Nitta Gelatin India Ltd Auditors Report.
To the Members of Nitta Gelatin India Limited
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Nitta Gelatin India Limited (the Company), which comprise the Balance Sheet as at 31 March 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
2. 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 Companies Act, 2013 (Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) specified under section 133 of the Act, of the state of affairs (financial position) of the Company as at 31 March 2019, and its loss(financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. 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 (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the rules thereunder, 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.
Emphasis of Matter
4. We draw attention to note 3.41 to the accompanying standalone financial statements, which states that pursuant to the Scheme of Amalgamation and Merger (the Scheme) entered into between erstwhile subsidiary company, M/s Reva Proteins Limited (the Transferor Company) and the Company, as approved by the Honble National Company Law Tribunal, Chennai Bench, the Transferor Company has been merged with the Company as per accounting prescribed under the Scheme which is in line with the accounting principles given under Appendix C to Ind AS 103 applicable to common control business combinations. Accordingly, opening balance sheet as at 1 April 2017, comparative financial information for the year ended 31 March 2018 and the accompanying standalone financial statements for the year ended 31 March 2019 have been adjusted to account for the aforesaid merger, as described in aforementioned note. Our opinion is not modified in respect of this matter.
Key Audit Matters
5. 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
6. We have determined the matters described below to be the key audit matters to be communicated in our report.
|Key audit matter||How our audit addressed the key audit matter|
|(a) Provisions and contingent liabilities relating to litigations (Refer note 3.31 of the accompanying standalone financial statements):||Our audit work included, but was not limited to the following procedures:|
|Following are the significant matters relating to litigations that are outstanding as at 31 March 2019:|| Obtained an understanding of the management process for:|
|- identification of legal and tax matters initiated against the Company,|
|i. Customs duty demand of Rs. 19,68,35,881||- assessment of accounting treatment for each such litigation identified under Ind AS 37 accounting principles, and|
|ii. Water cess demand of Rs. 6,53,01,200||- measurement of amounts involved.|
|iii. Other tax matters of Rs. 12,18,37,037|
|The eventual outcome of these legal proceedings is dependent on the outcome of future events and unexpected adverse outcomes could significantly impact the Companys reported loss and balance sheet position.|| Evaluated the design and tested the operating effectiveness of key controls around above process.|
|The amounts involved are material and the application of accounting principles as given under Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets, in order to determine the amount to be recorded as a liability or to be disclosed as a contingent liability, in each case, is inherently subjective, and needs careful evaluation and judgement to be applied by the management.|| Obtained an understanding of the nature of litigations pending against the Company and discussed the key developments during the year for key litigations with the management and respective legal counsels handling such cases on behalf of the Company. Tested the independence, objectivity and competence of such management experts involved.|
|Key judgments are also made by the management in estimating the amount of liabilities, provisions and/ or contingent liabilities related to aforementioned litigations.|| On a sample basis, obtained and reviewed the necessary evidence which includes correspondence with the external legal counsels and where necessary, inspected minutes of case proceedings available in public domain, to support the decisions and rationale for creation of provisions and / or disclosure of contingent liabilities in respect of each such litigation selected for testing.|
|Considering the degree of judgment, significance of the amounts involved, inherent high estimation uncertainty and reliance on external legal and tax experts, this matter has been identified as a key audit matter for the current year audit.|| Obtained independent opinion/confirmations directly from the external legal counsels to confirm managements assessment of outstanding litigation and asserted claims.|
| Reviewed each attorney response obtained as above to ensure that the conclusions reached are supported by sufficient legal rationale and adequate information is included for the management to determine the appropriate accounting treatment of such cases in the financial statements.|
| Assessed the appropriateness of methods used, and the reliability of underlying data for the underlying calculations made for quantifying the amounts involved. Tested the arithmetical accuracy of such calculations.|
| Involved our tax specialists to assess the Companys interpretation and application of relevant tax laws to evaluate the appropriateness of key assumptions used and the reasonableness of estimates in relation to uncertain tax positions, taking into account past precedents.|
| Evaluated the disclosures made under provisions and contingent liability for their appropriateness in accordance with the applicable accounting standards.|
|(b) Impairment assessment of the carrying value of Property, Plant and Equipment(Refer note 3.01 of the accompanying standalone financial statements)||Our audit work included, but was not restricted to, the following procedures:|
|Pursuant to the Scheme of Merger and Amalgamation (the Scheme) as detailed in note 3.41 to the standalone financial statements, the assets and liabilities of the Transferor Company have been recognised in the books of the Company at their carrying amounts as on 1 April 2017,which includes the carrying value of Property, Plant and Equipment (PPE) as at 31 March 2019 Rs. 30,66,81,888.|| Obtained an understanding of the management process and performed a walkthrough to evaluate design effectiveness and tested operating effectiveness of key controls around identification of impairment indicators, impairment testing of property, plant and equipment which include identification of cash generating units at which level such impairment testing is required to be performed.|
|As mentioned in note 3.01 to the standalone financial statements, as per impairment testing of the carrying value of PPE carried out by the management as at 31 March 2019, in the manner prescribed under Ind. AS 36 Impairment of Assets, there is no impairment in the carrying value of the PPE as at 31 March 2019.|| Obtained and reviewed the valuation report given by the valuation specialist for the fair value of the PPE using cost approach valuation model.|
|Fair value and value-in-use of such PPE for the determination of the recoverable amounts involves significant judgement and high estimation uncertainty relating to identification of appropriate cash- generating unit, future cash flow projections made by the management using internal and external assumptions, and using appropriate discount rate. As a result of such judgements and significance of the amounts involved, the matter has been identified as a key audit matter in the current year audit.|| Assessed the valuation specialists qualification, expertise, objectivity and reviewed their terms of engagement to determine whether there were any matters that may have imposed scope limitations upon their work.|
| Tested the key inputs on sample basis such as capitalization date, gross and net block as at 31 March 2019, useful life used by the valuation expert by comparison of the same from the fixed assets register.|
| Obtained the business plans of the Company for the identified cash-generating unit, to corroborate the future cash flows used in value-in-use determination.|
|Emphasis of Matter|| Performed sensitivity analysis in respect of the key assumptions used, including revenue growth rates, cost reduction targets and discount rate to verify appropriateness of such assumptions.|
|This matter is also considered as fundamental to the understanding of the users of the financial statements.|| Compared the actual results of estimates made in prior period to assess accuracy of managements estimates.|
| Assessed appropriateness of the disclosures made by the management for impairment assessment of carrying value of PPE.|
Information other than the Financial Statements and Auditors Report thereon
7. The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditors report thereon. The Annual Report is expected to be made available to us after the date of this auditors report.
Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available 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.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
8. The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
9. 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.
10. Those Board of Directors are also responsible for overseeing the Companys financial reporting process.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
11. 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 Standards on Auditing 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.
12. As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material mis-statement 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 rel-evant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for explaining 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 poli-cies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of manage-ments 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.
13. 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.
14. 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.
15. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 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.
16. The financial information of the Transferor Company for the year ended 31 March 2018 and balance sheet as at 1 April 2017 included in the comparative financial information given in accompanying standalone financial statements are based on first Ind AS compliant financial statements of the Transferor Company prepared for the year ended 31 March 2018, which were audited by another firm of Chartered Accountants, M/s Varma and Varma, who expressed an unmodified opinion on those financial statements vide their audit report dated 3 May 2018.
Report on Other Legal and Regulatory Requirements
17. As required by section 197(16) of the Act, we report that the Company has paid remuneration to its director in excess of limits laid down under section 197 read with Schedule V to the Act by 5,916,263, which is subject to approval of the shareholders by special resolution in the ensuing Annual General Meeting in accordance with the provisions of section 197 read with Schedule V of the Act, as mentioned in note 3.29 to the accompanying standalone financial statements.
18. As required by the Companies (Auditors Report) Order, 2016 (the Order) issued by the Central Government of India in terms of section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
19. Further to our comments in Annexure I, 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 purpose 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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of section 164(2) of the Act;
f) we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as on 31 March 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 9 May 2019 as per Annexure II expressed unmodified;
g) 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. the Company, as detailed in note 3.31 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2019;
ii. the Company did not have any long-term cont -racts including derivative contracts for which there were any material foreseeable losses as at 31 March 2019;
iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2019;and
iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016, which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.
For Walker Chandiok & Co LLP
Firms Registration No.: 001076N/N500013
Membership No.: 206229
9 May 2019
Annexure I to the Independent Auditors Report of even date to the members of Nitta Gelatin India Limited, on the standalone financial statements for the year ended 31 March 2019
Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties are held in the name of the Company except for the following properties which were transferred as a result of amalgamation of transferor company as stated in note 3.41 to the standalone financial statements wherein the tittle deeds are in the name of the erstwhile company:
|Nature of property||Total Number of Cases||Whether leasehold / freehold||Gross block as on 31 March 2019 ()||Net block on 31 March 2019 ()||Remarks|
|Land||1||Leasehold||6,22,69,322||5,65,02,360||The title deeds are in the name of Reva Proteins Limited,erstwhile company that was merged with the Company except for 12486.25 square meters of land at Jhagadia Industrial Estate, Bharuch District, Gujarat (Gross Book Value of Rs. 79,09,260/-and Net Book Value of Rs..71,83,430/-) as stated in Note No 3.06 to the standalone financial statements whose title deed are in the name of GIDC.|
|Building||1||Freehold||16,56,93,840||8,57,32,476||The title deeds are in the name of Reva Proteins Limited, erstwhile company that was merged with the Company.|
ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and material discrepancies noticed on physical verification have been properly dealt with in the books of account.
(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.
(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of investments and guarantees. Further, in our opinion, the Company has not entered into any transaction covered under Section 185 and Section 186 of the Act in respect of loans and security.
(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Companys products and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) (a) Undisputed statutory dues including provident fund, employees state insurance, income-tax, duty of customs, goods and service tax, cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been a slight delay in a few cases. Undisputed amounts payable in respect of cess, which was outstanding at the year end for a period more than six months from the date they became payable are as follows:
Statement of arrears of statutory dues outstanding for more than six months:
|Name of the statute||Nature of dues||Amount (RS)||Period to which the amount relates||Remarks|
|The Water (Preven- tion and Control of Pollution) Cess Act, 1977||Water cess||8,91,790||July 2011, August 2011, April 2016, May 2016 and Jan- uary 2017 to Sep- tember 2017||Payment of dues is made based on the order of as- sessment received under the Water (Prevention and Control of Pollu- tion) Cess Act, 1977|
b) The dues outstanding in respect of income-tax, sales-tax,service-tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows:
Statement of Disputed Dues:
|Name of the statute||Nature of dues||Amount (Rs)||Amount paid under Protest (Rs)||Period to which the amount relates||Forum where dispute is pending|
|Income-tax Act, 1961||Income tax||4,15,81,200||11,61,060||AY 2009-10 to 2014-15||Commissioner of Income Tax (Appeals)|
|Kerala Value Added Tax Act, 2003||Value Added Tax||12,37,334||12,37,334||FY 2009-10||Deputy Commissioner of Sales Tax (Appeals)|
|Kerala Value Added Tax Act, 2003||Value Added Tax||48,56,016||14,31,648||FY 2010-11||Deputy Commissioner of Sales Tax (Appeals)|
|Central Sales Tax Act, 1956||Central Sales Tax||69,58,866||15,22,697||FY 2010-11, 2011-12 and 2013-14||Deputy Commissioner of Sales Tax (Appeals)|
|Central Sales Tax Act, 1956||Central Sales Tax||19,91,185||-||FY 2014-15||Assistant Commissioner of Sales Tax (Appeals)|
|Kerala Value Added Tax Act, 2003||Value Added Tax||7,11,04,350||-||FY 2011-12||Assistant Commissioner, Sales Tax|
|Customs Act, 1962||Custom duty||19,68,35,881||-||FY 2011-12 to FY 2016-17||Customs, Excise and Service Tax Appellate Tribunal, Bangalore|
|Central Excise Act, 1944 Central excise||Central excise||3,50,74,543||-||FY 2003-04 to 2014-15||Commissioner of Central Excise and Customs|
|Central Excise Act, 1944||Central excise||7,20,668||36,252||FY 2010-11 to 2012-13||Customs, Excise and Service Tax Appellate Tribunal, Bangalore|
|Central Excise Act, 1944||Central excise||5,72,606||28,630||FY 2010-11 to 2012-13||Commissioner (Appeals)|
|Finance Act, 1994||Service tax||35,49,668||1,39,065||FY 2010-11 to 2012-13||Commissioner (Appeals)|
|Finance Act, 1994||Service tax||3,68,058||18,402||FY 2011-12||Customs, Excise and Service Tax Appellate Tribunal, Bangalore|
|Finance Act, 1994||Interest on service tax demands||28,90,147||-||FY 2010-11 to 2012-13||Commissioner (Appeals)|
viii) The Company has not defaulted in repayment of loans or borrowings to financial institutions or bank during the year. The Company has neither taken any loans or borrowings from government nor has any dues to debenture-holders.
(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purposes for which the loans were obtained.
(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.
(xi) As stated in Note no. 3.29 to the standalone financial statements, the Company has paid remuneration aggregating to Rs. 59,16,263 is excess of limits laid down under section 197 read with Schedule V to the Act, which is subject to approval of the shareholders by special resolution in the ensuing Annual General Meeting in accordance with the provisions of section 197 read with Schedule V of the Act.
(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable Ind AS.
(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.
(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
For Walker Chandiok & Co LLP
Firms Registration No.: 001076N/N500013
Membership No.: 206229
9 May 2019
Independent Auditors Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act)
1. In conjunction with our audit of the standalone financial statements of Nitta Gelatin India Limited (the Company) as at and for the year ended 31 March 2019, we have audited the internal financial controls over financial reporting (IFCoFR) of the Company as at that date.
Managements Responsibility for Internal Financial Controls
2. The Companys Board of Directors 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 (the Guidance Note) 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 the Companys business, including adherence to the 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 Act.
3. Our responsibility is to express an opinion on the Companys IFCoFR based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India (ICAI) and deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) issued by the ICAI. 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 IFCoFR were established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining an understanding of IFCoFR, 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A companys IFCoFR 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 IFCoFR include 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of IFCoFR, including the possibility 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 IFCoFR to future periods are subject to the risk that the IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such controls were operating effectively as at 31 March 2019, 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 issued by ICAI.
For Walker Chandiok & Co LLP
Firms Registration No.: 001076N/N500013
Membership No.: 206229
9 May 2019