the standalone Ind AS financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing asspecified under section 143(10) of the Companies Act 2013 to the extent applicable to anaudit of internal financial controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting 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 ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting isa process 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 controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 312020 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For S. R. BATLIBOI & CO. LLP

Chartered Accountants ICAI Firm Registration Number: 301003E/E300005

per Viren H. Mehta

Partner

Membership Number: 048749 UDIN: 20048749AAAAII5017

Mumbai June 2 2020

.