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Titan Company Ltd.

BSE: 500114 Sector: Consumer
NSE: TITAN ISIN Code: INE280A01028
BSE 00:00 | 06 Aug 1120.35 14.85
(1.34%)
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1106.50

HIGH

1125.00

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1093.05

NSE 00:00 | 06 Aug 1120.15 14.70
(1.33%)
OPEN

1105.45

HIGH

1125.00

LOW

1091.25

OPEN 1106.50
PREVIOUS CLOSE 1105.50
VOLUME 139972
52-Week high 1389.85
52-Week low 720.00
P/E 65.56
Mkt Cap.(Rs cr) 99,465
Buy Price 1120.35
Buy Qty 5.00
Sell Price 1120.35
Sell Qty 496.00
OPEN 1106.50
CLOSE 1105.50
VOLUME 139972
52-Week high 1389.85
52-Week low 720.00
P/E 65.56
Mkt Cap.(Rs cr) 99,465
Buy Price 1120.35
Buy Qty 5.00
Sell Price 1120.35
Sell Qty 496.00

Titan Company Ltd. (TITAN) - Auditors Report

Company auditors report

To the Members of Titan Company Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

OPINION

We have audited the standalone financial statements of Titan Company Limited ("theCompany") which comprise the standalone balance sheet as at 31 March 2019 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 its profit 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) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the

 

Auditor's Responsibilities for the Audit of the section of our report. We

 

Standalone financial Statements 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 standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.

KEY AUDIT MATTERS

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

REVENUE RECOGNITION

Refer note 2(v) and 17 to the standalone financial statements

The key audit matter How the matter was addressed in our audit
Revenue from sale of goods is recognised when control of the products being sold is transferred to the customer and when there are no other unfulfilled obligations. The performance obligations in the contracts are fulfilled at the time of dispatch delivery or upon formal customer acceptance depending on customer terms. In view of the significance of the matter we applied the following audit procedures in this area among other procedures to obtain sufficient appropriate audit evidence:
1. We assessed the appropriateness of the revenue recognition accounting policies and its compliances with applicable accounting standards. We read the contracts with customer distributors and franchisees to determine appropriateness of revenue recognition.
We identified revenue recognition as a key audit matter because the Company and its external stakeholders focus on revenue as a key performance indicator. This could create an incentive for revenue to be overstated or recognised before control has been transferred. 2. We evaluated the design of key internal financial controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions.
3. We evaluated the design implementation and operating effectiveness of management's general IT controls and key application controls over the Company's IT systems which govern revenue recognition including access controls controls over program changes and interfaces between different systems.
Additionally the Company has adopted Ind AS 115 – Revenue from Contracts with Customers which is the new revenue accounting standard. The application and transition to the accounting standard is complex and is an area of focus in the audit. 4. We performed substantive testing by selecting samples of sales made at the retail outlets using statistical sampling and tested the underlying sales to collection reports and bank statements. For other sales (excluding retail sales) we performed substantive testing for the revenue transactions using statistical sampling and tested the underlying documentation supporting the sales.
5. We assessed the adequacy of disclosures made.
6. We tested on a sample basis specific revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period.

INVENTORIES

Refer note 2(xv) and note 9 to the standalone financial statements

The key audit matter How the matter was addressed in our audit
The Jewelry and Watches divisions of the Company hold inventory at various locations including factories stores and third party locations. The Company has a plan wherein inventory is verified on a periodic basis to ascertain the existence of inventory. Inventory valuation involves significant assumptions and estimations made by the Management. Management also makes an estimate for slow moving inventory based on the age of the inventory. In view of the significance of the matter we applied the following audit procedures in this area among other procedures to obtain sufficient appropriate audit evidence:
We have identified inventory as a key audit matter because of the number of locations that inventory is held at and the judgement applied in the valuation of inventory and provision for inventory. 1. We assessed the appropriateness of the inventories accounting policies and its compliances with applicable accounting standards.
2. We evaluated the design of key internal financial controls and operating effectiveness of the relevant key controls with respect to physical verification of inventory valuation of inventory and provision for inventory.
3. We evaluated the design implementation and operating effectiveness of management's general IT controls and key application controls over the Company's IT systems which govern inventories including access controls controls over program changes interfaces between different systems.
4. For locations selected using statistical sampling we attended physical verification of stocks conducted by the management as at the year end. We also performed surprise stock counts at select stores on a sample basis.
5. For samples selected using statistical sampling we obtained independent confirmations of inventories held with third parties.
6. We tested on a sample basis the valuation of inventories as at the year end and the Management's assessment of provision required for obsolete and slow moving inventories held as at the balance sheet date.
7. We considered the adequacy and appropriateness of the disclosures in the financial statements relating to the inventories.

IMPAIRMENT OF INVESTMENT IN SUBSIDIARIES AND INTER CORPORATE DEPOSITS

Refer note 2(xviii) 6.1 10.4 and 35 to the standalone financial statements

The Key matter How the Matter was addressed in out audit
The Company held significant amounts of investments in subsidiaries. Management assesses at each reporting date if there is an indication based on either internal or external sources of information that investments in subsidiaries may be impaired. Where such indicators exist management performs impairment testing. In view of the significance of the matter we applied the following audit procedures in this area among other procedures to obtain sufficient appropriate audit evidence:
In performing such impairment assessments management compared the carrying value of each of the identifiable cash generating units ("CGUs") to which investments in subsidiaries have been allocated with their respective recoverable amounts. The recoverable amount of the CGUs which is based on the higher of the value in use or fair value less costs to sell has been derived from discounted forecast cash flow models to determine if any impairment loss should be recognized. 1. We tested the design of key internal financial controls and operating effectiveness of the relevant key controls around the review of the assessment of impairment of investment in subsidiaries and ICDs.
Further the Company invested its surplus funds in Short term Inter Corporate Deposits ("ICDs") in an infrastructure conglomerate. The ICDs are carried at cost less provisions for impairment. 2. We evaluated management's identification of CGUs the carrying value of each CGU and the methodology followed by management for the impairment assessment in compliance with the prevailing accounting standards.
We focused on these areas due to the magnitude of the carrying amounts of these assets and the fact that significant judgements were required by management (i) to identify whether any impairment indicators existed for any of these assets during the year; (ii) to determine the appropriate impairment approaches i.e. fair value less costs of disposal or value in use; and (iii) to select key assumptions to be adopted in the valuation models including estimating future cash flows growth rates and discount rates. 3. We evaluated appropriateness of key assumptions included in the cash flow forecasts used in computing recoverable amount of each CGU such as growth rates profitability etc with reference to our understanding of their business and historical trends.
4. We engaged valuation specialists who tested Management's assumptions used for assessment of the carrying value of the subsidiaries.
5. We performed sensitivity analysis considering a reasonably possible change in key assumptions used.
6. We tested Management's assessment of the provision required for ICDs. We also read the minutes with respect to the deliberations held in the Audit Committee of the Board and the Board Meetings with respect to the recoverability of the ICDs.
7. We evaluated the appropriateness of the disclosure in the financial statements and assessed the completeness and mathematical accuracy.

OTHER INFORMATION

The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the Financial Statements and our Auditor's Reportthereon. The other information is expected to be made available to us after the date ofthe Auditor's report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.

When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take necessary actions as applicable under the applicable laws andregulations.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit MPTT and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible 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.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the companyhas adequate internal financial controls with reference to financial statements in placeand the 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

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

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B" .

(B) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 onits financial position in its standalone financial statements - Refer Note 28 to thestandalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred[excluding disputed legal cases as explained in Note 14.3 to the standalone financialstatements] to the Investor Education and Protection Fund by the Company; and

iv. The disclosures regarding holdings as well as dealings in specified bank notesduring the period from 8 November 2016 to 30 December 2016 have not been made in thesefinancial statements since they do not pertain to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditor's Report under Section197(16): In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under section 197(16) which arerequired to be commented upon by us.

for B S R & Co LLP
Chartered Accountants
Supreet Sachdev
Partner
Membership No: 205385
Place: Bengaluru
Date: 8 May 2019

Annexure A to the Independent Auditor's Report

With reference to the Annexure A referred to in the Independent Auditor's Report to themembers of the Company on the standalone financial statements for the year ended 31 March2019 we report the following: (i) (a) The Company has maintained proper records showingfull particulars including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assetsby which all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to the programme certain fixedassets were physically verified during the year and no material discrepancies were noticedon such verification.

(c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties included in property plant and equipment are held in the name of the Company.

(ii) The inventory except goods-in-transit and stocks lying with third parties hasbeen physically verified by the management during the year. In our opinion the frequencyof such verification is reasonable. The discrepancies noticed on verification between thephysical stock and the book records were not material. For stocks lying with third partiesat the year-end written confirmations have been obtained by the Management.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct. Accordingly the provisions of paragraph 3(iii) (a) (b) and (c) of the Order are notapplicable to the Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act with respectto the loans given and investments made. Further there are no guarantees and securitygiven in respect of which provisions of section 185 and 186 of the Act are applicable.

(v) In our opinion and according to the information and explanations given to us theCompany has complied with the applicable directives issued by the Reserve Bank of Indiaprovisions of Section 73 to 76 of the Act any other relevant provisions of the Act andthe relevant rules framed thereunder with regard to deposits accepted from the public.Accordingly there have been no proceedings before the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in thismatter and no order has been passed by any of the aforesaid authorities.

(vi) The Central Government has not prescribed the maintenance of cost records underSection 148 of the Act for any of the products manufactured by the Company.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees' StateInsurance Income-tax Goods and Services tax duty of Customs Cess and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities. As explained to us the Company did not have any dues onaccount of Sales tax Service tax duty of Excise and Value added tax during the year.Also refer note 28(h) to the financial statements.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax Goods andServices tax duty of Customs Cess and other material statutory dues were in arrears asat 31 March 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofProvident Fund Employees' State Insurance Income-tax Goods and Services tax duty ofcustoms Cess and other material statutory dues which have not been deposited by theCompany on account of disputes except for the following:

Statute/ Nature of dues Amount* Period to which the amount relates Forum where the dispute in pending
Excise duty (including service tax) 8664 (700) 2005-2009 Supreme Court
1 2001-2002 High Court
(1)
3866 1987-2012 Custom Excise and Service Tax
(535) Appellate Tribunal
2188 1996-2018 Appellate Authority upto
(1661) Commissioner's level
Sales tax/ value added tax 87 2000-01 High Court
(15)
64 2009-2012 Commercial Tax Tribunal
(28)
2344 2000-2018 Appellate Authority upto
(1028) Commissioner's level
Customs duty 68 2012-2013 Appellate Authority upto
(36) Commissioner's level
Income-tax 827 1998-2003 High Court(s)
(827)
10304 2005-2014 Income tax Appellate Tribunal
(4330)
1201 2000-2005 Appellate Authority upto
(1201) Commissioner's level

* the amounts disclosed are excluding interest and penalties wherever applicable andamount in brackets represent amounts paid under protest.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to financialinstitutions and banks. The Company did not have any outstanding loans or borrowings fromgovernment and there are no dues to debenture holders during the year.

(ix) In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly paragraph 3(ix)of the Order is not applicable to the Company.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.

(xi) In our opinion and according to the information and explanations given to us andbased on examination of the records of the Company the Company has paid/ providedmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under Section 406 of the Act.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with Sections 177 and 188 of the Act where applicable and details of alltransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable to the Company.

(xvi) According to the information and explanation given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

for B S R & Co LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Supreet Sachdev
Partner
Membership No: 205385
Place: Bengaluru
Date: 8 May 2019

Annexure B to the Independent Auditor's Report

on the standalone financial statements of Titan Company Limited ("theCompany") for the year ended 31 March 2019

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 (Referred to in paragraph 1(A)(f) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

OPINION

We have audited the internal financial controls with reference to financial statementsof Titan Company Limited ("the Company") as of 31 March 2019 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's Management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

AUDITOR'S RESPONSIBILITY

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 Guidance Note and the Standards on

Auditing prescribed under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls with reference to financial statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements were established and maintainedand whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

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

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 and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIALSTATEMENTS

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.

for B S R & Co LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Supreet Sachdev
Partner
Membership No: 205385
Place: Bengaluru
Date: 8 May 2019