THE MEMBERS OF
TWENTYFIRST CENTURY MANAGEMENT SERVICES LIMITED
Report on the Financial Statements
We have audited the accompanying standalone financial statements of TWENTYFIRSTCENTURY MANAGEMENT SERVICES LIMITED ("the Company") which comprise theBalance Sheet as at 31st March 2016 and the Statement of Profit and Loss andthe Cash Flow Statement and a summary of the significant accounting policies and otherexplanatory information for the year then ended.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition and financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Companies Act 2013 read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the preparation of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies ; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate Internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Basis of Opinion
Non Provision of Doubtful Loans & Advances amounting to Rs.2951.16 lacs advanced toits subsidiary company.
We further report that had the observation made by us above been considered the lossfor the year would have been Rs.2922.55 lacs (as against the reported profit figures ofRs. 28.61 lacs) and loss after considering accumulated figures of previous years wouldhave been Rs. 2361.56 lacs (as against reported figure of profit of Rs. 589.60 Lacs) andthe balance of amount due from subsidiary company would have been Rs. Nil (as against thereported figure of Rs. 2951.16 lacs).
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion Paragraph above and Notes to Accounts the aforesaid standalone financialstatements give the information required by the Act in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:
(a) in the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2016
(b) in the case of the statement of Profit and Loss of the profit of the Company forthe year ended on that date
(c) in the case of the Cash Flow Statement of the cash flows of the Company for theyear ended on that date.
Report on Other Legal and Regulatory
1. As required by the Companies (Auditors Report) Order 2016 (the Order') issuedby the Central Government of India in terms of sub section (11) of section 143 of the Actwe give in the "Annexure A" a statement on the matters specifiedin paragraphs 3 & 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this
Report are in agreement with the books of account.
(d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above our opinion the aforesaid standalone financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014
(e) The matter described in the basis of qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the company.
(f) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in termsof Section 164 (2) of the Act.
(g) In our opinion the internal financial controls over financial reporting of theCompany and the operating effectiveness of such controls refer to our separate report in "AnnexureB"
(h) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion Paragraph above.
(i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has not disclosed the impact of pending litigations on its financialposition in its financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor's Education and Protection fund by the company.
For Lakhani & Lakhani
Firm Registration No. 115728W
Membership No. 117107
"ANNEXURE A" TO INDEPENDENT AUDITOR'S REPORT
1. The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
The fixed assets of the company have been physically verified by the Management duringthe year and no material discrepancies were noticed on such verification. In our opinionthe verification is reasonable having regard to the size of the company and the nature ofits assets.
2. The company is primarily engaged in investing activities. Accordingly it does nothold any physical inventories. Thus paragraph 4(ii) of the Order is not applicable to thecompany.
3. The company has granted interest free loans of Rs. 2951.16 lacs to the companylisted in the register maintained under section 189 of the Companies Act 2013. But thesaid Loan advanced to subsidiary company amounting to Rs.2951.16 lacs is doubtful inrecovery.
4. During the year under audit the company has complied with the provisions of section185 and 186 of the Companies Act 2013 in respect of loans investments guarantees andsecurity.
5. During the year under audit the company has not accepted any deposits from thepublic to which the directives issued by Reserve Bank of India or the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under apply.
6. We have been informed that Central Government has not prescribed the maintenance ofcost records under Section 148(1) of the Companies Act 2013 in respect of any activitiescarried on by the company.
7. According to the information and explanations given to us the company has beenregular in depositing Employees Provident Fund dues and has also been regular indepositing undisputed income tax and other applicable statutory dues with appropriateauthorities.
According to the information and explanations given to us and the records of theCompany examined by us the particulars of income tax as at 31st March 2016 which have notbeen deposited on account of a dispute pending are as under:
|Name of the Statute ||AY ||Nature of Dispute ||Forum where the disputes are pending ||Amount Disputed |
|Income tax Act 1961 ||1995-96 ||Demand raised subject to rectification by ACIT ||ACIT Company Circle III (2) ||Rs.4.81 lacs |
|Income tax Act 1961 ||1996-97 ||Rectification by AO raised a demand Company has to file rectification for the interest working 234B Waiver petition filed by the company. Expecting a relief of Rs 45 lacs ||ACIT Company Circle-III(2) CCIT-I Chennai ||Rs.104.96 lacs |
|Income tax Act 1961 ||2003-04 ||Diminution in the value of stock- Rs. 1289 lacs (value written off) ||Madras High Court ||NIL |
| || ||However there will not be any demand on this issue only carried forward loss will be reduced. However the Carried forward loss will be useful for AY 2007-2008 demand. || || |
|Income tax Act 1961 ||2005-06 ||Assessment was re-opened for third time and order dated 28.03.2013 AO rejected the Excess relief u/s 115JB ||CIT(A)-III ||Rs. 35.15 lacs |
| || ||BCIT(A) has ordered in ITA No. No.646/2013-14/CIT(A)-11 rejecting the the Jurisdictions and on facts remanded back to AO || || |
|Income tax Act 1961 ||2006-07 ||B/F loss not considered rectification filed ||ACIT Company Circle III (2) ||Rs.1.33 lacs |
|Income tax Act 1961 ||2007-08 ||Department has filed appeal before Hon'ble ITAT on the issue of Short Term Capital gains @ 30.99% instead of 15% ||ITAT ||Rs.55.45 lacs |
| || ||Revision order by AO has not considered the Rebate which is pending || || |
| || ||The Hon'ble ITAT vide order dated remanded back to Ld CIT(A) to adjudicate the same Ld CIT(a) has remanded back the matter to AO and it is pending with AO || || |
|Incomet tax 1961 ||2007-08 ||Department issued 148 notice and the assesement got completed ||CIT-Appeal -III ||Rs 68.69 lacs |
| || ||The same issue of STCG @ 30.99 instead of 15% assessment completed. Company had filed appeal before Commissioner Appeal-III || || |
| || ||Further to ITAT remanding back to Ld CIT (A). Ld CIT (A) clubbed both the appeals and since the issue is common and had remanded the matter to AO on the issue on whether sale of shares is Businsess or Capital gains || || |
|Income tax Act 1961 ||2010-11 ||The Assessment was reopened u/s 148 on the issue of Client Modification code ||ACIT Corporate Circle-3(1) chenani ||Rs 4.57lacs |
| || ||The Company has filed appeal against the order. || || |
8. On the basis of records examined by us and the information and explanations given tous the company has not defaulted in repayment of dues to financial institutions banks ordebenture holders.
9. According to the information and explanations given to us the company has notraised any moneys by way of initial public offer or further public offer or any term loansduring the year under review.
10. To the best of our knowledge and belief and according to the information andexplanations given to us we have not come across any fraud by the company or any fraud onthe Company by its officers or employees during the course of our audit of the periodunder review.
11. During the year under audit the company has not paid any managerial remuneration.Thus paragraph 3(xi) of the order is not applicable to the company.
12. In our opinion and according to information and explanations given to us thecompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the order is notapplicable.
13. According to the information and explanations given to us and the records examinedby us the transaction with the related parties are in compliance with the provisions ofsection 177 and section 188 of the Companies Act 2013 and details of such transactionshave been disclosed in the financial statements as required by the applicable accountingstandards.
14. According to the information and explanations given to us and the records examinedby us the company has not made any preferential allotment and private placement of sharesduring the year. Accordingly paragraph 3(xiv) of the order is not applicable.
15. According to the information and explanations given to us and the records examinedby us the company has not entered into noncash transactions with directors or personsconnected with him. Accordingly paragraph 3(xv) of the order is not applicable.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Lakhani & Lakhani
Firm Registration No. 115728W
Membership No. 117107
"ANNEXURE B" TO INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Controls under clause (i) of sub-section 3 of section143 of the companies act 2013 ("the act")
We have audited the internal financial controls over financial reporting of TWENTYFIRSTCENTURY MANAGEMENT SERVICES LIMITED ("the Company") as of 31stMarch 2016 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2016based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
For Lakhani & Lakhani
Firm Registration No. 115728W
Membership No. 117107