TO THE MEMBERS OF
TWENTYFIRST CENTURY MANAGEMENT SERVICES LIMITED
REPORT ON THE AUDIT OF STANDALONE 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 2020 and the Statement of Profit and Loss(including Other Comprehensive Income) the Cash Flow Statement and the Statement ofChanges in Equity for the year then ended and a summary of the significant accountingpolicies and other explanatory information (hereinafter referred to as "standalonefinancial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020 the Loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing ("SA"s) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence obtained by us is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr. No. ||Key Audit Matter |
|1. ||Evaluation of uncertain tax Positions |
| ||The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. (Refer note 2(g) to the standalone financial statements. |
| ||Auditor's Response: |
| ||We have obtained the details of tax assessments & demands for all the cases disputed from the Management. We involved our internal expertise to challenge the Management's underlying assumptions over the possible outcome of the disputes. We have also considered other rulings in evaluating the Management's position on these uncertain tax positions. |
| ||Additionally we considered the effect of new information in respect of uncertain tax positions as at 1st April 2019 to evaluate whether any change was required on these uncertainties. |
|2 ||Accounting and Valuation of Investments |
| ||The Company's investments as on 31/03/2020 amount to Rs.1386.19 Lakh which in primarily invested in equity shares preference shares of subsidiary company & other company. This comprises 24.46% of total assets of the Company. Considering the high value of this item of asset it has been considered as a key audit matter. |
| ||Auditor's Response: |
| ||We obtained an understanding of the internal controls designed by the management for investment accounting and valuation and tested the operating effectiveness these controls. |
| ||We undertook substantive audit procedures like inspection recalculation and reperformance. |
| ||We performed procedures to identify encumbrances on these investments and verified sufficiency and appropriateness of disclosures regarding the same. We performed procedures to verify adherence to IND-AS. |
Emphasis of Matter
1. As more fully described in Note 2(h) to the standalone financial statements theCompany has made provision form contingent liability of Rs.75 Lakhs payable to GujaratIndustrial Investment Corporation for pending legal case in the High Court of Chennai. Thescope duration or outcome of these matters is uncertain.
Our opinion is not modified in respect of this matter.
2. The Company provides gratuity benefit to its employees (Employee benefits expense)which is funded with Life Insurance Corporation of India.
Hitherto the company was not reflecting the defined benefit obligation and plan assetsseparately. In this year the defined benefit obligation of Rs. 854500/- and Defined planassets of Rs. 993249/- has been reflected in the accounts and net effect thereofRs.138749/- has been adjusted in retained earnings.
Our opinion is not modified in respect of this matter.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance Report and Shareholder Information but does not include thestandalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibilities for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
a. Non Provision of Doubtful Loans & Advances: The Company's Loans & advancesas on 31/03/2020 amount to Rs.3125.68 Lakhs which is given to subsidiary company &Group Company. This comprises 55.16% of total assets of the Company. Considering the highvalue of this item of asset it has been considered as a important matter. We furtherreport that had
the observation made by us above been considered the loss for the year would have beenRs. 4311.38 lacs (as against the reported loss figure of Rs. 1185.70 lacs) and loss afterconsidering accumulated figures of previous years would have been Rs.2935.97 lacs (asagainst reported figure of profit of Rs. 189.71 Lacs) and the balance of amount due fromsubsidiary company and group company would have been Rs. Nil (as against the reportedfigure of Rs. 3125.68 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 the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 312020 and its Loss total comprehensive income itscash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
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 based on our audit we report that :
a. We have sought and except for the possible effect of the matter described inparagraph of the paragraph of the basis for qualified opinion above obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purposes of our audit.
b. In our opinion except for the effect of the matters described in the basis forqualified opinion paragraph above proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss Statement of OtherComprehensive Income Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
d. In our opinion except for the effect of the matters described in the basis forqualified opinion paragraph above the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.
e. On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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 of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
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 as amended inour opinion and to the best of our information and according to the explanations given tous :
i. The Company has 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 Education and Protection Fund by the Company and its subsidiary companiesincorporated in India.
For Shankar & Kishor
Firm Registration No. 112451W
Membership No. 038139
"ANNEXURE A" TO INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Twentyfirst Century ManagementServices Limited of even date)
1. In respect of the Company's fixed assets :
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.
c. The company has no immovable property. In respect of immovable properties of landand building that have been taken on lease the lease agreements are in the name of theCompany.
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. According to the information and explanations given to us the Company has grantedunsecured loans to 2 body corporate covered in the register maintained under section 189of the Companies Act 2013 in respect of which we would like to state that the recoveryof the loan amount of Rs.3125.68 is doubtful.
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. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 312020 and therefore the provisions of the clause 3(v) ofthe Order are not applicable to the Company.
6. The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 for the business activities carried out bythe Company. Thus reporting under clause 3(vi) of the order is not applicable to theCompany.
7. According to the information and explanations given to us in respect of statutorydues :
a. The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax and other materialstatutory dues applicable to it with the appropriate authorities.
b. There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Except Income Tax and other material statutory dues in arrears as atMarch 312020 for a period of more than six months from the date they became payable.
c. Details of dues of Income Tax which have not been deposited as at March 31 2020 onaccount of dispute are given below :
|Name of Statute ||Nature of dispute ||Amount (Rs. in lacs) ||Period for which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income tax ||4.81 ||A.Y 1995-96 ||ACIT Assessing officer |
|Income Tax Act 1961 ||Income tax ||104.96 ||A.Y 1996-97 ||ACIT Assessing officer |
|Income Tax Act 1961 ||Income tax ||1.33 ||A.Y 2006-07 ||ACIT Assessing officer |
|Income Tax Act 1961 ||Income tax ||124.14 ||A.Y 2007-08 ||CIT (A)-18 |
|Income Tax Act 1961 ||Income tax ||2.93 ||A.Y 2008-09 ||Rectification Pending with CPC |
|Income Tax Act 1961 ||Income tax ||4.57 ||A.Y 2010-11 ||ITAT Chennai |
|Income Tax Act 1961 ||Income tax ||259.71 ||A.Y 2014-15 ||ACIT |
|Income Tax Act 1961 ||Income tax ||22.74 ||A.Y 2015-16 ||ACIT |
|Income Tax Act 1961 ||Income tax ||0.95 ||A.Y 2017-18 ||ACIT |
|Income Tax Act 1961 ||Income tax ||205.41 ||A.Y 2018-19 ||Rectification Pending with CPC |
8. The Company has not taken any loans or borrowings from financial institutions banksand government or has not issued any debentures. Hence reporting under clause 3(viii) ofthe Order is not applicable to the Company.
9. The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3(ix) ofthe Order is not applicable to the Company.
10. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
11. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act
12. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable to the Company.
13. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
14. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3(xiv) of the Order is not applicable to the Company.
15. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Shankar & Kishor
Firm Registration No. 112451W
Membership No. 038139
"ANNEXURE B" TO INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Twentyfirst Century ManagementServices Limited of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 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 March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India (the"ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to therespective company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the ICAI and the Standardson Auditing prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively 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 of themanagement 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312020 based on the internal financialcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance
Note on Audit of Internal Financial Controls Over Financial Reporting issued by theICAI.
For Shankar & Kishor
Firm Registration No. 112451W
Membership No. 038139