To the Members of EXPLICIT FINANCE LIMITED
Report on the Financial Statements
1. We have audited the accompanying financial statements of EXPLICIT FINANCE LIMITED("the Company") which comprise the Balance Sheet as at March 31 2016 theStatement of Profit and Loss Cash Flow Statement for the year then ended a summary ofsignificant accounting policies and other explanatory information which we have signedunder reference to this report.
Management's Responsibility for the Financial Statements
2. The management and Board of Directors of the Company are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of Companies (Accounts) Rules2014 as applicable. This responsibility includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
3. Our responsibility is to express an opinion on these financial statements based onour audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the Act and the Rules made there under. We conducted our audit inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amountsand 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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's management and Board of Directors aswell as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
6. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2016 and its Profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanations given to us wegive in the Annexure A a statement on the matters Specified in paragraphs 3 and 4 of theOrder.
8. As required by section 143(3) of the Act we further 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 purpose of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) The Balance Sheet Statement of Profit and Loss and the Cash Flow Statement dealtwith by this r eport are in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the applicableAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of written representations received from the directors as on March 312016 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164(2) of theAct
f) With respect to adequacy of the internal financial controls over financial reportingof the Company and the operating effectiveness of such controls refer to our separateReport in Annexure B.
g) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014:
i. The Company does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses does not arise.
iii. There has not been an occasion in case of the Company during the year under reportto transfer any Sums to the Investor Education and Protection Fund. The question of delayin transferring such sums does not arise.
For MVK Associates
Firm Registration No. 120222W
CA. Kapil Gupta
M. No. 047911
Date: 25th May 2016
Annexure A referred to in Paragraph 7 of our Report of even date to the members ofEXPLICIT FINANCE LIMITED on the accounts of the company for the year ended March 31 2016
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
b) As explained to us fixed assets have been physically verified by the management atregular intervals; as informed to us no material discrepancies were noticed on suchverification;
a) The inventory has been physically verified by the management during the year. In ouropinion the frequency of such verification is reasonable. For stocks lying with thirdparties at the year end written confirmations have been obtained for significant accountbalances.
b) The procedures for the physical verification of inventories followed by themanagement are reasonable and adequate in relation to the size of the Company and thenature of its business.
c) The Company is maintaining proper records of inventory. The discrepancies noticed onverification between the physical stocks and the book records were not material.
iii. The Company has not granted any loans or advances in the nature of loans toparties covered in
the register maintained under section 189 of the Companies Act 2013. Hence thisclause is not applicable.
iv. In our opinion and according to information and explanation given to us thecompany has
complied with the relevant provisions in respect of loans given and/or investmentsmade as per the provisions of section 185 and 186 of the Companies Act 2013.
v. The Company has not accepted any deposits from the public as per the directivesissued by
the Reserve Bank of India and under Section 73 to 76 of the Companies Act 2013.
vi. The company is not engaged in the productions of any goods and provision of anyservices.
Hence the provisions of section 148(1) of the Act do not apply.
a) According to the information and explanations given to us and based on the recordsof the company examined by us in our opinion the company is regular in depositing theundisputed statutory dues including Provident Fund 'Employees' State InsuranceIncome-tax Sales-tax Wealth Tax Service Tax Custom Duty Excise Duty and othermaterial statutory dues as applicable with the appropriate authorities in India;According to the information and explanations given to us no undisputed amounts payablein respect of aforesaid dues were in arrears as at March 31 2016 for a period of morethan six months from the date they became payable.
b) According to the information and explanations given to us and based on the recordsof the company examined by us there are no dues of Income Tax Wealth Tax Service TaxSales Tax Customs Duty and Excise Duty which have not been deposited on account of anydisputes.
viii. According to the records of the Company the company has not borrowed fromfinancial
institutions or banks or Government issues debentures till 31st March 2016.Hence this clause is not applicable.
ix. According to the information and explanations given to us and the records of theCompany
examined by us the Company has not raised any money by way of initial public offer orfurther public offer and term loans during the year. Accordingly provisions of Clause3(ix) of the Order are not applicable to the company.
x. During the course of our examination of the books and records of the Companycarried out in
accordance with the generally accepted auditing practices in India and according tothe information and explanations given to us we have neither come across any instance ofmaterial fraud by the Company or on the Company by its officers or employees noticed orreported during the year nor have we been informed of any such case by the Management.
xi. The Company has not paid/provided any Managerial remuneration during the year.Therefore
the provisions of Clause 3(xi) of the Order are not applicable to the Company.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the
provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. In our opinion and as per information and explanations provided to us bymanagement all the
transactions with the related parties are in compliance with the provisions of sections177 and 188 of Companies Act 2013 where applicable and the details have been disclosed inthe financial statements as required under Accounting Standard (AS) 18 Related Party
Disclosures specified under Section 133 of the Act read with rule 7 of the Companies(Accounts) Rules 2014.
xiv. The company has not made any preferential allotment or private placement of sharesor fully or
partly convertible debentures during the year. Accordingly provisions of Clause 3(xiv)of the Order are not applicable to the company.
xv. According to the records of the Company examined by us and the information andexplanation
given to us the company has not entered into any non-cash transactions with itsdirectors or persons connected with him. Accordingly the provisions of Clause 3(xv) ofthe Order are not applicable to the Company.
xvi. The company is registered under section 45-IA of the Reserve Bank of India Act1934.
For MVK Associates
Firm Registration No. 120222W
CA. Kapil Gupta
M. No. 047911
Date: 25th May 2016
Annexure B to Independent Auditors' Report
Referred to in paragraph 8(f) of the Independent Auditors' Report of even date to themembers of EXPLICIT FINANCE LIMITED on the financial statements as of and for the yearended March 31 2016.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
1. We have audited the internal financial controls over financial reporting of EXPLICITFINANCE LIMITED ("the Company") as of March 31 2016 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management7s Responsibility for Internal Financial Controls
2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India (ICAI). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls which wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the respective company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
3. Our responsibility is to express an opinion on the internal financial controls overfinancial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI) and the Standards on Auditing deemed to be prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of internal financial controls and both issued by the ICAI.Those Standards and the Guidance Note require that we comply with the ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial control system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedoperating and understanding of internal financial controls over financial reportingassessing the risk that a material weakness exist 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 risk ofmaterial misstatement of the financial statement whether due to fraud or error.
5. 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 overfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's internal financial controls over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with theGenerally Accepted Accounting Principles. A company's internal financial controls overfinancial reporting includes those policies and procedures that:
i. Pertain to the maintenance of records that in reasonable details accurately andfairly reflect the transaction and dispositions of the assets of the company;
ii. Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with the generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
iii. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or dispositions of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
7. 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 period are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of the changes in conditions orthat the degree of compliance with the policies or procedures may deteriorate.
In our opinion the company in all material respect has an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India
For MVK Associates
Firm Registration Number: 120222W
CA. Kapil Gupta
M. No. 047911
Date: 25th May 2016