ufo moviez india ltd share price Auditors report

To the Members of

UFO Moviez India Limited

Report on the Audit of the Consolidated Financial Statementss Opinion

We have audited the consolidated financial statements of UFO Moviez India Limited (hereinafter referred to as the "Holding Company") and its subsidiaries (Holding Company and its subsidiaries together referred to as "the Group"), and its associates, which comprise the consolidated balance sheet as at 31 March 2023, and the consolidated statement of profit and loss (including other comprehensive income), consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financialstatements,including significantaccounting policies and summaryof other explanatory information (hereinafter referred to as "the consolidatedfinancial . statements") In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of the other auditors on separate financialstatements of such subsidiaries as were audited by the other auditors, the aforesaid consolidated 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, of the consolidated state of affairs of the Group and its associates as at 31 March 2023, of its consolidated loss and other comprehensive income, consolidated changes in equity and consolidated cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of responsibilities under those SAs are further described in the Auditor?s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group and its associates in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in terms of the Code of Ethics issued by the Institute of Chartered Accountants of India and the relevant provisions of the Act, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence obtained by us along with the consideration of reports of the other auditors referred to in paragraph (a) of the "Other Matters" section below, is sufficient and appropriate to provide a our opinion on the consolidated financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment and based on the consideration of reports of other auditors on separate financial statements of components audited by them, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue Recognition on advertisement, content delivery charges and lease rental income revenue
The key audit matter	How the matter was addressed in our audit
The Group has recognized advertisement revenue, content delivery charges (CDC) and lease rental income of Rs. 24,243.18 lakhs for the year ended 31 March 2023 (Refer Notes 20 and 2(h) to the consolidated financial statements).	In relation to recognition of revenue from advertisement revenue, content
We identified these revenue stream as a KAM considering	delivery charges (CDC) and lease rental income, we have:
Advertisement revenue has an inherent risk Assessed the design, implementation and operating effectiveness due to fraud for arrangements entered into with of Group?s key internal controls over revenue recognition; various types of customers and advertisement Involving our internal IT specialists, assessed the design, agencies. CDC revenue and lease rental income implementation and operating effectiveness of Group?s key internal are other revenue streams core to the operations IT controls over the scheduling and billing; of the Group.	Assessed the Group?s accounting policies relating to revenue recognition by comparing them to applicable accounting standard;
The Group uses its automated front-end system for scheduling, tracking and invoicing revenues. The revenue from these streams is recognised based on automated playback logs retrieval and rates in the system. Further, processing of advertisement and content with their scheduling are linked to the financial module. Thus, recognition of Group?s advertisement revenue is largely dependent on the front-end system and may be susceptible to override of controls.	Assessed the accuracy of amount and timing of revenue recognised during the year;
	tested the financial information contained within the module and billing systems, which included system generated reports, recordingC of revenue, and accrual of revenue at period end;
	Detailed testing of samples selected statistically for sales transactions from origination through to the general ledger to ascertain revenue recognised was complete and was recorded in the correct period and at correct value;
	On samples selected statistically, we
	gathered understanding of the process by which revenue is determined by the relevant billing system
	verified underlying records such as agreement, sales contracts, release orders, invoices, logs for advertisements and content displayed
	analyzed release orders over / under/ unutilized and obtained rationale from Group for the same
	verified the underlying documents for the existence of the customers

 

Impairment of Goodwill
The key audit matter	How the matter was addressed in our audit
The carrying value of goodwill as at 31 March 2023 in the consolidated financials statements of the Group is Rs. 2,310.88 lakhs (refer note 3.2 of the consolidated financial statements). The goodwill has been allocated to the respective cash-generating units. Management has future business plans with the underluying assumptions using the discounted free cash flow model.	Our audit procedures included, amongst others, the following:
We identified this as a key audit matter considering the significant risk that the goodwill arising out of investments in entities may not be recoverable. The annual impairment testing involves significant judgment in evaluating appropriateness of model used and underlying assumptions such as growth rate, terminal value, discount rate and others.	Evaluating the Group?s process for testing impairment by assessing management?s review of financial performance of the underlying entities; performed impairment assessment based on the
	assessed the recoverable amount based on the business projection prepared by the Group using discounted cash flow model. This included assessment of historical accuracy of management?s assumptions and forecasts and review of documentation supporting key judgements, where applicable;
	reconciled input data to approved budgets and tested mathematical accuracy;
	performed sensitivity analysis around the key assumptions, to ascertain the extent to which adverse changes both i.ndividually or in aggregate, could impact the analysis;
	Discussed management?s strategic and operational plans for the foreseeable future; and
	Assessed the appropriateness of the Group?s disclosures in respect of impainnent assessment of goodwill in accordance with t h e accounting standards

Other Information

The Holding Company?s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Holding Company?s annual report, but does not include the financial auditor?s reports thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed and based on the work done/audit reports of other auditors, 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.

Management?s and Board of Directors? Responsibilities for the Consolidated Financial Statements

The Holding Company?s Management and Board of Directors are responsible for the preparation and presentation of these consolidated financial statements in term of the requirements of the Act that give a true and fair affairs, consolidated profit/ loss and other comprehensive income, consolidated statement of changes in equity and consolidated cash flows of the Group including its associates in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. The respective of the companies included in the Group and of its associates are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of each company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to error, which have been used for the purposeofpreparationoftheconsolidatedfinancialstatements by the Management and Board of Directors of the Holding Company, as aforesaid.

In preparing the consolidated financial statements, the respective Management and Board of Directors of the companies included in the Group and of its associates are responsible for assessing the ability of each company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The respective Board of Directors of the companies included in the Group and and the respective Board of Directors of its associates are responsible for overseeing the financial reporting process of each company.

Auditor?s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor?s 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 consolidated 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 consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is 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 Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements 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 the Management and Board of Directors.

Conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting in preparation of consolidated financial statements and, based on the audit evidence obtained, whether a material uncertainty exists relatedtoeventsorconditionsthatmaycastsignificantdoubt on the appropriateness of this assumption. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor?s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor?s report. However, future events or conditions may cause the Group and its associates to cease to continue as a going concern.

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

Obtain sufficientappropriate audit evidence regarding the financial activities within the Group and its associates to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements/financial information of such entities included in the consolidated financial statements of which we are the independent auditors. For the other entities included in the consolidated financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further described in paragraph (a) of the section titled "Other Matters" in this audit report.

We communicate with those charged with governance of the Holding Company and such other entity included in the consolidated financial statements of which we are the independent auditors 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 consolidated financialstatements of the current period and are therefore the key audit matters. We describe these matters in our auditor?s 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.

Other Matter a. We did not audit the financial statements of seven (7) subsidiaries, whose financial statementsreflectstotal assets (before consolidation adjustments) of Rs. 7,469.76 lakhs as at 31 March 2023, total revenues (before consolidation adjustments) of Rs. 10,342.10 lakhs and net cash outflows (before consolidation adjustments) amounting to Rs. 59.53 lakhs for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group?s share of net profit (and other comprehensive income) of Rs. 677.28 lakhs for the year ended 31 March 2023, in respect of one (1) associate, whose financial statements has not been audited by us. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and associate, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and associate is based solely on the reports of the other auditors. b. Certain of these subsidiaries and associates are located outside India whose financial statements and other financial information have been prepared in accordance with accounting principles generally accepted in their respective countries and which have been audited by other auditors under generally accepted auditing standards applicable in their respective countries. The Holding Company?s management has converted the financial statements/financial information of such subsidiaries and associates located outside India from accounting principles generally accepted in their respective countries to accounting principles generally accepted in India. We have audited these conversion adjustments made by the Holding Company?s management. Our opinion in so far as it relates to the balances and affairs of such subsidiaries and associates located outside India is based on the reports of other auditors and the conversion adjustments prepared by the management of the Holding Company and audited by us.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.

c. The financial information of three (3) subsidiaries, whose financial information reflects total assets (before adjustments) of Rs. 35.96 lakhs as at 31 March 2023, total revenues (before consolidation adjustments) of Rs. Nil and net cash outflows (before consolidation adjustments) amounting to Rs. 24.65 lakhs for the year ended on that date, as considered in the consolidated financial statements, have not been audited either by us or by other auditors. The consolidated financial statements also include the Group?s share of net profit (and other comprehensive income) of Rs. 63.31 lakhs for the year ended 31 March 2023, as considered in the consolidated financial statements, in respect of seven (7) associates, whose financial information have not been audited by us or by other auditors. These unaudited financial information have been furnished to us by the Managementandouropinionontheconsolidatedfinancialstatements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and associates, and our report in terms of sub-section (3) of Section 143 of the Act in so far as it relates to the aforesaid subsidiaries and associates, is based solely on such unaudited financial information. In our opinion and according to the information and explanations given to us by the Management, these financial information are not material to the Group.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of this matter with respect to financial information certified by the Management.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor?s Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2 A. As required by Section 143(3) of the Act, based on our audit and on the consideration of reports of the other auditors on separate financial statements of such subsidiaries, as were audited by other auditors, as noted in the "Other Matters" paragraph, we report, to the extent applicable, 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 of the aforesaidconsolidatedfinancial . statements b. In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors. c. The consolidated balance sheet, the consolidated statement of profit income), the consolidated statement of changes in equity and the consolidated statement of cash flows dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements. d. In our opinion, the aforesaid consolidated financialstatements comply with the Ind AS specified under Section 133 of the Act. e. On the basis of the written representations received from the directors of the Holding Company as on 31 March 2023 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors of its subsidiary companies and associate companies incorporated in India, none of the directors of the Group companies and its associate companies incorporated in India is disqualified as on 31 March 2023 from being appointed as a director in terms of Section 164(2) of the Act. f. With respect to the adequacy of the internal financial controls with reference to financial statements of the Holding Company and its subsidiary companies and associate companies incorporated in India and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

B. With respect to the other matters to be included in the Auditor?s 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 and based on the consideration of the reports of the other auditors on separate financial statements of the subsidiaries, as noted in the "Other Matters" paragraph: a. The consolidated financial statements disclose the impact of pending litigations as at 31 March 2023 on the consolidated financial position of the Group and its associates. Refer Note XX to the consolidated financial statements. b. The Group and its associates did not have any material foreseeable losses on long-term contracts including derivative contracts during the year ended 31 March 2023.

c. There are no amounts which are required to be transferred to the Investor Education and Protection Fund by the Holding Company or its subsidiary companies and associate companies incorporated in India during the year ended 31 March 2023. d (i) The respective management of the Holding Company and its subsidiary companies and associate companies incorporated in India whose financial statements have been audited under the Act have represented to us and the other auditors of such subsidiary companies and associate companies respectively that, to the best of their knowledge and belief, as disclosed in the Note XX to the consolidated financial statements, 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 Holding Company or any of such subsidiary companies and associate companies 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 directly or indirectly lend or invest in other persons or entities identifiedin any manner whatsoever by or on behalf of the Holding Company or any of such subsidiary companies and associate companies ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (ii) The respective management of the Holding Company and its subsidiary companies and associate companies incorporated in India whose financial statements have been audited under the Act have represented to us and the other auditors of such subsidiary companies and associate companies respectively that, to the best of their knowledge and belief, as disclosed in the Note XX to the consolidated financial statements, no funds have been received by the Holding Company or any of such subsidiary companies and associate companies from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Holding Company or any of such subsidiary companies and associate companies shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Parties ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(iii) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances performed by us and that performed by the auditors of the subsidiary companies incorporated in India whose financial statements have been audited under the Act, nothing has come to our or other auditors notice that has caused us or other auditors to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (i) and (ii) above, contain any material misstatement. e. The dividend declared and paid by the subsidiary company during the year and until the date of this audit report is in accordance with Section 123 of the Act. The Holding Company has not declared or paid any dividend during the year. f. As proviso to rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Holding Company or any of such subsidiary companies and associate companies only with effect from 1 April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is not applicable.

C. In our opinion and according to the information and explanation given to us and based on the reports of the statutory auditors of such subsidiary companies and associate companies incorporated in India which were not audited by us, the remuneration paid by the Group and associates companies to its directors during the current year is in accordance with the provisions of Section 197 read with Schedule V of the Act. The remuneration paid to any director by the Holding Company is as per limit laid down under Section 197 read with Schedule V of the Act and as approved by the shareholder?s through special resolution in the Annual General Meeting held on 23 August 2022. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us.

For B S R & Co. LLP

Chartered Accountants Firm?s Registration No.:101248W/W-100022

Annexure A to the Independent Auditors? Report

Annexure A to the Independent Auditor?s Report on the Consolidated Financial Statements of UFO Moviez India Limited for the year ended 31 March 2023

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements? section of our report of even date) (xxi) In our opinion and according to the information and explanations given to us, following companies incorporated in India and included in the consolidated financial statements, have unfavourable remarks, qualification or adverse remarks given by the respective auditors in their reports under the Companies (Auditor?s Report) Order, 2020 (CARO):

Name of the entities	CIN	Holding Company/Sub sidiary/ JV/ Associate	Clause number of the CARO report which is unfavourable or qualified or adverse
1. UFO Moviez India Limited	L22120MH2004 PLC285453	Holding Company	Clause (iii)(c), (vii)(b) and (xvii)
2. Scrabble Entertainment Limited	U92190MH200 8PLC178456	Subsidiary	Clause (vii)(b)
3. Nova Cinemaz Private Limited	U72900MH200 6PTC163092	Subsidiary	Clause (iii(c), (iv), (xvii) and (xix)
4. Plexigo Entertainment Private Limited	U92419MH202 0PTC343580	Subsidiary	Clause (xvii)
5. Zinglin Media Private Limited	U74999MH201 7PTC300940	Subsidiary	Clause (xvii) and (xix)
6. Scrabble Digital Limited	U74999MH201 1PLC213170	Subsidiary	Clause (vii)(b)
7. UFO Software Technologies Private Limited	U74899MH200 5PTC284653	Subsidiary	Clause (vii)(b)

been issued by its auditor till the date of principal auditor?s report.

Name of the entities	CIN	Subsidiary/ JV/ Associate
Mukta V N Films Limited	U74120MH2013PLC24422 0	Associate
Mumbai Movie Studios Private	U92490MH2020PTC345461	Associate
Limited
Cinestaan Digital Private Limited	U72300DL2013PTC258259	Associate

Annexure B to the Independent Auditor?s Report on the consolidated financial statements of UFO Moviez India Limited for the year ended 31 March 2023

Report on the internal financial controls with reference to theaforesaidconsolidatedfinancialstatementsunder Clause (i) of Sub-section 3 of Section 143 of the Act

(Referred to in paragraph 2(A)(f) under ‘Report on Other Legal and Regulatory Requirements? section of our report of even date)

Opinion

In conjunction with our audit of the consolidated financial statements of UFO Moviez India Limited (hereinafter referred to as "the Holding Company") as of and for the year ended 31 March 2023, we have audited the internal financial controls with reference of the Holding Company and such companies incorporated in India under the Act which are its subsidiary tofinancial companies, as of that date.

In our opinion and based on the consideration of reports of the other auditors on internalfinancialcontrols with reference to financial statements of subsidiary companies, as were audited by the other auditors, the Holding Company and such companies incorporated in India which are its subsidiary companies, have, in all material respects, adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively with reference to financial statements criteria established by such companies considering the essential components financial of such internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the "Guidance Note").

Management?s and Board of Directors? Responsibilities for Internal Financial Controls

The Holding Company?s Management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the considering the essential components of internal control stated in the Guidance Note. 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 the Holding Company?s 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.

Auditor?s Responsibility

Our responsibility is to express an opinion on the internalfinancialcontrols with reference to financial statements based on our audit.

We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. 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 with reference to financial statements were 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 with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 auditor?s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors of the relevant subsidiary companies in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls withreferenceto . financialstatements

Meaning of Internal Financial Controls with Reference to Financial Statements

A company?s internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of consolidated financialstatements for external purposes in accordance with generally accepted accounting principles. A company?s internal financial controls with reference to financial statements 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 consolidated 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 company?s assets that could have a material effect statements.

Inherent Limitations of Internal Financial Controls with Reference to Financial Statements

Because oftheinherentlimitationsofinternalfinancialcontrols with reference to financial statements, 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 with reference to financial statements to future to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Other Matter

Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls with reference to financial statements insofar as it relates to five (5) subsidiary companies, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies incorporated in India.

The internal financial controls with reference to financial statements insofar as it relates to three (3) associate companies, which are companies incorporated in India and included in these consolidated financialstatements, have not been audited either by us or by other auditors. In our opinion and according to the information and explanations given to us by the Management, such unaudited associate companies are not material to the Holding Company.