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Unichem Laboratories Ltd.

BSE: 506690 Sector: Health care
NSE: UNICHEMLAB ISIN Code: INE351A01035
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OPEN 345.20
PREVIOUS CLOSE 341.15
VOLUME 2374
52-Week high 360.00
52-Week low 121.60
P/E 56.84
Mkt Cap.(Rs cr) 2,369
Buy Price 0.00
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Sell Price 0.00
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OPEN 345.20
CLOSE 341.15
VOLUME 2374
52-Week high 360.00
52-Week low 121.60
P/E 56.84
Mkt Cap.(Rs cr) 2,369
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Unichem Laboratories Ltd. (UNICHEMLAB) - Auditors Report

Company auditors report

to the Members of Unichem Laboratories Limited

To

The Members

Unichem Laboratories Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of UnichemLaboratories Limited (“the Company") which comprise the Balance Sheet as at 31stMarch 2020 and the Statement of Profit and Loss (including other comprehensive income)the Statement of Changes in Equity and the Statement of Cash Flows for the year thenended on that date and a summary of significant accounting policies and other explanatoryinformation (hereinafter referred to as “standalone financial statements”).

2. 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 (“the Act”) in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards (Ind AS) prescribed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2020 the loss and total comprehensive incomechanges in equity and its cash flows for the year ended on that date.

Basis for Opinion

3. We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor's Responsibilitiesforthe Audit of the Standalone Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the standalone financial statements under the provisions of the Act andthe Rules thereunder and we have fulfilled our ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on thestandalone financial statements.

Emphasis of Matter

4. We draw attention to note 37 of notes to the standalone financial statements whichinforms that the General Court of the European Union had on 12th December 2018 rejectedthe appeal and confirmed the fine of € 13.96 Million (equivalent to Rs 11614.72Lakhs) imposed by the European Commission jointly and severally on the Company and itssubsidiary (Niche Generics Limited UK). The Company and its subsidiary based on legaladvice and merits have filed appeals against the decision of General Court before theCourt of Justice of the European Union and outcome of the appeals are awaited. Consideringthe above in view of the management no provision for the aforesaid fine is considerednecessary. This matter was also reported earlier under ‘Emphasis of Matter' paragraphin our report on the standalone and consolidated financial statements for the year ended31st March 2019. Our opinion is not modified in respect of the above matter.

Key Audit Matters

5. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

5.1. Contingent liability as elaborated above in ‘Emphasis of Matter' paragraph

As elaborated in ‘Emphasis of Matter' paragraph given above the Company and itssubsidiary based on legal advice and merits have filed appeals against the decision ofGeneral Court before the Court of Justice of the European Union and outcome of the appealsare awaited. This matter of contingent liability is considered as key audit matter and wehave relied on the management's assessment which is supported by legal advice and meritsthat the aforesaid fine is considered as contingent liability.

Refer to note 36 (ii) and note 37 of the standalone financial statements.

5.2. Impairment test of investment in subsidiaries at UK and Ireland

Investments in subsidiaries are carried in the Company's standalone financial statementat cost less impairment. The carrying value of investments made by the Company in itssubsidiaries (Niche Generics Limited UK and Unichem Laboratories Limited Ireland) as perstandalone financial statements is aggregating '8260.96 Lakhs as at 31 st March 2020. Incase of these subsidiaries there are operating losses in current year accumulated lossesand low net-worth as at balance sheet date. Considering the overall exposure in thesesubsidiaries need for impairment test is a key audit matter. Based on the financialprojections of the above subsidiaries the management is of the view that recoverableamount is higher than carrying value of these investments and there is no impairment ofinvestments as at balance sheet date. For the purpose of our audit we have considered thefollowing aspect:

a. Analytical review of gross margins earned by these subsidiaries.

b. Discussion with management for business outlook (including future financialprojections of the above subsidiaries) and plans for overall turnaround of thesesubsidiaries.

c. Evaluated the performance in the current year as compared to last year and prioryear achievement as compared to the budget.

d. Discussion with the auditors of subsidiaries for the basis on which they haveconcluded that there is no impairment of assets in the books of subsidiary.

Based on our evaluation of management estimates other information & discussionwith the management we agree with the management views and estimates and conclude that noprovision for impairment is required as at date of our audit report.

Refer to note 6.2 of the standalone financial statements.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

6. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance Business Responsibility Report and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we will 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 during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report the fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

7. The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and accounting principles generally accepted in India. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statement that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

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

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

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

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and 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.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the standalone financial statements.

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

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

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of standalone 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 the matteror 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

9. 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 a statement on the matters specified in paragraphs 3 and 4 of theOrder.

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

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

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

c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow Statement dealt withby this Report are in agreement with the books of account;

d. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with rule 7 of the Companies (Accounts)Rules 2014;

e. On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act;

f. With respect to adequacy of internal financial controls over financial reporting ofthe Company and operating effectiveness of such controls refer to our separate reportgiven in Annexure II. Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting;

g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act; and

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

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer note 36 (I) 36 (ii) 36 (vi)36(vii) and note 37 to the standalone financial statements; except certain claims made bythe exemployees whose services were terminated in earlier years and are not acknowledgedas debts. The financial impact of these claims cannot be estimated. However in the opinionof the management these claims are not tenable;

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

iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration Number: 116560W/W100149
Milan Mody
Partner
Membership No. 103286
UDIN.: 20103286AAAABV2189
Mumbai
19th June 2020

ANNEXURE I TO THE INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED 31st MARCH 2020

(Referred to point 9 under the heading “Report on other legal and regulatoryrequirements” of our report of even date)

(i) In respect of fixed assets (property plant and equipment right of use assets andinvestment property):

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

(b) The Company has a program for conducting physical verification to cover all theitems of fixed assets in a phased manner which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programfixed assets were physically verified by the management during the year. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties whichare freehold are held in the name of the Company as at the balance sheet date. In respectof immovable properties of land that have been taken on lease and disclosed as right ofuse assets in the standalone financial statements the lease agreements are in the name ofthe Company as at the balance sheet date.

(ii) The inventories have been physically verified during the year by the managementexcept for the inventories lying with the third parties as at balance sheet date whichhave been confirmed by them. In our opinion the frequency of such verification isreasonable. The discrepancies noticed on verification between the physical stocks and thebook records were not material.

(iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Therefore the requirement of clause (iii)(a) (iii)(b) and(iii)(c) of paragraph 3 of the Order are not applicable to the Company.

(iv) The Company has complied with the provisions of Section 186 of the Act in respectof the investments made by the Company. Further there are no loans guarantees orsecurities given by the Company which are covered under section 186 of the Act. There areno transactions during the year which are covered under section 185 of the Act andtherefore question of commenting on compliance of section 185 of the Act does not arise.

(v) In our opinion and according to the explanations given to us the Company has notaccepted any deposits. Therefore question of reporting compliance with directives issuedby the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Act and rules framed there under does not arise. We are informed that noorder relating to the Company has been passed by the Company Law Board or National CompanyLaw Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vi) We have broadly reviewed the books of account and records maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as prescribed bythe Central Government for the maintenance of cost records under Section 148 (1) of theAct relating to the manufacture of drugs and pharmaceuticals and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. We havehowever not made a detailed examination of the said records with a view to determinewhether they are accurate or complete.

(vii) In respect of statutory dues:

(a) According to the information and explanations given to us and on the basis of ourexamination of records of the Company in respect of amounts deducted / accrued in thebooks of account the Company has been regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax goods and services taxduty of customs duty of excise value added tax cess and any other statutory dues asapplicable to the Company during the year with the appropriate authorities. There are noundisputed statutory dues payable in respect to above statutes outstanding as at 31stMarch 2020 for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us and on the basis of ourexamination of the records of the Company there is no disputed sales tax goods andservices tax service tax duty of customs duty of excise and value added tax as on 31stMarch 2020 which have not been deposited except the following disputed dues which havenot been deposited since the matters are pending with the relevant forum.

Name of the Statutes Nature of the dues Disputed amount Amount paid in protest Unpaid amount Period to which it relates

Forum where dispute is pending

The Income tax Act 1961 TDS and Interest 7.95 - 7.95 FY 2007-2020

In the process of filing rectification/ appeal

The Uttar Pradesh Value Added Tax Act 2008 Penalty 20.44 20.44 FY 2008-2009

Hon'ble High Court of Judicature at Allahabad

The Madhya Pradesh Value Added Tax Act 2002 Entry Tax and Interest 10.94 2.73 8.21 FY 2015-2016

Additional Commissioner of Commercial tax Indore

The Madhya Pradesh Value Added Tax Act 2002 Disallowance of VAT Credit 4.61 1.15 3.46 FY 2012-2013

Additional Commissioner of Commercial tax Indore

The Madhya Pradesh Value Added Tax Act 2002 Non Submission of Forms including interest 18.46 4.61 13.85 FY 2016-2017

Additional Commissioner of Commercial tax Indore

Name of the Statutes Nature of the dues Disputed amount Amount paid in protest Unpaid amount

Period to which it relates

Forum where dispute is pending
The Madhya Pradesh Value Added Tax Act 2002 Disallowance of Input tax Rebate 35.97 8.99 26.98

FY 2016-2017

Additional Commissioner of Commercial tax Indore
The Central Excise Act 1944 Duty and Penalty 81.44 3.85 77.59

April 2003 to November 2013

Appellate Tribunal (CESTAT)- Mumbai
The Finance Act 1944 (Service Tax) Disallowance of Service Tax Credit & Penalty 816.81 28.91 791.10

FY 2008-09 to August 2015

Appellate Tribunal (CESTAT) - Mumbai
The Finance Act 1944 (Service Tax) Disallowance of Service Tax Credit 219.00 16.81 202.19

September 2015 to June 2017

Appellate Tribunal (CESTAT) - Mumbai
The Finance Act 1944 (Service Tax) Disallowance of Service Tax Credit & Penalty 139.88 5.24 134.64

January 2012 to March 2012

Appellate Tribunal (CESTAT)- Kolkatta
The Central Excise Act 1944 Disallowance of CENVAT Credit 41.42 3.10 38.32

FY 2011-12 to 2012-13

Commissionerate (Appeal)- Siliguri
The Central Excise Act 1944 Excise Duty Liability 87.95 6.82 81.13

FY 2013-14 to FY 2016-17

Joint Commissioner CGST & Central Excise Ujjain
The Central Excise Act 1944 Disallowance of CENVAT Credit 1.23 0.12 1.11

FY 2013-14 to FY 2016-17

Joint Commissioner CGST & Central Excise Ujjain
The Finance Act 1944 (Service Tax) Disallowance of CENVAT Credit 1.78 0.18 1.60

FY 2013-14 to FY 2016-17

Joint Commissioner CGST & Central Excise Ujjain

(viii) Based on our audit procedures and as per the information and explanations givenby the management we are of the opinion that the Company has not defaulted in repaymentof loans or borrowings to banks during the year. The Company has not borrowed any moneyfrom financial institutions or debenture holders or Government.

(ix) During the year the Company did not raise any money by way of initial public offeror further public offer (including debt instruments) and term loans. Accordingly clause(ix) of paragraph 3 of the Order is not applicable to the Company.

(x) During the course of our examination of the books of account and records of theCompany carried out in accordance with generally accepted auditing practices in India andaccording to information and explanation given to us we have neither noticed nor havebeen informed by the management any incidence of fraud by the Company or on the Companyby its officers or employees.

(xi) According to the information and explanations given to us and based on ourexamination of the records the Company has paid / provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.

(xii) The Company is not a Nidhi Company. Therefore the provisions of clause (xii) ofparagraph 3 of the Order are not applicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records transactions with the related parties are in compliance withSection 177 and 188 of the Act where applicable and the details of such transactions havebeen disclosed in the standalone financial statements as required by the applicableAccounting Standards.

(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. Therefore the provisions of clause (xiv) ofparagraph 3 of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with directorsor persons connected with the directors. Therefore the provisions of clause (xv) ofparagraph 3 of the Order are not applicable to the Company.

(xvi) The Company is not required to be registered under Section 45-lA of the ReserveBank of lndia Act 1934. Therefore the provisions of the clause (xvi) of the Order arenot applicable to the Company.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration Number: 116560W/W100149
Milan Mody
Partner
Membership No. 103286
UDIN.: 20103286AAAABV2189
Mumbai
19th June 2020

ANNEXURE II TO THE INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED 31stMARCH 2020

(Referred to in point 10(f) under the heading “Report on Other Legal andRegulatory Requirements” of our Report of even date)

Report on the Internal Financial Controls under section 143(3)(i) of the Companies Act2013 (“the Act”)

Opinion

We have audited the internal financial controls over financial reporting of UnichemLaboratories Limited (“the Company”) as of 31st March 2020 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

Management's Responsibility for Internal Financial Controls

The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (“the Guidance Note”) issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the “Guidance Note”) issued by ICAI and the Standards on Auditing prescribedunder Section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls with reference to financial statement. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment 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 internal financial controls system overfinancial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial 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 standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the standalonefinancial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration Number: 116560W/W100149
Milan Mody
Partner
Membership No. 103286
UDIN.: 20103286AAAABV2189
Mumbai
19th June 2020

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