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Khandwala Securities Ltd.

BSE: 531892 Sector: Financials
NSE: KHANDSE ISIN Code: INE060B01014
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OPEN 13.94
PREVIOUS CLOSE 13.50
VOLUME 322
52-Week high 18.00
52-Week low 12.52
P/E
Mkt Cap.(Rs cr) 16
Buy Price 13.50
Buy Qty 198.00
Sell Price 13.88
Sell Qty 155.00
OPEN 13.94
CLOSE 13.50
VOLUME 322
52-Week high 18.00
52-Week low 12.52
P/E
Mkt Cap.(Rs cr) 16
Buy Price 13.50
Buy Qty 198.00
Sell Price 13.88
Sell Qty 155.00

Khandwala Securities Ltd. (KHANDSE) - Auditors Report

Company auditors report

To

The Members of

Khandwala Securities Limited

Report on the Standalone Financial Statements

We have audited the accompanying financial statements of Khandwala SecuritiesLimited ("the Company") which comprise the Balance Sheet as at 31stMarch 2017 the Statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.

Management’s Responsibility for the Standalone 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 preparationand presentation 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 the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of 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.

Auditor’s Responsibility

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 accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the

financial statements. The procedures selected depend on the auditor’s judgmentincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 control 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 wellas evaluating 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 financial statements.

Opinion

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 2017 and its Profit & Loss Account and its cash flows for the year ended onthat date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 (‘theOrder’) issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure-A" a statement onthe matters specified in the paragraph 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit; (b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; (c) The Balance Sheet the Statement of Profit and Loss andthe Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount; (d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms ofSection 164 (2) of the Act; (f) With respect to the adequacy of the internal financialcontrols over financial reporting of the Company and the operating effectiveness of suchcontrols refer to our separate 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. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements as referred to in Note No.25 to the financial statements; ii. TheCompany does not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses; iii. There were no amounts which were requiredto be transferred to the Investor Education and Protection Fund by the Company; and iv.The Company has provided requisite disclosures in the financial statements as to holdingsas well as dealings in Specified Bank Notes during the period from 8th November 2016 to30th December 2016. Based on audit procedures and replying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the Management. Refer note 37.

3. Further to our comments in our opinion referred to above we report that: (a) TheCompany had advanced application money towards purchase of shares of Rs. 216.69 lacswhich is outstanding for a period of 180 months as at the end of the year. In the absenceof information regarding the status of the allotment or the net worth of the entities inwhich the Company made applications we are unable to ascertain the extent to which anamount of Rs. 216.69 lacs is recoverable and accordingly the effect thereof on thefinancial statements cannot be ascertained. Please refer Note No. 21 forming part offinancial statements.

(b) Long-term deposits to various companies of Rs. 530.00 lacs are subject toconfirmation and subsequent adjustments if any. Please refer Note No. 22forming part offinancial statements

For Udyen Jain & Associates

Chartered Accountants

Firm Registration No: 116336W

Sushil Bajaj

Partner

Membership No: - 131144

Place: Mumbai

Date: May 29 2017

ANNEXURE TO THE AUDITOR’S REPORT

With reference to the "Annexure-A" referred to in the IndependentAuditors’ Report to the Members of Khandwala Securities Limited (‘theCompany’) on the financial statements for the year ended 31st March 2017 wereport that: (i) (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner. In accordance with this programmecertain fixed assets were verified during the year and no material discrepancies werenoticed on such verification. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) Company is a service company primarily engaged in the business of renderingmerchant banking & broking services. Accordingly it does not hold any physicalinventories. Thus paragraph 3(ii) of Order is not applicable (iii) In our opinion andaccording to the information and explanations given to us the company has not granted anyloans secured or unsecured to companies firms or other parties covered in the registermaintained under section 189 of the Companies Act. Hence reporting under clause 3(iii) ofthe Order is not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us thecompany has neither granted any loans to directors etc. nor made loan and investmentunder section 185 and 186 of the Companies Act respectively. Hence reporting under clause3(iv) of the Order is not applicable to the company.

(v) According to the information and explanations given to us during the FY 2016-17the Company has not accepted deposits from the public during the year. Therefore theprovisions of clause 3(v) of the Order are not applicable to the Company.

(vi) The Central Government has not prescribed the maintenance of cost records undersub-section (l) of section 148 of the Act for any of the goods manufactured or servicesrendered by the Company.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Income-tax service tax cessProvident Fund and other material statutory dues have been regularly deposited during theyear by the Company with the appropriate authorities. However there have been few casesof delays in payment of Income Tax and Service Tax.

According to the information and explanations given to us no undisputed amountspayable in respect of Income tax service tax cess and other material statutory dues werein arrears as at 31st March 2017 for a period of more than six months from the datethey became payable except TDS Defaults showing on TDS Traces website amounting to Rs.50638/- as on 31st March 2017.

(b) According to the information and explanation given to us there are no materialdues of income tax or service tax which have not been deposited with appropriateauthorities on account of any dispute except reported as below.

Details of dues of income tax which have not been deposited as at March 31 2017 onaccount of disputes are given below:

Name of the Statute Nature of the Dues Amount Period to which the a m o u n t relates Forum where Under Section
(Rs.) Dispute is pending
Finance Act 1994 Service Tax 7.11 FY 2010 to 2016 Add. 73 (1) of Commissioner Finance Act
Service Tax 1994
Income Tax Act 1961 Income Tax 31.88 A.Y. 2006- 07 ITAT 271(1)(C)
4.96 A.Y. 2007- 08 ITAT 143(3)

(viii) According to the information and explanations given to us and based on theverification of records of company examined by us the company has not default inrepayment of loan or borrowing s to financial institution & bank.

(ix) According to the information and explanations provided to us and as per therecords of the company examined by us company has not raised funds by way of publicissue/ follow-on offer (including debt instruments) and term loans. Therefore paragraph3(ix) of the Order is not applicable to the company (x) According to the information andexplanations given to us no material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with schedule V to the Companies Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentof Equity Share / private placement of shares or fully or partly convertible debenture.Therefore paragraph 3(xiv) not applicable to the company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with director or person connected with them.

(xvi) In our opinion and according to information and explanation provide to usCompany is not required to be registered under section 45-IA of Reserve Bank of India Act1934. Therefore paragraph 3(xvi) of the Order is not applicable to the company

For Udyen Jain & Associates

Chartered Accountants

Firm Registration No: 116336W

Sushil Bajaj

Partner

Membership No: - 131144

Place: Mumbai

Date: May 29 2017

"Annexure-B" to the Independent Auditors’ Report – 31st March 2017of sub – section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the Internal Financial Control over financial reporting of KhandwalaSecurities Limited ("the Company") as of March 31 2017 in conjunction withour audit of the financial 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 Control over Financial Reportingissued by the ICAI. These responsibilities include the design implementation andmaintenance of adequate internal financial control that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany’s policies the safeguarding of assets the prevention and detection of fraudand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We have conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the standards on auditing issued by ICAIand deemed to be prescribed under section 143 (10) of the Companies Act 2013 to theextent applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those standards and the Guidance Note requirethat we comply with the ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 understanding of internal financial controls over financial reporting assessingthe risk that a material weakness exists and testing and evaluating the design andoperating 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 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 controlssystem over financial reporting.

Reporting

A Company’s Internal Financial Control 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 withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransaction and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made 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 inherent limitations of internal controls over financial reportingincluding the possibility of collusion or improper management override of controlsmaterial misstatement due to error or fraud may occur and not to be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that the internal financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

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 effectively as at March 31 2017 based on the internalcontrol over financial reporting criteria established by the company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by Institute of Chartered Accounts ofIndia.

For Udyen Jain & Associates

Chartered Accountants

Firm Registration No: 116336W

Sushil Bajaj

Partner

Membership No: - 131144

Place: Mumbai

Date: May 29 2017