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W S Industries (India) Ltd.

BSE: 504220 Sector: Infrastructure
NSE: WSI ISIN Code: INE100D01014
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OPEN 16.05
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VOLUME 2235
52-Week high 16.05
52-Week low 9.87
P/E
Mkt Cap.(Rs cr) 50
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

W S Industries (India) Ltd. (WSI) - Auditors Report

Company auditors report

To the Members of W.S. INDUSTRIES (INDIA) LIMITED

Report on the Audit of the Standalone financial statements Qualified Opinion

We have audited the accompanying Standalone Ind AS financial statements of W.S.INDUSTRIES (INDIA) LIMITED (‘the Company') which comprise the balance sheet asat 31st March 2022 the statement of profit and loss (including othercomprehensive income) the statement of cash flows and the statement of changes in equityfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of matter given in basis for qualified opinionparagraph the aforesaid standalone financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 312022 and its loss total comprehensive income its cash flows and thechanges in equity for the year ended on that date.

Basis for Qualified Opinion

The company's net worth has been completely eroded. The accumulated losses in thereporting year amounts to Rs. 5629.83 millions (Previous year Rs.5036.68 millions).Further the company had overdue loans to various financial institutions amounting toRs.369.00 millions and interest accrued and due there on of Rs.35.32 millions which hasbeen subsequently fully settled as on the date of this report and the turnover during theperiod ended 31stMarch 2022 is Rs.10.15 millions (previous year Rs.15.64millions) as per the books of accounts maintained.

We refer to note no.41 in the absence of external confirmation of balance in respectof suppliers customers depositors and others we are unable to comment on it. Withregard to Banks/Financial Institutions the Company has completed the final settlementagreements entered into with them.

Material Uncertainty related to ‘Going Concern'

We draw attention to the following note to the financial statements:

During the year under audit there was no production in the Chennai and Vizag plantsand are being considered as discontinued operations. Turnkey Project Business Segment isbeing considered as Continuing Operations.

These factors along with other matters as set forth in the said notes which indicatesthe existence of a material uncertainty that may cause significant doubt about thecompany's ability to continue as a going concern. However the Company has explained itsmeasures taken so far in note no.2 (c) and note no.2(d). In light of the aforesaid thefinancial statements have been prepared on a going concern basis. However in view of theabove mentioned matter we are unable to comment on the ability of the company to continueas a going concern as per SA 570.

wWe believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified opinion.

Emphasis of Matter Impact of COVID-19:

We draw attention to Note No: 2 (e) of the financial statements which describes theeffects of COVID-19 pandemic on the Company's operations and compliances which does nothave any significant impact in the company's overall performance during the period underreview.

It is not appropriate to estimate the duration and severity of these consequences aswell as their impact on the financial position and results of the company for futureperiods.

Note no.27 in respect of payment of dividend on Non Convertible Cumulative RedeemablePreference Shares is contingent on various factors as mentioned in the said note which iscurrently uncertain and hence the amount payable has been treated as contingent liability.

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. In addition to the matter described in the Basis forQualified Opinion section we have determined the matters described below to be the keyaudit matters to be communicated in our report.

Key audit matters Response to Key Audit Matters & Conclusion
1. Sale of 6.58 acres of land @ Porur Chennai to subsidiary company M/s. Vidagara Tech Park Private Limited The sale consideration of Rs.1417.99 millions was received in cash equivalents after the deduction of TDS amounting to Rs.14.20 millions. Necessary adjustments have been carried out in Revaluation Reserve and Capital Reserve accordingly. The title deed of the property was released by the Sub Registrar.
2. Interest on the loans availed from banks/financial institutions Interest Expenses has been provided as per the definitive settlement agreements entered into with the secured lenders.
3. Settlements to the Secured Lenders The company has arrived at a settlement with the secured lenders on 9th August 2021 for the settlement of all outstanding dues (other than the debt allocated to the Vizag Plant of Rs.47.50 Crores) for Rs.95 Crores over a specified period of time in tranches.
The details as per the Settlement agreement dated 9th August 2021 are as follows: Full and final settlement and discharge of Total Outstanding Dues for a settlement amount of INR 950000000/- (Indian Rupees Ninety Five Crores only) ("Settlement Amount") payable by the Company in accordance with the terms and conditions of this Agreement. The Settlement Amount shall be payable in tranches by the Company on the respective Tranche Payment Date in the manner set out below:
(a) 1 NR. 250000000/- (Indian Rupees Twenty Five Crores only) ("First Tranche Amount") on or before August 152021 ("First Tranche Payment Date");
(b) INR. 250000000/-(Indian Rupees Twenty Five Crores only) ("Second Tranche Amount") on or before October 31 2021 ("Second Tranche Payment Date"); and
(c) INR 450000000/- (Indian Rupees Forty Five Crores only)("Final Tranche Amount") on or before January 31 2022 ("Final Tranche Payment Date"). This amount is reduced by the extent of consideration received by M/s. Edelweiss Asset Reconstruction Company Ltd from the potential sale of shares of the Company held by them.
The Company has paid the First Tranche Amount of Rs.50000000/- Rs.100430333/- and Rs. 99569667/- on 31st July 2021 10th August 2021 and on 11th August 2021 respectively.
The Company has paid the Second Tranche Amount of Rs.94350000/- Rs.155650000/- on 28th October 202129th October 2021 respectively.
The Company has paid the Final Tranche Amount of Rs.397225000/- on 4th January 2022.
With the above settlements all the necessary charges with respect to the Chennai Property were released.
The Secured Lenders have given NOC for the above settlements made to them with respect to the Chennai Property.
4. Settlement of Vizag Debt with the secured lenders The Company has made a payment of '.188500000/- with respect to the remaining debt allocated to Visakhapatnam unit. Upon this payment the claims of the Secured Lenders on the Visakhapatnam unit and the Company stand released and fully discharged and duly acknowledged as full and final settlement of all the debt owed by the Company to the Secured Lenders.
5. Impairment of assets pertaining to discontinued operations. In accordance with Ind AS 105 assets relating to discontinued operations have been tested for impairment loss. As the carrying amount was greater than the realizable value impairment loss amounting to Rs. 497.98 millions has been provided for the same as required under Ind AS 36. The provision made earlier in the year ended 31st March 2021 amounting to Rs. 461.89 millions stands reversed.
6. Provision for Doubtful Debts An amount of Rs.1.02 millions has been provided for doubtful debts in the profit and loss account.
7. Allotment of Non Convertible Debentures during the period under review The outstanding loan payable to M/s.Trala Electromech Systems Private Limited was restructured into 35500000 (Three Crore Fifty Five Lakh) fully paid up unlisted secured redeemable Non Convertible Debentures having a face value of Rs.10/-.
8. Disposal of investment in its wholly owned subsidiary M/s.Vidagara Tech Park Private Limited The company has sold its investment in its erstwhile subsidiary M/s.Vidagara Tech Park Private Limited comprising of 70000 equity shares amounting to Rs.0.70 millions which resulted in the cessation of control w.e.f. 4th March 2022.
9. Waiver of Loans Waiver of Loans extended by the secured lenders have been accounted as Revenue in the books of accounts to the extent of Rs. 189.28 millions.
10. Sale of 2.214 acres of land @ Pondicherry Completed the sale of 2.214 acres of land located at Pondicherry on 19th May 2022 for a consideration of Rs.20 millions.

Information Other Than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Information included in the management discussion and analysisboard's report including annexures to board's report corporate governance andshareholder's information but does not include the standalone financial statements andour auditor's report thereon.

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 during the course of our audit or otherwise appears to be materially misstated.

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

Management's Responsibility for the Standalone financial statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern. In this context attention is drawn to Note no.2 and otherrelated notes to the standalone financial statements which indicates that the currentliabilities exceeded its current assets and it has accumulated losses which has resultedin complete erosion of the net worth of the Company as at 31st March 2022leading to material uncertainty about the Company's ability to continue as ‘GoingConcern' and the Company continues to prepare its accounts on a "Going Concern"basis unless management either intends to liquidate the Company or to cease operations orhas 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

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgement andmaintained professional scepticism throughout the audit. We also:

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

• Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 and board of director'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. We conclude that a materialuncertainty exists and attention is drawn to Material Uncertainty related to ‘GoingConcern' paragraph in our report herein above with related disclosures in the Note 2 tothe financial statements. Our conclusions are based on the audit evidence obtained up tothe date of our auditors' report. However future events or conditions may cause theCompany to cease to continue as a going concern.

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

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 the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' 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

As required by the Companies (Auditor's Report) Order 2020 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

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 other comprehensive income theStatement of Cash Flows and Statement of Changes in Equity dealt with by this Report arein agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) The company has made payment of interest on the debentures as per the definitivesettlement agreements entered into with them.

f) The ‘Going Concern' matter described under the Material Uncertainty related to‘Going Concern' paragraph herein above in our opinion may have an adverse effect onthe functioning of the company.

g) On the basis of the written representations received from the directors as 31stMarch 2022 and taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2022 from being appointed as a director in termsof Section 164(2) of the Act.

h) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

i) 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 on its financialposition in its financial statements - Refer Note 27 and other related notes to thefinancial statement.

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

iii. The Company is not required to transfer any amount to the Investor Education andProtection Fund by the Company.

"Annexure A" to the Independent Auditors' Report of even date on theStandalone financial statements of W.S. INDUSTRIES (INDIA) LIMITED.

Referred to in Paragraph 1 under the heading ‘Report on Other Legal &Regulatory Requirement' of our report of even date:

(i) In respect of its property plant and equipment:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment;

(b) These property plant and equipment have been physically verified by the managementduring the period under review. According to the information and explanations given to usno material discrepancies where observed by the management on such verification.

(c) We are informed that the title deeds of immovable properties are held in the nameof the company.

(d) The Company has not revalued its property plant and equipment (including right ofuse assets) or intangible assets or both during the year under review.

(e) No Proceedings have been initiated or are pending against the company for holdingany benami property under the Benami Transactions (Prohibition) Act 1988 and rules madethereunder.

(ii) (a) According to the information and explanations given to us there is noinventory as on

31st March 2022 in the books of accounts. Hence reporting under clauseno.(ii)(a) is not applicable.

(b) During any point of time of the year the Company has not availed any workingcapital facility from the banks or financial institutions. Hence reporting under clauseno.(ii)(b) is not applicable.

(iii) According to the information and explanations given to us and on the basis of ourexamination of the books of accounts the company has not granted loans to a bodycorporate covered in the register maintained under Sec 189 of the Companies Act 20l3.Hence reporting under clause no.(iii) is not applicable.

(iv) The company has complied with the provisions of sections 185 and 186 of thecompanies Act 2013 in respect of loans investments provided by the company. Thecompany has not provided any guarantee or security to any company covered under Section185.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public to which the directives issued by the Reserve Bankof India and the provisions of sections 73 to 76 of the Companies Act 2013 and the rulesframed there under are applicable.

(vi) According to information and explanations given to us the Central Government hasnot prescribed maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013.

(vii) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company is regular in depositingundisputed statutory dues including Provident Fund Income-Tax Goods and Service TaxDuties of Customs and any other statutory dues with the appropriate authorities as onMarch 31 2022. According to the information and explanations given to us no undisputedamounts payable in respect of the above were in arrears as at March 31 2022 for a periodof more than six months from the date on which they become payable.

(viii) There were no transactions relating to previously unrecorded income that havebeen surrendered or disclosed as income during the year in the tax assessments under theIncome Tax Act 1961 (43 of 1961).

(ix) Based on our verification and according to the information and explanations givenby the management the Company has not defaulted in repayment of dues to itsbanks/financial institutions since settlements agreements have been entered into with thesecured lenders as mentioned in the key audit matters.

(x) (a) According to the information and explanations given to us the company has notraised moneys by way of initial public offer or further public offer including debtinstruments and term Loans. Hence the clause no.(x) of the Order is not applicable to theCompany.

(b) According to the information and explanations given to us the Company has not madeany preferential allotment or private placement of shares during the year under review.However the Company has made private placement of non convertible debentures during theyear under review pursuant to section 42 and rule 14(1) of the Companies (Prospectus andAllotment of Securities) Rules 2014 comprising of 35500000 fully paid up unlistedsecured redeemable Non Convertible Debentures having a face value of Rs. 10/- toM/s.Trala Electromech Systems Private Limited.

(xi) In our opinion and according to the information and explanations given to us thecompany has not noticed any fraud by the company or any fraud on the company by itsOfficers or employees or reported during the year.

(xii) The Company is not a Nidhi Company. Hence reporting under clause no.(xii) is notapplicable.

(xiii) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theStandalone Financial Statements as required by the applicable accounting standards.

(xiv) (a) The Company has an internal audit system commensurate with the size andnature of its business;

(b) We have considered the internal audit reports for the year under audit issued tothe Company during the year and till date.

(xv) According to the information and explanations given to us the company has notentered into any non-cash transactions with directors or persons connected with him.Hence reporting under clause no.(xv) is not applicable.

(xvi) (a) The company is not required to be registered under section 45 IA of theReserve Bank of India Act 1934. Hence reporting under clause no.(xvi) (a) (b) and (c)are not applicable.

(b) In our opinion there is no core investment company within the Group (as defined inthe Core Investment Companies (Reserve Bank) Directions 2016) and accordingly reportingunder clause no.(xvi)(d) is not applicable.

(xvii) The cash losses in the reporting year amounts to Rs. 593.15 millions (Previousyear Rs.83.58 millions).

(xviii) There has not been any resignation of the statutory auditors during the year.

(xix) On the basis of the financial ratios ageing and expected dates of realisation offinancial assets and payment of financial liabilities other information accompanying thefinancial statements we are of the opinion that no material uncertainty exists as on thedate of the audit report that company considering the definitive settlement agreementsentered into with the secured lenders is capable of meeting its liabilities existing atthe date of balance sheet as and when they fall due within a period of one year from thebalance sheet date.

(xx) Sub-section (5) of Section 135 of the Companies Act 2013 read with Schedule VIIto the Companies Act is not applicable as the company has accumulated losses including thereporting year

(xxi) The Company has subsidiaries during the year under review and reporting underclause no.(xxi) is not applicable.

"Annexure B" to the Independent Auditor's Report of even date on theStandalone financial statements of W.S. INDUSTRIES (INDIA) LIMITED

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of W.S.INDUSTRIES (INDIA) LIMITED ("the Company") as of March 31 2022 in conjunctionwith our audit of the Standalone financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI)". 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.

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 the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 judgement including the assessment of the risks ofmaterial misstatement of the Standalone financial statements whether due to fraud orerror.

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 the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone financial 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.

Opinion

The system of internal financial controls over financial reporting with regard to thecompany were made available to us to determine whether the company has establishedadequate internal financial control over financial reporting and whether such internalfinancial controls were operating effectively as at 31st March 2022. Howeverin addition to above internal financial controls over financial reporting is based onmanagement's assurance.

We give a disclaimer as reported above in respect of the internal financial controlsover financial reporting considering the nature timing and extent of audit tests in ouraudit of the Standalone financial statements of the Company and hence our opinion issubject to the said disclaimer on the Standalone financial statements of the company.

For M/s. S B S B AND ASSOCIATES
Chartered Accountants
Firm Registration No.: 012192S
D. Sharath Kumar
Partner
Place : Chennai Membership No.: 024568
Date : 30th May 2022 UDIN: 22024568AJVRMR3616

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