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Om Metals Infraprojects Ltd.

BSE: 531092 Sector: Engineering
NSE: OMMETALS ISIN Code: INE239D01028
BSE 00:00 | 24 Apr 2020 Om Metals Infraprojects Ltd
NSE 05:30 | 01 Jan 1970 Om Metals Infraprojects Ltd

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OPEN 14.05
PREVIOUS CLOSE 14.40
VOLUME 216
52-Week high 34.00
52-Week low 10.00
P/E
Mkt Cap.(Rs cr) 136
Buy Price 13.76
Buy Qty 200.00
Sell Price 16.89
Sell Qty 200.00
OPEN 14.05
CLOSE 14.40
VOLUME 216
52-Week high 34.00
52-Week low 10.00
P/E
Mkt Cap.(Rs cr) 136
Buy Price 13.76
Buy Qty 200.00
Sell Price 16.89
Sell Qty 200.00

Om Metals Infraprojects Ltd. (OMMETALS) - Auditors Report


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Company auditors report

To the Members of

Om Metals Infraprojects Limited

Report on the Standalone Financial Statements

Qualified Opinion

We have audited the standalone financial statements of Om Metals Infraprojects Limited("the Company") which comprise the balance sheet as at 31st March 2019 and thestatement of Profit and Loss (including other comprehensive income) the statement ofchanges in equity and statement of cash flows for the year ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information in which are incorporated financial statements of Engineering andHotel Divisions of the Company audited by other auditors and whose reports have beenfurnished to us. Our opinion in so far as it relates to the affairs of such division isbased solely on the report of other auditors.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the matters discussed in basis of qualified opinion the aforesaidstandalone financial statements give the information required by the Act in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the act read with the companies (Indian AccountingStandards) rules2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019and the profit and total comprehensive income changes in equity and its cash flows forthe year ended on that date.

Basis of qualified opinion

1. As stated in Note 52(b) to the standalone financial statements the Company'snon-current investments as at 31 March 2019 include investments aggregating Rs. 488.45Lacs in a subsidiary; being considered good and recoverable by the management consideringthe factors stated in the aforesaid note.

However this Subsidiary has accumulated losses and its net worth is fully eroded.Further this subsidiary is facing liquidity constraints due to which they may not be ableto realize projections made as per their respective business plans thus we are unable tocomment upon the carrying value of these non-current investments and recoverability of theaforesaid dues and the consequential impact if any on the accompanying standalonefinancial statements and as per audited financial statements of subsidiary provided to usrespective auditor has not on qualified on going concern matter. The recoverability of thesaid investment is in doubtful in our opinion.

2. As stated in Note 52 (a) & 52(d) to the standalone financial statements theCompany's noncurrent investments as at 31 March 2019 include investments aggregating Rs.5092.90 Lacs and advances of Rs. 8518.13 Lacs current as well as non-current in two jointventures being considered good and recoverable by the management considering the factorsstated in the aforesaid note.

Both joint ventures (52(a) & 52(d)) has filed termination to their respectiveauthority and claimed the amount invested and termination payments as per concessionagreement. But company's operating only on behalf of respective authority and is notbooking any expenses and revenue in books after termination. So far as this matterindicates material uncertainty about the going concern of these joint ventures. In ourview recoverability of the amount invested and advance provided not certain but noprovisioning has been made against such diminishing of investment and loans. Management isof the view that such arbitration claims has merits and will be in favor of joint venturesand amount invested and advance provided will be recovered fully.

3. Company granted advance to SPML Infra Limited amount of Rs. 541.95 lacs as at 31stmarch 2019. The Management represented that this amount will be adjusted against capitalcontribution of SPML Infra Ltd lying in OM Metal SPML JV (Ujjain) which is a jointoperation and proportionately included in company's financial statements. However inabsence of third party confirmation and other supportive evidence we are unable tocomment upon such balances and such adjustment. Further company has not adjusted suchamount in books.

Other Matter

(i) We did not audit the separate financial statements of five joint operationsincluded in these standalone financial statements whose financial statements reflecttotal assets of Rs. 8576.45 Lacs and net liabilities of Rs. 6464.02 Lacs as at 31 March2019 and total revenues of Rs.7189.37 Lacs and Net Profit before tax of Rs. 1258.49 Lacsfor the year ended on that date as considered in these standalone financial statements.The Company had prepared separate set of statutory financial statements of these jointoperations for the years ended 31 March 2019 in accordance with accounting principlesgenerally accepted in India and which have been audited by other auditors under generallyaccepted auditing standards applicable in India. Our opinion in so far as it relates tothe amounts and disclosures in respect of these joint operations is solely based on reportof the other auditors and the conversion adjustments prepared by the management of theCompany which have been audited by us. Our opinion is not qualified in respect of thismatter.

(ii) The Company has executed an agreement to sale of Hotel Om Tower (Hotel Division)in current year and whole amount against sale consideration of Rs. 3600.00 lacs has beenreceived on various dates from the buyer of property as at 31/03/2019. Company hasclassified such net current and noncurrent assets as held for sale under the other currentassets and recognized them on lower of book value and recoverable amount which is basedupon the management's prudent business practice and does not affect company'sprofitability or going concern.

(iii) As stated in note no. 62 Company made claims against customer/parties/subsidiaries which represents work done in earlier years or loss of interest or any othermatter which are either in dispute or yet to be finalized by both the parties amounting toRs. 59140.09 Lacs net off counter claims of Rs. 2146.53 lacs. Outcome of such claims arepresently unascertainable. No adjustment has been made in the standalone financialstatements. Our opinion is not qualified in respect of this matter.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the Independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Companies Act 2013 and the Rules there under and we have fulfilledour other ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. TheKey audit matters on financial statements of Engineering and Hotel Divisions and jointoperations of the Company are provided by other auditors and whose reports have beenfurnished to us. Our opinion in so far as it relates to the affairs of such division isbased solely on the report of other auditors.

S. no. Key Audit Matter Auditor's Response
i. Revenue Recognition Principal Audit Procedures
There are significant accounting judgements including estimation of costs to complete determining the stage of completion and the timing of revenue recognition. Our procedures included :
• Testing of the design and implementation of controls involved for the determination of the estimates used as well as their operating effectiveness;
The Company recognizes revenue and profit/ loss on the basis of stage of completion based on the milestone approved by project authority. • Testing the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard;
Cost contingencies are included in these estimates to take into account specific uncertain risks or disputed claims against the Company arising within each contract. These contingencies are reviewed by the Management on a regular basis throughout the contract life and adjusted where appropriate. • Testing a sample of contracts for appropriate identification of performance obligations;
• For the sample selected reviewing for change orders and the impact on the estimated costs to complete;
• Engaging technical experts to review estimates of costs to complete for sample contracts; and
• Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings
2. Evaluation of uncertain tax positions Principal Audit Procedures
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Obtained details of completed tax assessments and demands for the year ended March 31 2019 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions.
Refer Notes 44 to the Standalone Financial Statements
Additionally we considered the effect of new information in respect of uncertain tax positions as at March 31 2018 to evaluate whether any change was required to management's position on these uncertainties.
3. Recoverability of Indirect and direct tax Principal Audit Procedures
receivables We have involved our internal experts to review the nature of the amounts recoverable the sustainability and the likelihood of recoverability upon final resolution.
As at March 31 2019 non-current assets in respect of withholding tax and others include Cenvat recoverable amounting to Rs. 698.97 Lacs which are pending adjudication.
4. Assessment of the carrying value of unquoted equity instruments in loss making subsidiaries and joint ventures. Besides obtaining an understanding of Management's processes and controls with regard to testing the impairment of the unquoted equity instruments in loss making subsidiaries and joint ventures.
The impairment review of unquoted equity instruments and debt with a carrying value of Rs 5580.65 lacs is considered to be a risk area due to the size of the balances as well as the judgmental nature of key assumptions which may be subject to management override.
Our procedures included the following:
• Engaged internal fair valuation experts to challenge management's underlying assumptions and appropriateness of the valuation model used;
• Compared the Company's assumptions with
The carrying value of such unquoted equity instruments and debt is at risk of recoverability. comparable benchmarks in relation to key inputs such as long-term growth rates and discount rates;
The net worth of the underlying entities has significantly eroded and the orders in hand are below the break-even production levels of this facilities. The estimated recoverable • Assessed the appropriateness of the forecast cash flows within the budgeted period based on their understanding of the business and sector experience;
amount is subjective due to the inherent uncertainty involved in forecasting and discounting future cash flows. • Considered historical forecasting accuracy by comparing previously forecasted cash flows to actual results achieved; and
Refer to Note Number 7 of the Standalone Financial Statements • Performed a sensitivity analysis in relation to key assumptions.

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

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 Annexure to Board's Report BusinessResponsibility Report Corporate Governance 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 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 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 total comprehensive income changes in equity and cashflows of the Company in accordance with the Ind AS and other accounting principlesgenerally accepted in India. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic 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 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the

Central Government of India in terms of sub-section (11) of section 143 of theCompanies

Act 2013 we give in the Annexure "A" statement on the matters specified inparagraphs 3

and 4 of the Order to the extent applicable.

2. 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 except for thematter described in the basis of qualified opinion paragraph.

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 and proper returnsadequate for the purposes of our audit have been received from the branches i.e.Engineering and Hotel Divisions of the Company not visited by us;

c) The report(s) on the accounts of the branch office(s) i.e. Engineering & HotelDivisions and joint operations of the Company audited under section 143 (8) of the Act bythe branch auditors have been sent to us and have been properly dealt with by us inpreparing this report.

d) The Balance Sheet the Statement of Profit and Loss including Other comprehensiveincome statement of changes in equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account and with the returns received from thebranches Engineering & Hotel Divisions and Joint operations not visited by us

e) Except for the effects of the matter described in the basis for qualified opinionparagraph In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014.

f) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

g) 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".

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 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 litigation on its financial positionin its Financial Statement as referred in Note no 44 to the Financial Statement.

ii. The Company has made provisions as required under the applicable law or accountingstandards for material foreseeable losses if any on Long Term Contracts includingderivative contracts.

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

For Mahipal Jain & Co.
Chartered Accountants
Firm Registration No 007284C
Place : Delhi
Dated : 30.05.2019
{CA Rupesh Garg}
Partner
M.No.404191

ANNEXURE A TO THE AUDITOR'S REPORT

Annexure referred to in paragraph 1 under the heading of "Report on other legaland Regulatory requirements" of the independent Auditor's Report on the FinancialStatements of Om Metals Infra-projects Limited ("The Company'') for the year ended on31st March 2019.

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of accounts and other recordsexamined by us in the normal course of audit. In preparing the report we have consideredthe report made under the aforesaid order by other auditors who have audited theFinancial Statements of the Divisions of Engineering and Hotel and joint operation of theCompany we report that:

(i) In respect of fixed assets:

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

b. The fixed assets were physically verified during the year except Engg divisionmanagement in accordance with a program of verification the frequency of verification isreasonable having regard to the size of the company and the nature of its fixed assets.According to the information and explanations given to us no material discrepancies werenoticed on such verification as compared to books records. In Engg. Division physicalverification has been done by company once In two years.

c. The title deeds of all the immovable properties are held in the name of the companyexcept for the below:

(Amount in Rs. Lacs)

Name of Property Located at Carrying Value Title Deed in the name of
Industrial Land & Building Plot No A-37-38 A-21-22 B-26 Industrial Estate Kota 3.00 Om Metals & Mineral P Ltd*
Industrial Land & Building Plot No B-131 IPIA Kota Land - 483.49 Building - 34.65 Om Structural India P Ltd**
Industrial Land & Building Special - 1 IPIA Kota Land - 2443.82 Building 282.83 Om Rajasthan Carbide Ltd**
Industrial Land & Building Special - 1A IPIA Kota Land - 1876.18 Building - 47.89 Jupitar Manufacturing P Ltd**
Commercial Building NBCC Plaza IVth Floor Sector -11 Pushp Vihar Saket Delhi 2100.00 Pending for registration

*These are the earlier name of "the Company"

** Immovable properties i.e. freehold/lease hold land and buildings are held in thename of the Company and such immovable properties has been transferred pursuant to thescheme of amalgamation under section 391 to 394 of the Companies Act 1956 the transfer isthrough the order of the Hon'ble High Court Rajasthan Jaipur and are pending forregistration in favor of the Company.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year. No material discrepancies were noticed on the physicalverification.

(iii) The Company has granted unsecured loan to Subsidiaries and joint Venture coveredin the register maintained under section 189 of the Companies Act 2013 and with respectto the same:

a) In our opinion the terms and conditions of such loans are not prime facieprejudicial to the Company's interest.

b) The schedule of repayment of the principal and the payment of the interest has notbeen stipulated and hence we are unable to comment as to whether repayment/ receipt of theprincipal amount and the interest are regular.

c) In the absence of stipulated schedule of repayment of principal and payment ofinterest we are unable to comment as to whether there is any amount which is overdue formore than 90 days and whether reasonable steps have been taken by the company for recoveryof the principal amount and interest.

(iv) According to information and explanation given to us and based on the legalopinion obtained by the company that the company being a company engaged in the businessof providing infrastructure facilities in terms of section 186 the company has compliedwith the provisions of section 185 and 186 of the Companies Act 2013 in respect of grantof loans making investments and providing guarantee and security as applicable.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of accounts maintained by the company pursuantto the Rules made by the Central Govt. for the maintenance of cost records under subsection (1) of section 148 of the Companies Act in respect of company and are of theopinion that prima-facia the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determining whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income- tax sales-tax service tax GST duty of customs duty of excise dutyvalue added tax cess have not been regularly deposited to the appropriate authorities.There have been significant delay in large number of cases. Further the undisputedamounts payable in respect thereof which were outstanding at the year-end for a period ofmore than six months from the date they become payable are as follows:

Statement of arrear of statutory dues outstanding for more than six months:

Name of Statute Nature of Dues Amount in Rs. Lacs Period to which the amount relates Due date Date of Payment
Labour Law Labour Cess 29.03 Prior to 01.04.2018 Various Due Dates Not paid till date
State Tax Gujrat Professional Tax 0.25 Prior to 01.04.2018 Various Due Dates Not paid till date

(b) According to the information and explanations given to us and the records of thecompany examined by us the dues outstanding in respect of income-tax sales-tax servicetax duty of excise and Wealth Tax on account of any dispute are as follows:

Nature of the Statute Nature of Dues Forum where dispute is pending Demand Amount (Rs. in Lacs.) Amount paid under protest (Rs. in lacs.) Period to which the amount relates
Central Sales Tax Act 1956. and Sales Tax/ Sales Tax & Entry Tax Commissioner (Appeals)/Tribunal 191.87 0.00 1990-91 2009-10 to 2010-11 and 2015-16
VAT Act of various states High Court 16.91 0.00 2003-04
Central Excise Act 1944 Excise Duty Tribunal (CESTATE) 471.49 0.00 2009-10 to 2011-12
Commissioner(Appeal) and Show Case 605.34 21.50 2000-01 to 2015-16
Income Tax Act 1961 Income Tax ITAT 2.19 2.19 1991-91 to 2013-14
CIT Appeal 217.73 54.14 2007-08 to 2016-17
Service tax law finance Act 1994 Service Tax Commissioner (Appeals)/Tribunal / Show Cause 204.85 0.00 2003-04 to 2005-06 & 2010 -11 to 2011-12 and 2014-15
Wealth Tax Act. Wealth Tax ITAT 0.28 0.28 1992-1993

Note: 1) Amount as per demand orders including interest and penalty wherever mentionedin the order.

2) In addition to above Income Tax Department filed Appeal before honorable SupremeCourt against decision of Honorable High Court for the financial year pertaining to2002-03 to 2009-10 (Total Number of Appeals 15 Amounting Rs. 5651.84 Lacs pending).

3) In addition to above Income Tax Department filed Appeal before Honorable RajasthanHigh Court against decision of ITAT for the financial year pertaining to 1976-77 1995-96and 2013-14 (Total Number of Appeals

3 Amounting Rs. 2012.36 Lacs pending).

(viii) In our opinion and according to our opinions and explanations the company has noloans or borrowings payable to govt or debenture holder.

During the year the company delayed in repayment of dues to banks which are as follows:

Bank Days Principal Interest Total
Daimler Financial Services India Pvt Ltd. 0-30 2.55 0.52 3.07
HDFC Bank Ltd. 0-30 84.45 0.00 84.45
Kotak Mahindra Prime Ltd. 0-30 0.78 0.31 1.09
HDFC bank Ltd. 0-30 1.89 0.21 2.10

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

(x) No fraud by the Company or on the company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 of the Act read with Schedule V to theCompanies Act 2013.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly clause 3(xii) ofthe Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

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

(xv) The company has entered in sale transaction of Hotel Property to Jupiter MetalPrivate limited as non-cash transactions with directors or persons connected with them.Refer note no. 60

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

For Mahipal Jain & Co.
Chartered Accountants
Firm Registration No 007284C
Place: Delhi
Dated: 30.05.2019
{CA Rupesh Garg}
Partner
M.No. 404191

Annexure to the Independent Auditor's Report of even date to the members of Om MetalInfraprojects Limited on the financial statements for the year ended 31st March 2019

INDEPENDENT AUDITOR'S REPORT

Annexure B

Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act"). Inpreparing the report we have considered the report made under the aforesaid order byother auditors who have audited the Financial Statements of the Divisions of Engg. &Hotel and Joint operations of the Company we report that:

1. In conjunction with our audit of the standalone financial statements of Om MetalsInfraprojects Limited. ("the Company") as of and for the year ended 31 March2019 we have audited the internal financial controls over financial reporting (IFCoFR) ofthe company of as of that date.

Management's Responsibility for Internal Financial Controls

2. 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 Control Over Financial Reporting (the'Guidance Note') issued 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 the company's business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditors' Responsibility

3. 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 and the Standards on Auditing prescribed under Section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of internal financialcontrols. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment

of the risks of material misstatement of the financial statements whether due to fraudor error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Basis for Qualified Opinion

In our opinion according to information and explanations given to us and based on ourAudit Procedure performed the following material weakness has been identified in theoperating effectiveness of the Company's IFCoFR as at 31.03.2019.

The Company's Internal Financial Control in respect of Supervisory and review controlsover process of determining of (a) Carrying Value of the Company's Non Current Investmentin its Subsidiaries and Joint Venture (b) recoverability of Non Current Loans other NonCurrent Financial Assets and Other Current Financial Assets due from such subsidiarieswere not operating effectively. Absence of aforesaid assessment in accordance with theaccounting principal generally accepted in India could potentially result in a materialmisstatement in the carrying value of investments in such Subsidiaries and the aforesaiddues from such subsidiaries and consequently could also impact the Profit (FinancialPerformance including other Comprehensive Income) after tax.

A material weakness is a deficiency or a combination of deficiencies in IFCoFR suchthat there is a reasonable possibility that a material misstatement of the Company'sannual or interim financial statement will not be prevented or detected on a timely basis.

Qualified Opinion

8. In our opinion except for the possible effects of the material weakness describe inthe basis for Qualified Opinion Paragraph the Company has in all material respectsadequate internal financial controls over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2019 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Control Over Financial Reporting (the 'Guidance Note') issuedby the Institute of Chartered Accountants of India (ICAI).

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of Audit test applied in our Audit of the StandaloneFinancial Statements of the Company as at and for the year ended 31.03.2019 and thematerial weakness has affected our opinion on the standalone Financial Statements of theCompany and we have issued a Qualified Opinion on the Standalone Financial Statement.

For Mahipal Jain & Co.
Chartered Accountants
Firm Registration No 007284C
Place: Delhi
Dated: 30.05.2019
{CA Rupesh Garg}
Partner
M.No. 404191


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