Indian Railway Catering & Tourism Corporation Ltd Directors Report.

To the Members of

M/s Indian Railway Catering and Tourism Corporation Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of M/s Indian Railway Catering and Tourism Corporation Limited (‘the Company), which comprise the balance sheet as at 31 March 2020, the statement of profit and loss (including other comprehensive income), the statement of cash flows and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as "standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements read along with our audit report give the information required by the Act in the manner so required and give a true and fair view in conformity with the in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2020, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis of 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 thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. That our opinion is based on sufficient and appropriate audit evidence that we obtained during the course of our Audit.

Key Audit Matter

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

a. That with regards to the Ind Accounting Standard 115 on Revenue from Contract with Customers, the company is in receipt of integration charges from booking agents (Non Refundable one time fees) for providing connectivity with the IRCTC Portal for railway ticket booking along with the annual maintenance charges which may vary based on volume of ticket bookings etc. The management is of the opinion that the agreement with the parties for integration charges is generally for one to three years, and subsequently the annual maintenance contract is renewed but without any integration charges. And that since the renewal is unilateral at the option of IRCTC such integration charges shall not be deferred as income beyond initial contract period of one to three years.

In our opinion, the contract for integration charges and annual maintenance contract are not distinct contracts therefore Income of integration charges (one time non refundable fees) shall be amortized over the expected contract period instead of recognizing revenue at one time. Further past trend has indicated that there is hardly any case where the contract was not renewed by IRCTC. Accordingly in our view, the one time integration charges shall be recognized as revenue over the estimated contract period (estimated 20 years based on past trend) rather than accruing the entire amount as income based on initial contract of one to three years.

Deferment of such integration charges in terms of above based on the past information compiled by the management is estimated to cause overstatement of revenue by H 6.33 Crores during the financial year ended 31st March 2020 and other equity comprising of reserves and surplus as at 31st March 2020 by H 37.74 Crores

Information Other than the Financial Statements and Auditors Report Thereon

a. The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the standalone financial statements and our auditors report thereon.

b. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

c. In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

d. When we read the Other Information, if we conclude that there is a material misstatement therein, we shall communicate the matter to those charged with governance. That such information is pending for approval on the date of audit report.

e. Managements Responsibility for the Standalone Financial Statements

The Companys 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

The responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable 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 standalone Ind AS 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, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the companys financial reporting process.

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 an 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.

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

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

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the 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 auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

1. Report on other Legal & Regulatory Requirements

As required by the Companies (Auditors 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 the Annexure A, a statement on the matters specified in the paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, we report hereunder along with emphasis on some matters. Our Opinion is not modified on such matters.

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit except for third party confirmations including balances payable/receivable from railways. Further the party wise receivables and payables as per sub-ledgers in the ERP system could not be reconciled with the corresponding ledger balances as per ERP System.

b. In our opinion, the internal control as well as the internal audit system is not commensurate with the size of the company and the nature of its operations. There is an immediate need to develop stronger MIS for periodical closure and review of operations at zonal level and of various business segments which could reduce the errors and omissions observed during the course of audit.

c. That with regards to the convenience charges (formally known as service charges) received on the online ticketing booking amounting to H 349.64 Crores up to March 31, 2020, reliance has been placed on the management representation that unlike the previous arrangement with the Indian Railways, there is no obligation upon the company to share the service charges earned with the Indian Railways. In our opinion, that reference was made to the Railway Board that restoration of convenience charges is must to recover the infrastructure cost whereas the Internet Ticketing Division has reasonable high operating margins as per Note No.59 to the financial statements.

d. That in our opinion, the railways share of 15% needs to be provided on the revenue from portion of supply of food from the base kitchens operated by IRCTC in terms of the Catering Policy 2017, the same being in the nature of revenue from departmentally managed units. The same shall result in increase in expenses to the tune of H2.96 Crores for the financial year under consideration. Further the railway share on trains operated under partial unbundling model in previous financial years amounting to H18.49 Crores not provided for, pending clarification from the Railways may reduce the retained earnings of the company.

e. That in our opinion, in terms of the catering policy, there is a need to do a yearly assessment of the sales to review and reassess the license fee for static units but no such information/revision was shared with us. Also, Trade receivable includes licensees with significant increase in credit risk and also those which are credit impaired on account of legal disputes, yet renewals as well as new business arrangement are conducted with such parties without settling pending disputed claims. In our opinion there is a need to fully adapt the e-tendering system and to reduce the number of limited tenders floated during the year for having a wider range of qualified vendors associated with the company.

f. In our opinion, immediate measures need to be taken to upgrade the current ERP system along with adequate training to the staff for reducing manually compiled reports and timely delivery of integrated financial data during course of audit. This shall also require identification and reconciliation of the legacy transactions the balances of which is stated to have been existing since the migration of data from earlier financial system to present financials maintained in Oracle apart from legacy transactions pertaining to the period of transfer of operations from/to railways.

Further, reconciliation between the transactions executed through 3rd party applications/portals as well as manual data with the financial information posted in the books of accounts could not be made and accordingly reliance was placed on information available on records and verified on test check basis as per the financial books. In our opinion the data posting between all the 3rd party application/ portals needs to be fully automated & documented for verification.

g. That the bank balances reflected in the financial statements have been stated as per the books of accounts and are subject to posting of financial payments and receipts crystallized in the company bank accounts but which are pending confirmations/reconciliations. Further the transaction by transaction reconciliation could not be made for some of the bank accounts being handled at Internet Ticketing division of the company on account of voluminous ticket booking and cancellation transactions on behalf of railways. (Refer to Note No. 38)

h. That the company is in the process of reconciling the liabilities under GST as well as the credit admissibility with the returns filed. That financial implications of the same shall be assessed once the reconciliation activity for the previous years is completed. That as represented to us the assessment of carry forward liability on account of various provisions including reverse charge mechanism on payment to railways, reimbursement claims etc. is being done and suitable corrective measures shall be taken based on directions from the Legal consultant in due course of time.

i. In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

j. the balance sheet, the statement of profit and loss including other comprehensive income, the statement of cash flows and the statement of changes in equity dealt with by this Report are in agreement with the books of account

k. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rule issued thereunder except as stated hereunder:

i. That with regards to the Ind Accounting Standard 31 on Interest in Joint Ventures, on account of the ongoing litigation with M/s Cox & Kings Ltd. in respect of joint venture company M/s Royale India Rail Tours Limited, for which the financial have not been prepared since 2010-11 and hence the company is neither filing the consolidated financial statements nor the disclosures have been made regarding the financial position of such joint venture company.

Further in view of the termination of the joint venture agreements, the company is of the view that M/s Cox & Kings Ltd cannot invoke arbitration clause in relation to the reliefs sought. Consequential financial impact, if any could not be ascertained. (Refer to Note 37.3 & 45)

ii. That with regards to the Ind Accounting Standard 37 on Provisions, Contingent Liabilities and Contingent Assets,

The commissioner of VAT vide order dated 23rd March 2006 had levied VAT on on-board catering services in train treating the same as sales. The plea of the company was not accepted by the Appellate Tribunal as well as by the Hon Delhi High Court and SLP is now pending at the Hon Supreme Court. The company as a prudent policy has been providing VAT liability but only net of corresponding VAT Input and service tax being paid since only one of the taxes may be applicable. Such VAT Input amounting to H11.19 Crores have been stated as balance due from statutory authorities as other current asset. In case the ruling goes against the company, the entire VAT liability (on gross or net basis) along with the interest (as levied) may have to be deposited and a separate service tax refund application may be required to be filed and obtained separately. (Refer to Note 37.4).

l. On the basis of written representations received from the directors as on March 31, 2020, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2020, from being appointed as a director in terms of Section 164(2) of the Act.

m. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls the reporting requirement have been reported in Annexure B.

n. That as required by Section 143(5) of the Act, and as per the directions issued by the Comptroller and Auditor General of India, refer to our report in Annexure C

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

a. The Company has represented and disclosed the impact of pending litigations on its financial position in its Ind AS financial statements (Refer to Note No.37.2, 37.3 & 37.4)

b. The company had not entered into any long term contracts including derivative contracts

c. There were no amount which was required to be transferred to Investor education & Protection fund by the company.

For Serva Associates
Chartered Accountants
FRN: 000272N
C.A.Nitin Jain
(Partner)
Membership Number: 506898 Place: Delhi
UDIN: 20506898AAAADL2014 Date: July 10, 2020

Annexure ‘A to the Independent Auditors Report

As referred to in the Auditors Report of even date to the members of M/s Indian Railway Catering and Tourism Corporation Limited on the Ind AS financial statements for the year ended March 31, 2020

(i) (a) The company has maintained records showing full particulars, including quantitative details and situation of fixed assets however the asset number wise identification is not available.

(b) As represented to us all the assets have been physically verified by the management during the year at regular intervals according to a program of verification. In our opinion, the manner of physical verification needs to be elaborated and formalized. No material discrepancies have been reported on such verification.

(c) The title deeds of immovable properties are held in the name of the company.

(ii) The physical verification of inventory has been conducted at reasonable intervals by the company & no material discrepancies were reported on physical verification of the inventory during the year. The inventory has been taken as quantified, valued and certified by the management.

(iii) The company has not granted any loan secured or unsecured to companies, firms, Limited liability partnerships (LLP) or other parties covered in the register maintained under section 189 of the Companies Act and hence provisions para (iii) are not applicable.

(iv) The company has not given/advances any loans to directors and parties covered under Section 185 or loans and advances under Section 186 of the Companies Act, 2013 and hence the provisions of paragraph (iv) are not applicable to the company.

(v) The company has not accepted any deposits and hence para (v) is not applicable.

(vi) According to the information and explanations given to us, in our opinion the maintenance of cost records have not been prescribed for the company by the Central Government under subsection (1) of section 148 of the Companies Act, though the same have been made voluntarily by the company.

(vii) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues deducted/accrued in the books of accounts including Income Tax, Goods and service Tax, Cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees state insurance, income tax ,Goods and Service Tax, cess and other statutory dues were in arrears which was payable as at 31st March2020 for a period of more than six months from the date they become payable. However the liabilities under GST are subject to reconciliation as stated in our report above and such liability if any could not be assessed.

(b) According to the information and explanation given to us, the statutory dues which have not been deposited on account of dispute with the authorities apart is as under:

Name of the statue Name of the Dues Period to which amount pertains Amounts in Lakhs Fourum where dispute is pending Remarks
ENTRY TAX Assessment, Interest & Penalty 2011-12 to 2012- 13 0.90 High Court Hearing in Process
Service Tax Tax on Renting, Agent Business, catering etc 01.04.2007 to 31.03.2012 7902.16 CESTAT Hearing in Process
Service Tax On charter coach booking April, 2016 to June 2017 48.44 Commissioner Hearing in Process
Service Tax Tax on Renting, Agent Business, catering etc 2012-13 upto June 2017 23.05 CESTAT Hearing in Process
Service Tax Demands on catering, tour operations, goods transportation etc. 2014-15 177.87 High Court/Tribunal/ Appellate Authority Hearing in Process
Service Tax On Sale of Package Drinking Water 2008-09 to 2012-13 38.57 CESTAT/Commissioner (Appeals) Hearing in Process
VAT Demand on Mobile Catenng Services 2008-09 to June 2017 8251.01 Supreme Court Hearing in Process
VAT Assessment, Interest & Penalty 2005-06 & 2008-09 373.30 Jt. Comm. of Sales Tax (Appeal) Hearing in Process
VAT ITC Denial, demand on Mobile Catering 2010-11 to 2012- 13 161.70 Tribunal Hearing in Process
VAT Bihar Demand on Mobile Catering Services 200809 to 2011-12 915.80 Supreme Court Hearing in Process
VAT Bihar Demand on Mobile Catering Services 2011-12 73.24 High Court/ Tribunal/ Appellate Authority Hearing in Process
VAT Delhi Assessment, Interest & Penalty 2012-13 77.74 VATO, SPL OHA Hearing in Process
VAT Delhi & CST Assessment, Interest & Penalty 2009-10 to 2010-11 599.38 Special Commissioner (DVAT) Hearing in Process
VAT Delhi & CST Assessment, Interest & Penalty 2013-14 to 2015- 427.97 DVAT OHA Hearing in Process
16
VAT Jharkhand Penalty 2010-11 to 2012- 13 46.31 ADC Hearing in Process
VAT Jharkhand Demand 2010-11 to 2012- 13 40.03 High Court/ Tribunal/ Appellate Authority Hearing in Process
VAT Kerela Pertaining to Denial of Compounding Rate 2014-15 47.57 ACTO Hearing in Process
VAT Odisha Assessment, Interest & Penalty 2011-12 to 2013-14 147.56 Commissioner, Tribunal Hearing in Process
VAT Odisha Demand on Mobile Catering Services 2011-12 to 2012- 13 14.11 Tribunal Hearing in Process
VAT Rajasthan Assessment, Interest & Penalty 2005-06 to 2016-17 32.56 ACTO Hearing in Process
VAT UP Assessment, Interest & Penalty 2008-09 17.08 Commissioner (UPVAT) Hearing in Process
TOTAL 19,416.34

(viii) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues against the borrowings made from Banks. No borrowings have been made from other financial institutions or debentures.

(ix) The company has not raised any money by way of Initial Public Offer (IPO) or further public offer (including debt instruments). As per the decision of Government of India to disinvest the shareholding by 12.6% of paid up share capital of company, the initial public offer was held on 30th September, 2019 and the shares of the Company were listed on NSE and BSE on 14th October, 2019. Accordingly, 2.016 Crores (Two Crores one Lakh sixty thousand total share) shares i.e. 12.6% of total capital having face value of H10/- each were offered to public through offer for sale, out of which 1.6 Lakhs share were reserved for employees (approx. 0.79% of total issue). No term loans were taken by the company.

(x) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the representations made to us, 2 cases of frauds were detected during the year and are under investigation however on account of the directions given by the Railway Board details of the same were not shared and hence we are unable to comment on the materiality and the financial implications of the same on the company. Further details on frauds (if any) where investigation was concluded during the year was also not shared with us during the course of audit.

(xi) As per Notification dated 05.06.2015, Section 197 of the Act is not applicable in case of a Government Company. Accordingly, paragraph 3 (xi) of the Order is not applicable.

(xii) The company is not a nidhi company & hence paragraph (xii) of the order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standard.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.

(xv) The company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph (xv) of the order is not applicable.

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

For Serva Associates
Chartered Accountants
FRN: 000272N
C.A.Nitin Jain
(Partner)
Membership Number: 506898 Place: Delhi
UDIN: 20506898AAAADL2014 Date: July 10, 2020

Annexure ‘B to the Auditors Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act)

We have audited the internal financial controls over financial reporting of M/s Indian Railway Catering and Tourism Corporation Limited ("the Company") as of 31st March 2020 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is 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 (‘ICAI). 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.

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 (the "Guidance Note") 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 Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained subject to our comments reported in inherent limitations below are sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

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 Ind AS 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 Ind AS 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 Ind AS financial statements.

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. We have broadly reviewed the operating procedures and identification of potential risks involved as documented by the management. Effort has been made to cover substantially the entire business of the company, yet owing to multiple geographical locations & Covid-19 induced movement restriction, the testing of the risks control measures was restricted to limited samples selected. However, we have considered the limitation reported above in determining the nature, timing & extent of audit test applied in our audit of Ind AS financial statements of the company and the limitations do not affect our opinion on the Ind AS financial statements of the Company.

Opinion

In our opinion, suitable measures needs to be taken for adapting system control procedures as against the manual control procedures being followed for over all strengthening of the financial control system. That reliance has been placed on such manual control procedures along with management representations including suitable measures being taken in the updated ERP System under implementation. We have performed the testing of internal financial controls over financial reporting at the Corporate level and subject to the above, the same were principal operating effectively as at 31st March 2020, 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.

For Serva Associates
Chartered Accountants
FRN: 000272N
C.A.Nitin Jain
(Partner)
Membership Number: 506898 Place: Delhi
UDIN: 20506898AAAADL2014 Date: July 10, 2020

Annexure ‘C to the Auditors Report

Report under Section 143(5) of the Act, and as per the directions issued by the Comptroller and Auditor General of India on Financials of M/s Indian Railway Catering and Tourism Corporation Limited for the Financial Year ended 31st March 2020

Directions under Section 143(5) of the Companies Act 2013 applicable.

1. Whether the company has system in place to process all the accounting transactions through lT system? If yes, the implications of processing of accounting transactions outside lT system on the integrity of the accounts along with the financial implications, if any, may be stated.

Reply: Yes, however the current version of the ERP system (Oracle), is not being used as end to end integrated accounting system since most of the information and calculations is being prepared in Excel Sheets or third party applications and uploaded/posted manually in the Financial Accounting Module.

That IT system upgradations is in process and as represented to us under mentioned limitations shall be duly addressed in the upgraded system,

a. master data reconfiguration

b. reconciliation of legacy transactions

c. inoperative & redundant ledger accounts, profit centers/ departments,

d. integration issues including correcting the mapping of tax codes as well as subledger accounts &

e. User controls & adequate staff training

2. 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 companys inability to repay the loan? lf yes, the financial impact may be stated.

Reply: Not Applicable

3. 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.

Reply: With regards to the government grant received in previous years, the same has been accounted for in terms of the applicable Ind AS. No new grant has been received during the year.

For Serva Associates
Chartered Accountants
FRN: 000272N
C.A.Nitin Jain
(Partner)
Membership Number: 506898 Place: Delhi
UDIN: 20506898AAAADL2014 Date: July 10, 2020