To the members of 63 moons technologies limited (Formerly Financial Technologies(India) Limited)
REPORT ON THE STANDALONE INDIAN ACCOUNTING STANDARDS IND AS FINANCIAL STATEMENTS
We have audited the accompanying standalone Ind AS financial statements of 63 moonstechnologies limited [formerly Financial Technologies (India) Limited] (theCompany') which comprise the balance sheet as at 31 March 2017 the statement of profitand loss (including other comprehensive income) the cash flow statement the statementof changes in equity for the year then ended and a summary of the significant accountingpolicies and other explanatory information (herein after referred to as standaloneInd AS financial statements')
MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS 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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Ind AS specified under section 133 of the Actread with relevant rules issued thereunder. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.
In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.
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 standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our qualified audit opinion on the standalone IndAS financial statements.
BASIS FOR QUALIFIED OPINION
Note no. 55 59 62 63 and 64 form basis for our qualified opinion. As stated by theManagement of the Company in Note 59 to the standalone Ind AS financial statements CivilSuits have been filed against the Company in relation to event occurred on NSEL's tradingplatform wherein the Company has been made a party. These matters are pending at variousstages of adjudication. As stated in the said note the management of the Company does notforesee that the parties who have filed Civil Suits would be able to sustain any claimagainst the Company. In addition as stated by the management in note 55 59 62 63 and64 to the standalone Ind AS financial statement there are First InformationReports/complaints/orders/notice registered/received against various parties including theCompany from/with the Economic Offences Wing of the Mumbai Police (EOW) Central Bureau ofInvestigation (CBI) and the Directorate of Enforcement. Above matters are pending atvarious stages of adjudication/investigation.
In this regard the Management and those charged with Governance have represented to usthat other than as stated in the said note to the standalone Ind AS financial statementthere are no claims litigations potential settlements involving the Company directly orindirectly which require adjustments to/ disclosures in the standalone Ind AS financialstatement and that the ability of the Company to carry out its day-to-day operations/activities is not seriously affected due to any such order/notice as aforesaid. In thelight of the above representations regarding the ongoing investigations and matters theoutcome of which is not known and is uncertain at this stage we are unable to comment onthe consequential impact in respect of the same on the standalone Ind AS financialstatements for the year ended 31 March 2017.
Except for the possible effects of the matter specified under Basis for QualifiedOpinion' and based on our audit conducted as stated above in our opinion and to thebest of our information and according to the explanations given to us the aforesaidstandalone Ind AS financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India including the Ind AS of the financial position ofthe company as at 31 March 2017 and its financial performance including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
EMPHASIS OF MATTER
1. We draw attention to Note 57 to the standalone Ind AS financial statement whichdescribes the passing of the final order of amalgamation of National Spot Exchange Limitedwith the Company by Ministry of Corporate Affairs Government of India. The Company hasfiled a Writ Petition before the Honourable Bombay High Court challenging the said orderand the Honourable Bombay High Court has stayed the notification of the said order and thematter is currently sub-judice.
2. We draw attention to Note 58 to the standalone Ind AS financial statement.Government of India has filed the Company Petition before the Principal Bench of theCompany Law Board under the Companies Act 1956 now pending with National Company LawTribunal ("NCLT") under the Act seeking inter alia removal and supersession ofthe Board of Directors of the Company which has been protested by the Company and thematter is pending before NCLT for consideration and the matter is currently sub-judice.
3. We draw attention to Note 51 to the standalone Ind AS financial statement regardingutilisation of unexpired MAT credit entitlement by the Company. The Company has a totalMAT credit entitlement of Rs 12402.73 lakhs as at 31 March 2017. Based on theprojections made by the Company's management regarding income-tax liability of theCompany Management is of the view that the Company will be able to utilise the unexpiredMAT credit entitlement in eligible projected years.
Our opinion is not qualified in respect these matters of emphasis.
The comparative financial information of the Company for the year ended 31 March 2016and the transition date opening balance sheet as at 1 April 2015 included in thestandalone Ind AS financial statements is based on the previously issued statutoryfinancial statements prepared in accordance with the Companies (Accounting Standards)Rules 2006 which were audited by us and on which we expressed a qualified opinion dated30 May 2016 and 22 May 2015 respectively. The adjustments to these financial statementfor the differences in the accounting principles adopted by the Company on transition tothe Ind AS have been audited by us.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1 As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of section 143(11) of the Act we givein Annexure A' a statement on the matters specified in paragraphs 3 and 4 of theOrder.
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 (including other comprehensiveincome) the cash flow statement and statement of changes in equity dealt with by thisreport are in agreement with the books of account;
d) in our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act read with relevantrule issued thereunder;
e) on the basis of the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 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; 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 has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements to the extent it is ascertainable;(Refer Note 33 and Basis for Qualified Opinion' above)
ii. the Company has made provision as required under the applicable law or Ind AS formaterial foreseeable losses if any on long-term contracts including derivativecontracts;
iii. there has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company; and
iv. the Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016 and are in accordance with the books ofaccounts maintained by the Company (Refer Note 67 to the standalone Ind AS financialstatements)
ANNEXURE A' TO THE INDEPENDENT AUDITORS' REPORT
(Referred to paragraph (1) under Report on other legal and regulatoryrequirements' of our report of even date)
i) In respect of the Company's property plant and equipment (fixed assets):
a) the Company is maintaining proper records showing full particulars includingquantitative details and situation of all fixed assets.
b) as explained to us fixed assets have been physically verified by the managementwhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. The frequency of physical verification is reasonable and no materialdiscrepancies were noticed on such verification.
c) the title deeds of immovable properties are held in the name of the Company.
ii) According to the process explained to us and as followed by the Company theCompany's inventory items are directly delivered to its customers on their procurement.Accordingly reporting on paragraph 3(ii) of the Order is not applicable.
iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships and other parties covered in the register maintained undersection 189 of the Act. Accordingly reporting on paragraph 3(iii) of the Order is notapplicable.
iv) In respect of loans investments guarantees and security provisions of section185 and 186 of the Act have been complied with to the extent applicable.
v) According to the information and explanations given to us the Company has notaccepted deposits from the public and accordingly reporting on paragraph 3(v) of theOrder is not applicable.
vi) Maintenance of cost records has not been specified by the Central government undersection 148(1) of the Act. Accordingly reporting on paragraph 3(vi) of the Order is notapplicable.
vii) a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including provident fund employees state insurance income-taxsales-tax service tax duty of customs duty of excise value added tax cess and othermaterial statutory dues as applicable with the appropriate authorities. According to theinformation and explanation given to us there were no undisputed amounts payable inrespect of provident fund employees state insurance income-tax sales-tax service taxduty of customs duty of excise value added tax cess and other material statutory duesoutstanding as at 31 March 2017 for a period of more than six months from the date theybecame payable.
b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of income tax service tax excise duty and salestax as at 31 March 2017 which have not been deposited on account of dispute pending areas under:
|Name of the Statue ||Nature of the disputed dues ||Amount in Rs lacs ||Period to which the amount relates ||Forum where disputes are pending |
|Income Tax Act 1961 ||Tax penalty and interest ||68.44 ||2009-10 ||Commissioner of Income Tax (Appeals) |
|Finance Act 1994 ||Tax penalty and interest ||165.92 ||2007-08 ||Commissioner of Service Tax |
|Central Excise Act 1944 ||Tax penalty and interest ||239.52 ||2005-06 ||Superintendent Central Excise |
viii) According to the records of the Company examined by us and the information andexplanations given to us during the year the Company has not defaulted in repayment ofloans or borrowings to any bank. The Company has not availed any loans or borrowings fromfinancial institution government and debenture holder.
ix) In our opinion and according to the information and explanations given to us nomoneys have been raised by way of further public offer (including debt instruments)however term loan being external commercial borrowing has been applied for the purposesfor which they were raised. x) Except for the matters(s) referred in the Basisfor Qualified Opinion' of our audit report which are subjudice and hence areinconclusive to the best of our knowledge and information and explanations given to usno fraud by the company or any fraud on the Company by its officers or employees has beennoticed or reported during the year.
xi) Managerial remuneration has been paid/provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the Act.
xii) The Company is not a Nidhi Company. Accordingly reporting on paragraph 3(xii) ofthe Order is not applicable.
xiii) All transactions with related parties are in compliance with sections 177 and 188of the Act and the details have been disclosed in the standalone Ind AS financialstatements as required by the applicable accounting standards.
xiv) The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review accordinglyreporting on paragraph 3(xiv) of the Order is not applicable.
xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him. Accordingly reporting on paragraph 3(xv) of the Order is notapplicable.
xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly reporting on paragraph 3(xvi) of the Order is notapplicable.
ANNEXURE B' TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2(f) under Report on other legal and regulatoryrequirements' of our report of even date)
Report on the internal financial controls under clause (i) of sub-section (3) ofsection 143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls over financial reporting of 63 moonstechnologies limited (formerly Financial Technologies (India) Limited) (theCompany') as of 31 March 2017 in conjunction with our audit of the standalone Ind ASfinancial 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 Reporting(the Guidance Note') issued by the Institute of Chartered Accountants of India("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 theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 standalone Ind AS financial statements whether due to fraudor 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 standalone Ind AS financial statements for external purposes in accordancewith generally 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 thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standaloneInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the standaloneInd AS 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 31 March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.
| ||Sharp & Tannan Associates |
| ||Chartered Accountants |
| ||Firm's registration no. 109983W |
| ||by the hand of |
| ||Tirtharaj Khot |
| ||Partner |
|Mumbai 26 May 2017 ||Membership No. (F) 037457 |