globus power generation ltd share price Auditors report

To the Members

Globus Power Generation Limited

Report on the Financial Statements, Financial Year ended on 31.03.2023

1. Opinion

We have audited the IND AS Financial Statements of Globus Power Generation Limited, which comprise the balance sheet as at 31^st March 2023, and the statement of Profit and Loss and statement, Statement of change in equity and Statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at that date, and loss and change in equity and its cash flows for the year ended on that date.

2. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the

Company in 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 the financial statements under the provisions of the Companies Act, 2013 and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Material Uncertainty Related to Going Concern

We draw attention to Note No. 20 ‘Going Concern Assumption of the Financial Statements which indicates that the Company has incurred substantial losses of Rs. 1,334.97 Lacs (LY Rs. 66.65 Lacs) Out of this cash loss incurred during the year is Rs. 48.92 Lacs (PY cash loss Rs. 54.20 Lacs). However, the management is of the opinion that there is no uncertainty for the Company for continuing in business for the foreseeable future. The management has clear intention not to liquidate the Company or cease the operations. The Company is able to realize its assets and discharge its liabilities in the normal course of business. This indicates the existence of material uncertainty that may cast significant doubt about the Companys ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note. Our opinion is not modified in respect of this matter.

4. Key Audit Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon. We communicate the following: a) In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

DESCRIPTION OF KEY AUDIT MATTER	AUDITORS RESPONSE
(i) Trade receivables and ‘loans & advances given of the Company are carried at fair value Rs.1,196.25 Lacs (PY Rs. 2,392.76 Lacs) (net off loss allowance)	We evaluated the significant judgments of the management within the going concern model by comparing them to the rate of prudential provision generally prevalent in the market in the preparation of financial statements and then benchmarking them against the market observable external data. We conclude that the rate determined of prudential provision for expected credit loss is reasonable.
In calculating the fair value the rate of prudential provision for expected credit loss has been determined on an estimated basis.This estimate involves significant judgment by the management.	We evaluated the significant judgments of the management within the going concern model by comparing them to the discounting rates generally prevalent in the market in the preparation of financial statements and then benchmarking them against the market observable external data. We conclude that the discounting rate determined for amortized cost is reasonable.
(ii) Trade Payables and ‘other non current financial liabilities of the Company are carried at amortized cost Rs. 247.22 Lacs (PY 228.90 Lacs) and Rs. 1,057.64 Lacs (PY 939.60 Lacs) respectively. In calculating the amortized cost the discount rate has been determined on an estimated basis as per the prevalent rates in the market. This estimate involves significant judgment by the management.

5. Other Information in documents containing Audited Financial Statements:

The Companys management and Board of Directors are responsible for the other information. The other information comprises financial and non financial information included in the entitys Annual Report or Management Report and Chairmans Statements but does not include the Consolidated Financial Statements and our Independent Auditors Report thereon. These reports are expected to be made available to us after the date of this auditors report.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. SA720 "Auditors Responsibilities relating to Other Information" requires it in connection with our audit of the financial statements.

Independent Auditors responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

6. Responsibility of Management and ‘Those Charged with Governance for the Financial Statements

The Companys management and Board of Directors are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, Board of Directors is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Companys financial reporting process.

7. Auditors Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of the audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosers and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

8. Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub section (11) of section 143 of the Companies Act, 2013, we give in the ‘Annexure A statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

9. 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 best of 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 the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this

Report are in agreement with the books of account.

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

(e) In our opinion there is no observation or comment to be made by us on financial transactions or matters which have any adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on the date of financial statements taken on record by the Board of Directors, none of the directors is disqualified as on that date from being appointed as a director in terms of Section 164 (2) of the Act.

(g) In our opinion, we do not find any qualification, reservation or adverse remark to be made by us relating to the maintenance of accounts and other matters connected therewith.

(h) With respect to the adequacy of the internal financial controls with reference to financial statement of the Company and the operating effectiveness of such controls, refer to our separate Report in

"Annexure -B".

(i) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(a) The Company has disclosed the impact of pending litigations on in its financial position in its financial statements No such impact on financial position.

(b) The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

(c) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(d) (i) Whether the management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

It has been so represented by the management that no such funds have been advanced, loaned or invested and no such guarantee security or the like has been provided

(ii) Whether the management has represented, that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

It has been so represented by the management that no such funds have been received and no such guarantee security or the like has been provided

(iii) Based on such audit procedures that the auditor has considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under sub clause (i) and (ii) contain any material mis statement.

(e) Whether the dividend declared or paid during the year by the Company is in compliance with section 123 of the Companies Act, 2013.

NA since no dividend is declared

(f) Whether the Company has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the Company as per the statutory requirements for record retention." As proviso to rule 3(1) of the companies (accounts) rules, 2014 is applicable for the Company only w.e.f April 1,2023 reporting under this clause is not applicable for the year . (g) With respect to the matters to be included in the Auditors Report under Section 197(16) of the Act: In our opinion and to the best of our information and explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provision of section 197 of the Act and is not in excess of the limit laid down under the said section.

1. a Property, Plant & Equipment :

(i) whether the Company is maintaining proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment;

Yes.

(ii) whether the Company is maintaining proper records showing full particulars of intangible assets;

No Intangible Asset is held in the books of Company b whether these Property, Plant and Equipment have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;

Yes, No material discrepancies were noticed, the Company has a regular programme of physical verification in a phased manner over a period of three years. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. c whether the title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favor of the lessee) disclosed in the financial statements are held in the name of the Company, if not, provide the details thereof in the format below:

Description of property	Gross carrying value	Held in name of	Whether promoter director or their relative or employee	Period held indicate rage where appropriate	Reason for not being held in name of Company*
					*also indicate if in
					dispute

There is no Immovable property in the Company d whether the Company has revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year and, if so, whether the revaluation is based on the valuation by a Registered Valuer; specify the amount of change, if change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment or intangible assets;

No such revaluation is done e whether any proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder, if so, whether the Company has appropriately disclosed the details in its financial statements;

No such benami property is held and no such proceeding initiated or pending against the Company

2 a Inventory: whether physical verification of inventory has been conducted at reasonable intervals by the management and whether, in the opinion of the auditor, the coverage and procedure of such verification by the management is appropriate; whether any discrepancies of 10% or more in the aggregate for each class of were noticed and if so, whether they have been properly dealt with in the books of account;

No inventory held. b whether during any point of time of the year, the Company has been sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets; whether the quarterly returns or statements filed by the Company with such banks or financial institutions are in agreement with the books of account of the Company, if not, give details;

No such working capital limit sanctioned

3. Investments , Loans and Advances etc.: whether during the year the Company has made investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties, if so, a whether during the year the Company has provided loans or provided advances in the nature of loans, or stood guarantee, or provided security to any other entity [not applicable to companies whose principal business is to give loans], if so, indicate i) the aggregate amount during the year, and balance outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to subsidiaries, joint ventures and associates;

NA since no such loans and advances etc given to subsidiaries etc ii) the aggregate amount during the year, and balance outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to parties other than subsidiaries, joint ventures and associates;

NA since no such loans and advances etc given to other than subsidiaries etc b whether the investments made, guarantees provided, security given and the terms and conditions of the grant of all loans and advances in the nature of loans and guarantees provided are not prejudicial to the Companys interest;

NA c in respect of loans and advances in the nature of loans, whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular;

NA d if the amount is overdue, state the total amount overdue for more than ninety days, and whether reasonable steps have been taken by the Company for recovery of the principal and interest;

NA e whether any loan or advance in the nature of loan granted which has fallen due during the year, has been renewed or extended or fresh loans granted to settle the overdues of existing loans given to the same parties, if so, specify the aggregate amount of such dues renewed or extended or settled by fresh loans and the percentage of the aggregate to the total loans or advances in the nature of loans granted during the year [not applicable to companies whose principal business is to give loans]; No such loans renewed or extended or fresh loan granted to settle the overdues.

f whether the Company has granted any loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment, if so, specify the aggregate amount, percentage thereof to the total loans granted, aggregate amount of loans granted to Promoters, related parties as defined in clause (76) of section 2 of the Companies Act, 2013;

No such loans granted

4. in respect of loans, investments, guarantees, and security, whether provisions of sections 185 and 186 of the Companies Act have been complied with, if not, provide the details thereof;

Yes, they have been complied wherever applicable.

5. in respect of deposits accepted by the Company or amounts which are deemed to be deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules made hereunder, where applicable, have been complied with, if not, the nature of such contraventions be stated; if an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not;

No such deposits are accepted.

6. whether maintenance of cost records has been specified by the Central Government under sub section (1) of section 148 of the Companies Act and whether such accounts and records have been so made and maintained;

No such cost records are prescribed.

7. a Undisputed Statutory Dues: whether the Company is regular in depositing undisputed statutory dues including Goods and

Services Tax, provident fund, employees state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated;

Yes, and there is no such over dues. b Disputed Statutory Dues: where statutory dues referred to in sub clause (a) have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned (a mere representation to the concerned Department shall not be treated as a dispute);

A) Income Tax Demand Outstanding:

Assessment Year	Income tax Demand	Accrued Interest	Late Fees	Section	Remarks
2009 10	28.41 Lacs			u/s 148
2010 11	106.27 Lacs			u/s 148
2010 11	4.75 Lacs			u/s 143(3)
2011 12	3.05 Lacs			u/s 263

B) TDS demand Outstanding:

Assessment Year	TDS demand	Accrued Interest	Late Fees	Section	Remarks
Prior years	1.15 Lacs

8. whether any transactions not recorded in the books of account have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961), if so, whether the previously unrecorded income has been properly recorded in the books of account during the year;

No such unrecorded income is disclosed

9. a. Loans or other Borrowings:

whether the Company has defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender, if yes, the period and the amount of default to be reported as per the format below:

Nature of borrowing, including debt Securities	Name of lender*	Amount not paid on due date	Whether principal or interest	No. of days delay or unpaid	Remarks, if any
	*lender wise details to be provided in case of defaults to banks, financial institutions and Government.

There is no such default in repayment applicable b. whether the Company is a declared wilful defaulter by any bank or financial institution or other lender;

The Company is not declared wilful defaulter c Term Loans: whether term loans were applied for the purpose for which the loans were obtained; if not, the amount of loan so diverted and the purpose for which it is used may be reported;

No term loans obtained d whether funds raised on short term basis have been utilized for long term purposes, if yes, the nature and amount to be indicated;

No such funds are raised on short term basis e whether the Company has taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures, if so, details thereof with nature of such transactions and the amount in each case;

No funds taken from any entity to meet such obligations f whether the Company has raised loans during the year on the pledge of Securities held in its subsidiaries, joint ventures or associate companies, if so, give details thereof and also report if the

Company has defaulted in repayment of such loans raised;

No loans raised on the pledge of such Securities of subsidiaries etc.

10 a. whether moneys raised by way of initial public offer or further public offer (including debt instruments) during the year were applied for the purposes for which those are raised, if not, the details together with delays or default and subsequent rectification, if any, as may be applicable, be reported;

No such money is raised by IPO or FPO during the year.

b. whether the Company has made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year and if so, whether the requirements of section 42 and section 62 of the Companies Act, 2013 have been complied with and the funds raised have been used for the purposes for which the funds were raised, if not, provide details in respect of amount involved and nature of non compliance;

No such allotment is made during the year.

11. a. whether any fraud by the Company or any fraud on the Company has been noticed or reported during the year, if yes, the nature and the amount involved is to be indicated;

No such fraud is noticed or reported. b. whether any report under sub section (12) of section 143 of the Companies Act has been filed by the auditors in Form ADT 4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government;

No such fraud report filed c. whether the auditor has considered whistle blower complaints, if any, received during the year by the Company;

No such whistle-blower complaints are there

12. a. whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability;

N.A. b. Whether the Nidhi Company is maintaining ten per cent. unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability;

N.A. c. whether there has been any default in payment of interest on deposits or repayment thereof for any period and if so, the details thereof;

N.A.

13. Related Parties Transactions: whether all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act where applicable and the details have been disclosed in the financial statements, etc., as required by the applicable accounting standards;

Yes. The details of related party transactions have been disclosed wherever there, in financial statements etc, as required by the applicable accounting standards.

14 a Internal Audit System: whether the Company has an internal audit system commensurate with the size and nature of its business;

Yes , internal audit system is commensurate b whether the reports of the Internal Auditors for the period under audit were considered by the statutory auditor;

Yes, internal audit report has been considered

15 whether the Company has entered into any non cash transactions with directors or persons connected with him and if so, whether the provisions of section 192 of Companies Act have been complied with;

No such non cash transaction is entered with directors etc.

16. a. (a) whether the Company is required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 (2 of 1934) and if so, whether the registration has been obtained;

No such requirement is applicable to the Company. b. whether the Company has conducted any Non Banking Financial or Housing Finance activities without a valid Certificate of Registration (CoR) from the Reserve Bank of India as per the Reserve Bank of India Act, 1934;

No such NBFC or HFC activity is conducted c. whether the Company is a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India, if so, whether it continues to fulfil the criteria of a CIC, and in case the Company is an exempted or unregistered CIC, whether it continues to fulfil such criteria;

The Company is not CIC as defined in the RBI regulation d. whether the Group has more than one CIC as part of the Group, if yes, indicate the number of CICs which are part of the Group;

NA

17. whether the Company has incurred cash losses in the financial year and in the immediately preceding financial year, if so, state the amount of cash losses;

Particulars	31.03. 2023	31.03.2022
Cash loss Incurred	48.92 Lacs (loss)	54.20 Lacs (loss)

18. whether there has been any resignation of the statutory auditors during the year, if so, whether the auditor has taken into consideration the issues, objections or concerns raised by the outgoing auditors;

No such resignation of statutory auditor during the year

19. No Material Uncertainty of meeting its Liabilities:

on the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompany the financial statements, the auditors knowledge of the Board of Directors and management plans, whether the auditor is of the opinion that no material uncertainty exists as on the date of the audit report that Company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date;

Nothing has come to our attention which causes us to believe that any material uncertainty exists to the fact that the Company is not capable of meeting its liabilities existing at the date of balance sheet and when they fall due within a period of one year from the balance sheet date. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the date of balance sheet will get discharged by the Company as and when they fall due.

20. a. (a) whether, in respect of other than ongoing projects, the Company has transferred unspent amount to a Fund specified in Schedule VII to the Companies Act within a period of six months of the expiry of the financial year in compliance with second proviso to sub section (5) of section 135 of the said

Act;

No such ongoing project of CSR fund is there b. (b) whether any amount remaining unspent under sub section (5) of section 135 of the Companies Act, pursuant to any ongoing project, has been transferred to special account in compliance with the provision of sub section (6) of section 135 of the said Act;

No such CSR fund is there

21. Whether there have been any qualifications or adverse remarks by the respective auditors in the Companies (Auditors Report) Order (CARO) reports of the companies included in the consolidated financial statements, if yes, indicate the details of the companies and the paragraph numbers of the CARO report containing the qualifications or adverse remarks.

NA since this report is not of consolidated financial statements

1. Opinion

We have audited the internal financial controls over financial reporting of Globus power Generation Private Limited as of March 31, 2023 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2023 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on ‘Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

2. Managements and Board of Directors Responsibilities for Internal Financial Controls

The Companys management and the board of directors are responsible for establishing and maintaining internal financial controls based on the ‘internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on ‘Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

3. Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on ‘Audit of Internal Financial Controls Over Financial Reporting and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both 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 and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting with reference to financial statements.

4. Meaning of Internal Financial Controls Over financial Reporting

A Companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

5. Inherent Limitations of Internal Financial Controls Over financial Reporting

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