TO THE MEMbERS OF TAMIL NADU NEWSPRINT AND PAPERS LIMITED
Report on audit of the Financial Statements
1.1 We have audited the financia l statements of Tamil Nadu Newsprint and PapersLimited ("the Company") which comprise the Balance Sheet as at 31st Mar 2019and the Statement of Profit and Loss Statement ch of Changes in Equity and Statement ofCash Flows for the year then ended and Notes to the Financial
Statements including a Summary of Significant Accounting Policies and otherexplanatory information ("the financial statements").
1.2 In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the IndianAccounting Standards prescribed under section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended ("Ind AS") & otheraccounting principles generally accepted in India of the state of affairs of the Companyas at March 31
2019 and Profit changes in equity and its cash flows for the year ended on that date.
2. basis for Opinion
2.1 We conducted our audit in accordance with the Standards on Auditing (SAs)specified under section 143(10) of the Companies Act 2013. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Auditof the Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants of
India together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
3. Key Audit Matters
3.1 K audit matters are those matters that in our professional judgment were ofmost significance in our audit of ey the financial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters. We have determined that the matters described below are key audit matters to becommunicated in our report.
|Key Audit Matter ||Auditors Response |
|Provision towards Wage arrears pending wage settle- ment with employees || |
|Management's estimates towards the obligations for wage arrears payable to its employees pending settlement of agreement with employees र 1874.26 Lakhs. We identified this as the key audit matter for the current year considering the fact that the provision made is based on the management's assessment of the obligation based on past settlements and best estimates of current expectations. (Refer to Note No. 24 to the financial statements) ||Our audit approach include: |
| ||Evaluated the design and operating effectiveness of the internal controls associated with the assessment of implications likely to arise on account of ongoing negotiations and possible settlement to be entered into with employees. |
| ||Considered the previous wage revisions negotiations and consequent settlements as benchmarks for the provision made by the management during the year and also reviewed the method of estimation which essentially was based on the wage settlement discussions. |
|Recoverability of Goods and Services Tax (GST) and Value Added Tax(VAT) refunds || |
|Claims receivables include र 1705.45 lakhs representing Goods and Services Tax (GST) and Value Added Tax(VAT) refunds. ||Our audit procedures in relation to GST / VAT recoverable as at the reporting is as follows: |
|The Recoverability of GST / VAT requires significant management judgement regarding the likelihood of its realizations pending clarifications or notifications from the Government on the eligibility of the company to receive the amount of SGST paid ( under GST Act) towards sales tax incentive due to the company under the Refund option scheme exercised by the company. ||Assessed and tested the design and the operative effectiveness control of the recoverability of GST / VAT towards the amounts paid under SGST. |
| ||Obtained companies analysis GST / VAT recoverability and decided the reasonableness of the assumptions used. |
|We identified this as the key audit matter for the current year owing to the materiality of the amounts involved and subjectivity involved to recover the sales tax incentive through SGST paid is matter of significant judgement. (Refer Note No.16 to the financial statements) ||Assessed the appropriateness and adequacy in the financial statem ents in accordance with the applicable accounting standards. |
|Recoverability of Minimum Alternate Tax (MAT) credit asset || |
|As at March 31 2019 the Company has recognised deferred tax asset in the nature of MAT credit aggregating to र 26129.37 lakhs. ||Our audit procedures in relation to assessment of MAT credit recognised as at reporting date are as follows: |
|Recognition of MAT credit asset requires significant judgement regarding the likelihood of its realization with in the utilization period if these projections are not met. ||Assessed and tested the design and operating effectiveness of the Company's controls over recognition of the MAT credit. |
|These future taxable profits are computed based on the business plan prepared by the management and projected post-tax cash flows of the Company and there are inherent uncertainties involved in forecasting such profits . ||Assessed the Company's analyses for MAT credit realisibility involving future projections of taxable profits. |
| ||Tested the appropriateness of the forecasted tax liability computation as per the provisions of the IT Act. |
|We identified this as key audit matter for current year audit owing to the materiality of the amounts involved and inherent subjectivity involved in the determination of utilization of MAT credit through estimation of future taxable profits. ||Obtained and evaluated sensitivity analysis performed by the management on aforesaid key assumptions. |
|(Refer to note 3(p)(ii) for the accounting policy and Note No.21 to the financial statements.) ||Assessed the appr opriateness and adequacy of the related disclosures in the financial statements in accordance with the applicable accounting standards. |
|Contingent Liabilities || |
|Assessment of Provisions and Contingent liabilities in respect of certain litigations including Direct and Indirect Taxes various claims filed by other parties not acknowledged as debt. ||Our audit approach involved :- |
|There is a significant level of judgement required in estimating the level of provisioning. The company's assessment is supported by the facts of matter their own judgment past experience and advices from legal and independent tax consultants wherever considered necessary. ||Evaluated and tested the procedures and controls relating to the identification recognition and measurement of provisions for disputes and disclosures in relation to matters concerning the contingent liabilities. |
| ||our audit was focused on analysing the facts of subject matter under consideration and judgments/ interpretation of law involved. |
|Accordingly unexpected adverse outcomes may significantly impact the Company's reported profit and the Balance Sheet. ||Understanding the current status of the litigations/tax assessments. |
|We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of these matters which requires application of judgment in interpretation of law. (Refer to notes 38 to the financial statements) ||Examining recent orders and/or communication received from various Tax Authorities/ Judicial forums and follow up action thereon. |
| ||Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal / tax advice. |
| ||Review and analysis of evaluation of the contentions of the company through discussions collection of details of the subject matter under consideration the likely outcome and consequent potential outflows on those issues. |
4. Information Other than the Financial Statements and Auditor's Report thereon
4.1 T he Company's Board of Directors is responsible for the preparation of theother information. The other information comprises the information included in Board'sReport including Annexures to Board's Report and Shareholder's
Information but does not include the financial statements and our auditor's reportthereon.
4.2 Our o on the financial statements does not cover the other information and we donot express any form of pinion assurance/conclusion thereon.
4.3 In connection with our audit of the financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially misstated.
4.4 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.
5. Responsibilities of Management and Those Charged with Governance for theFinancial Statements
5.1 The Company's Board of Directors is responsible for the matters stated insection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these 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 theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
5.2 In pr the financial statements management is responsible for assessing theCompany's ability to continue eparing 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.
5.3 Those Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.
6. Auditor's Responsibilities for the Audit of the Financial Statements
6.1 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 financial statements.
6.2 As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
a. Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
b. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
c. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
d. Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
e. 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.
f. Materiality is the magnitude of misstatements in the financial statements thatindividually 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 financial statements.
6.3 We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
6.4 We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
6.5 Fr om the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the 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.
7. Report on Other Legal and Regulatory Requirements
7.1 As r equired under Section 143 of the Companies Act 2013 we give Annexure Ain the " " our report on the directions issued by the Comptroller andAuditor General of India 7.2 As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in "Annexure B" a statement onthe matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
7.3 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 Statement of Changes in Equityand the Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount.
d. In our opinion the aforesaid financial statements comply with the Indian AccountingStandards prescribed 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 thedirectors as on 31stMarch 2019 taken on record by the Board of Directors none of thedirectors are disqualified as on 31st March 2019 from being appointed as a director interms of Section 164 (2) of the Act.
f. 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 C". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting; and
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 as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
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 litigations on its financialposition in its financial statements as referred to in Note No. 38 to the financialstatements;.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any and as required on long-term contractsincluding derivative contracts as referred to in Note No. 41 to the financial statements.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
"Annexure A" to the Independent Auditor's Report of even date on thefinancial statements of M/s. Tamil Nadu Newsprint and Papers Limited
|Sl. No. ||Compliance ||Comments |
|01 ||Whether the company has system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. ||The company has implemented Oracle E-Business suite to process all its accounting transactions through IT System. There are no accounting transactions processed outside IT system hence commenting on consequential financial impact does not arise. |
|02 ||Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/ interest etc. made by a lender to the company due to the company's inability to repay the loan? If yes the financial impact may be stated. ||There was no restructuring of loans during the year hence commenting on consequential financial impact does not arise. |
|03 ||Whether funds received/receivable for specific schemes from central/ State agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation ||The company has not received funds for specific schemes from central/state agencies during the current year. |
|04 ||Whether the Company's pricing policy absorbs all fixed and variable costs of production as well as the allocation of overheads? ||Yes |
|05 ||Whether the Company has fix ed norms for normal losses and a system for evaluation of abnormal losses for remedial action is in existence? ||Yes |
|06 ||What is the system of valuation of by-products and finished products? List out the cases of deviation from its declared policy ||Finished goods at factory are measured at lower of cost which includes cost of inputs (net of taxes and duties eligible for credits) and overheads and net realizable value. Finished goods at branches are valued on the above basis and also include transportation cost to branches and insurance cost |
|07 ||State the extent of utilization of plant and machinery during the year vis--vis installed capacity ||Paper 108.14% Packaging Board 88.50% |
|08 ||Whether the Company has effective system for physical verification valuation of stock treatment of non-moving items and accounting of effect of shortage / excess noticed during physical verification ||Yes. The company has effective system of physical verification valuation of stock and a policy for treatment of non-moving items and accounting of effect of shortage / excess noticed during physical verification. |
Annexure "b" to the Auditors' Report
The An B referred to in Independent Auditors' Report to the members of the Company onthe financial nexure statements for the year ended 31st March 2019 on the basis of suchchecks as we considered appropriate and according to the information and explanationsgiven to us during the course of audit we report that
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) The fixed assets have been physically verified by the Management at reasonableintervals. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification. In our opinion the periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets. The discrepancies noticed on such verification were not material;
(c) All title deeds of the immovable properties are held by the Company except Land(extending about 10 grounds and 425 square feet) on which the Corporate Office of theCompany functioning at Chennai. The transfer of title of the said land by the Governmentof Tamil Nadu in favour of the Company is yet to be done pending completion of necessaryformalities. According to the information and explanations given to us and on the basis ofour examination of the records of the Company Immovable properties of land whose titledeeds have been pledged with a lead bank as securities for term loans and other creditfacilities availed by the company the same are stated to have been held in the name of thecompany based on the mortgage deed executed between the Bank and the Company for whichconfirmations have been obtained from the lead bank.
ii. As explained to us the inventories have been physically verified during the yearby the management. The discrepancies noticed on physical verification of the same were notmaterial in relation to the operations of the Company and the same have been properlydealt with in the books of account;
iii. In our opinion and according to the information and explanations given to us thecompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act. Therefore clauses (iiia) (iiib) and (iiic) of paragraph 3 of the Orderare not applicable to the company for the year;
iv. In our opinion and according to the information and explanations given to us thereare no loans investments guarantees and securities granted in respect of which theprovisions of section 185 and 186 of the Act are applicable.
v. The Company has not accepted any deposit to which the provisions of Sections 73 to76 of the Act and The Companies (Acceptance of Deposits) Rules 2014 would apply. Asinformed to us no order has been passed by Company Law Board or National Company LawTribunal or Reserve Bank of India or any court or any other tribunal related to compliancewith above provisions.
vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 prescribed by the Central Governmentunder section 148(1) of the Act and are of the opinion that prima-facie the prescribedaccounts and cost records have been made and maintained. We have not however made adetailed examination of the cost records with a view to determining whether they areaccurate or complete;
vii. (a) According to the information and explanations given to us and the recordsexamined by us the Company is regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax service tax Goods and Services Tax duty of customs duty ofexcise value added tax cess and other statutory dues and there are no undisputedstatutory dues outstanding as at 31st March 2019 for a period of more than six monthsfrom the date they became payable.
(b) According to the records of the company and information and explanations given tous there are no outstanding amounts in respect of goods and services tax that have notbeen deposited with the appropriate authorities on account of any dispute. Disputed incometax wealth tax service tax value added tax duty of customs duty of excise that havenot been deposited on account of disputed matters pending before appropriate authoritiesare as under:
|Name of the Statute ||Nature of Dues ||Period to which the amount pertains ||Amount [Rs. Lakhs] ||Forum where the dispute is pending |
|Cenvat credit Rules2004 ||Input credit reversal ||1997-2002 ||63.86 ||Hon'ble High Court of Madras |
|Cenvat credit Rules2004 ||Capital goods Credits ||2003-2007 ||1646.61 ||Commissioner of Central Excise Tirchy |
|Cenvat credit Rules2004 ||Capital goods Credits ||2008-2009 ||13.41 ||Hon'ble High Court of Madras |
|Cenvat credit Rules2004 ||Input credit reversal ||2009-2015 ||1814.48 ||The Customs Excise and Service Tax |
| || ||2016-2018 || ||Appellate Tribunal Chennai |
|Cenvat credit Rules2004 ||Input Service Credit ||2012-2016 ||301.73 ||The Customs Excise and Service Tax |
| || || || ||Appellate Tribunal Chennai |
|Cenvat credit Rules2004 ||Input Service Credit ||2012-2018 ||20.23 ||Commissioner of Central Excise (Appeals)Trichy |
|Cenvat credit Rules2004 ||Input credit reversal on coal ||2013-2018 ||2728.21 ||The Customs Excise and Service Tax Appellate Tribunal Chennai |
|Customs Act 1962 ||Customs Duty ||1991-1993 ||90.47 ||Assistant Commissioner of Customs Chennai |
|Customs Act 1962 ||Customs Duty ||1999-2000 ||106.29 ||Deputy Commissioner of Customs Chennai |
|Customs Act 1962 ||Customs Duty ||2014-2015 ||75.70 ||The Customs Excise and Service Tax Appellate Tribunal Chennai |
|Customs Act 1962 ||Customs Duty ||1999-2000 ||20.44 ||Assistant Commissioner of Customs Cochin |
|Customs Act 1962 ||Custom Duty ||2000-2001 ||217.39 ||Hon'ble Supreme Court |
|Customs Act 1962 ||Custom Duty ||2012-2013 ||2180.99 ||The Customs Excise and Service Tax Appellate Tribunal referred to the Larger bench |
|Income Tax Act1961 ||Income Tax ||2002-2003 || ||Assessing Officer Chennai |
| || ||2006-2008 ||213.53 || |
| || ||2016-2017 || || |
|Income Tax Act1961 ||Income Tax ||2003-2004 ||612.81 ||Commissioner of IncomeTax(Appeals) & Assessing Officer Chennai |
|Income Tax Act1961 ||Income Tax ||2004-2005 || ||Income Tax Appellate Tribunal Chennai |
| || ||2009-2010 ||976.98 || |
| || ||2012-2013 || || |
|Income Tax Act1961 ||Income Tax ||2014-2015 ||117.80 ||Income Tax Appellate Tribunal Chennai |
|Wealth Tax Act1957 ||Wealth Tax ||1997-2000 ||19.46 ||Commissioner of Income Tax |
| || ||2001-2003 || ||(Appeals) Chennai |
|TNVAT ACT 2006 ||Value Added Tax ||2006-2013 ||741.37 ||Sales Tax Appellate Tribunal Madurai |
|CST ACT 1956 ||Central Sale Tax ||1997-2001 ||42.71 ||Sales Tax Appellate Tribunal Madurai |
viii. Ac cording to the information and explanations given the company has notdefaulted in repayment ofto us any loans or borrowings from banks or financialinstitutions. The company has not issued any debentures and has not borrowed any amountfrom Government during the year under report.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments). Term Loans have been applied for the purposefor which they were obtained.
x. To the best of our knowledge and belief and according to the information andexplanations given to us there have been no cases of fraud by the company or on thecompany by its officers or employees has been noticed or reported during the year underreport.
xi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable.
"Annexure C" to the Independent Auditor's Report of even date on theFinancial Statement of M/s. Tamil Nadu Newsprint and Papers Limited
Report on the Internal Financial Controls over financial reporting under Clause [i] ofSub-section 3 of Section 143 of the Companies Act 2013
We have audited the internal financial controls over financial reporting of ve M/s.Tamil Nadu Newsprint and Papers Limited ["the Company"] as of March 312019 in conjunction with our audit of the financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company management is responsible for establishing and maintaining internalfinancial controls based on pany's the internal control over financial reporting criteriathat are established by the Company in their separate internal control manuals consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its 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 Companies Act 2013.
Our r esponsibility 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"] and the Standards on Auditing issued by the Institute ofChartered Accountants of India and deemed to be prescribed under Section 143  of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal
Financial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Controls over Financial Reporting
A Compan internal financial control over financial reporting is a process designed toprovide reasonable y's assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that  pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company;  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  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
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 controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operative effectively as at March 31 2019 based onthe internal control over financial reporting criteria that are established by the
Company in their separate internal control manuals considering the essential componentsof internal control stated in the Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting issued by the Institute of Chartered Accountants of India.
| ||For bRAHMAYYA & CO. |
| ||CHARTERED ACCOUNTANTS |
| ||Firm Regn No: 000511S |
|Date : May 28 2019 ||R. Nagendra Prasad |
|Place : Chennai ||Partner |
| ||Membership No. 203377 |