The Shareholders of KBS India Limited
Report on the Financial Statements
We have audited the accompanying financial statements of KBS India Limited whichcomprise the balance sheet as at 31 March 2016 the statement of profit and loss the cashflow statement and a summary of significant accounting policies and other explanatoryinformation.
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 with respect to the preparation and presentation ofthese standalone financial statements that give a true and fair view of the financialposition 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 Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand 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.
Our responsibility is to express an opinion on these financial statements based on ouraudit. 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 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 the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of 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
In our opinion and to the best of our information and according to the explanationsgiven to us the said accounts together with the notes thereon give the informationrequired by the Companies Act 2013 in the manner so and give a true and fair view inconformity with the accounting principles generally accepted in India: st
(i) In the case of the Balance Sheet of the state of affairs of the Company as at 31March 2016; (ii) In the case of the Statement of Profit and Loss of the profit for theyear ended on that date and
(iii) In the case of the Statement of Cash Flow Statement of the Cash Flows for theyear ended on that date
Report on Other Legal and Regulatory Matters
1. As required by the Companies (Auditor's Report) Order 2015 issued by the CentralGovernment of India in terms of sub-section (11) of section 143 of the Act we give in theAnnexure a statement on the matters specified in the paragraph 3 and 4 of the Order tothe extent applicable.
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) 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 the statement of profit and loss statement dealt with by thisReport are in agreement with the books of account;
(d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
(e) on the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting if the company and the operating effectiveness of such controlsrefer to ourseprate report in Annexure B' and
(g) 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 does not have any pending litigations which would impact its financialposition.
(ii) the Company required under the applicable law or accounting standards formaterial foreseeable losses if any did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
(iii) The Company has not contributed as required to the Investor Education andProtection Fund.
Annexure to the Auditor's Report.
(Referred to in paragraph 3 of our report of Even Date)
1. a. The Company has maintained proper record showing particulars includingquantitative details and situation of fixed assets.
b. As explained to us Fixed Assets according to the practice of the company arephysically verified by the management at reasonable intervals which in our opinion isreasonable looking to the size of the company and the nature of the business. No materialdiscrepancies were noticed on such verification.
2. a. The Company is a stock broking company and has its inventory in shares. Asexplained to us the inventory has been physically verified during the year by themanagement. In our opinion the frequency of verification is reasonable.
b. In our opinion and according to the explanations given to us the procedures ofphysical verification of inventory followed by the management are reasonable and adequatein relation to the size of the company and the nature of its business.
c. On the basis of our examination of the inventory records in our opinion thecompany is maintaining proper records of inventory. The discrepancies noticed onverification between the physical inventory and the book records were not material andhave been properly dealt with in the books of account.
3. In respect of the loans secured or unsecured granted or taken by the company to/from companies firms of other parties covered in the register maintained under section189 of the Companies Act 2013:
a. The company has granted unsecured loans/advances to the Directors and theirAssociates.The Balance outstanding as on 30/03/2016 have been recovered by receipt ofcheques - Shown as Cheques on hand' in the Balance Sheet. These cheques we areinformed have been subsequently deposited in to the bank.
b. An amount of Rs 19500000/- Outstanding due from a firm in which the wife of aDirector is a partnerhas been written off during the year. The Balance outstanding as on31.03.2016 is Rs 8167562/-
c. The Company has given loan to its subsidiary. In respect of the said loan themaximum amount outstanding as on 31/03/2016 is Rs 148669762/-
d. In Our Opinion and according to the information and explanation given to us therate of interest and Other terms and conditions of the loan given by the company are notprejudial to the interest of the company
e. The principal amounts are repayable on demand and there is no repayment schedule.The interest is payable on demand.
f. In respect of the said loans the same are repayable and therefore the question ofoverdue amounts does not arise. In respect of the interest there are no overdue amounts.
g. The company has taken loan during the year from individuals other parties covered inthe Register maintained under the Act.
4. In our opinion and according to the information and explanation given to usgenerally there are adequate internal control procedures commensurate with the size of thecompany and the nature of its business with regards to purchase of shares fixed assetsand for sale of the shares. Further on the basis of our examinations of books and recordsof the company and according to the information and explanations given to us we haveneither come across nor have been informed of any continuing failure to correct this majorweakness in the aforesaid internal control procedures.
5. According to the information and explanations provided by the management we are ofthe opinion that the transactions that need to be entered into the register maintainedunder the Act have been so entered.
6. The company has not accepted any deposits from the public to which the directivesissued by the Reserve Bank of India and the provisions of section 73 and 76 or any otherrelevant provisions of the Companies Act and rules framed there under where applicablehave been complied
7. In our opinion the Company has an adequate internal audit system Commensurate withits size and nature of its business.
8. The Central Government has not prescribed maintenance of cost records under subsection (1) of the section 148 of the Companies Act.
9. a) According to the records of the company examined by us and as per theinformation and explanations given to us in our opinion the company is generally regularin depositing the undisputed statutory dues including Income tax Wealth tax Service taxand other statutory dues with the appropriate authorities except TDS which includes minordelay in payments.
b) According to the information and explanations given to us and on the basis ofexamination of the documents and records there are no disputed statutory dues which arenot been deposited with the appropriate authorities.
10. The Company has neither accumulated losses at the end of the financial year nor hasit incurred cash losses during the year under report.
11. On the basis of the records examined by us and the information and explanationsgiven to us the Company has not defaulted in repayment of dues to bank.
12. As explained to us the Company has not granted any loans and advances on the basisof security by way of pledge of shares debentures and other securities.
13. On the basis of the records examined by us and evaluation of the related internalcontrols the Company has maintained proper records of the transactions and contracts inrespect of dealings in shares and securities and other investment and timely entries havebeen made therein. The aforesaid securities have been held by the Company except to theextent of exemption under Act.
14. According to information and explanations given to us and the representations madeby the management the Company has not given any guarantee for loans taken by others fromany bank or financial institutions.
15. As explained to us the Company has not raised any term loans during the year.
16. According to the information and explanations given to us and on an overallexamination of the Financial Statements of the Company and after placing reliance on thereasonable assumptions made by the Company there are no funds raised on a short-termbasis which have been used for long-term investment and vice versa.
17. According to the information and explanations given to us and to the best of ourknowledge and belief no fraud on or by the Company has been noticed or reported by theCompany during the year.
Annexure B to the Auditor's Report
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of KBSINDIA LIMITED as of March 31 2016 in conjunction with our audit of the standalonefinancial statements of the Company 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and Maintained and if such controlsoperated 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 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 ICAI.
For and on behalf of
Gopal Rao & Associates
Firm Registration No. 127055W