The Members of A. K. Capital Services Limited
Report on the audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of A. K. CapitalServices Limited (the Company) which comprise the Balance Sheet as at March 31 2019 theStatement of profit and Loss (including other comprehensive income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policies andother explanatory information (hereinafter referred to as the standalone financialstatements).
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 true and fairview in conformity with the Indian Accounting Standard prescribed under Section 133 of theAct read with the Companies (Indian Accounting Standard) Rules 2015 as amended (Ind AS)and the accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2019 the profit and total comprehensive income the changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditors Responsibilities for the Audit of Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India 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 fullled ourother ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained 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.
|Key Audit Matter ||Auditors response |
|1 Transition to Indian Accounting Standards (Ind AS) ||Principal Audit Procedures |
|The Company has adopted Ind AS notified under Section 133 of the Companies Act 2013 ('the Act') read with the Companies (Indian Accounting Standards) Rules 2015 from April 01 2018 and the effective date of such transition is April 01 2017. ||We have performed the following audit procedures in order to obtain sufficient audit evidence: |
| || Assessed the Company's process to identify the impact of adoption and transition to the new accounting standards; |
|Ind AS is new and complex accounting standards which require considerable judgment and interpretation in its implementation. Further Ind AS 101 (First-time Adoption of Indian Accounting Standards') allows two categories of exceptions to the first-time adopters which mainly includes prohibition to retrospective application of certain requirements of Ind AS and exemption from some requirements of Ind AS. || Evaluated the design of internal controls and tested the operating effectiveness of key internal controls around the process of preparation of Standalone Financial Statements; |
| || Reviewed the exemptions availed by the Company from certain requirements under Ind AS; |
| || Obtained an understanding of the governance over the determination of key judgments; |
|We consider this transition and the required disclosure to be a key audit matter because new accounting policies have been developed by the Company to comply with these standards and judgment. Note 2 Significant Accounting Policies Note 39 First-time adoption of Ind AS Note 36 JFair value hierarchy Note 37 Mar ket Risk and Note 38 Liquidity Risk to the Standalone Ind AS Financial Statements provide detailed information on the significant policies critical judgment and estimation along with details of exemptions applied from certain requirements under Ind AS based on which these Standalone Financial Statements are prepared. || Evaluated and tested the key assumptions and judgments adopted by management; |
| || Assessed the disclosures made against the relevant Ind AS; and |
| || Determined the appropriateness of the methodologies and models used along with the responsibility of the outputs. |
|Accordingly it was determined to be a key audit matter in our audit of the standalone financial statements. || |
|2 Measurement of Investments in accordance with Ind AS 109Financial Instruments ||Principal Audit Procedures |
|On initial recognition Investments are recognized at fair value in case of Investments which are recognised at fair value through profit and loss (FVTPL) its transaction cost is recognised in the statement of profit and loss. In other cases the transaction costs are attributed to the acquisition value of the investments. || Obtained an understanding of Company's business model assessed in accordance with Ind AS 109. |
| || Evaluated the Company's assessment of business model. |
|The Company's investments are subsequently classified into following categories based the objective of its business model to manage the cash flows and options available in the standard: || Obtained an understanding of the determination of the measurement of the investments and tested the reasonableness of the significant judgements applied by the management. |
|Debt instruments at amortised cost || Evaluated the design of internal controls relating to the measurement and also tested the operating effectiveness of the aforesaid controls. |
| Debt instruments and equity instruments at fair value through profit or loss (FVTPL) || Obtained valuation certificate of independent valuer in respect of fair value investments. |
| Equity instruments measured at fair value through other comprehensive income FVTOCI. || Ensured that the Company has used valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value maximising the use of relevant observable inputs and minimising the use of unobservable inputs. |
|The Company has assessed following two business model: || |
| Held to collect contractual cash flows || |
| Realising cash flows through the sale of investments. The Company makes decisions based on the assets fair values and manages the assets to realise those fair values. || Assessed the appropriateness of the disclosure in the standalone financial statements in accordance with the applicable financial reporting framework. |
|Since valuation of investments at fair value involves critical assumptions significant risk in valuation and complexity in assessment of business model the valuation of investments as per Ind AS 109 is determined to be a key audit matter in our audit of the standalone financial statements. || |
|Refer note 2 6 35 and 36 to the standalone financial statements. || |
Information Other than the Financial Statements and Auditors Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in Management Discussion and AnalysisBoards Report and Corporate Governance Report but does not include the standalonefinancial statements and our auditors 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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.
Managements Responsibility 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 Indian Accounting Standards (Ind AS) and other accounting principles generallyaccepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for the 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 standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due 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.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditors Responsibility 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 auditors 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 standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concern basis ofaccounting 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 auditors report to the related disclosures in thestandalone 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 ourauditors 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 auditors 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.
The comparative financial information of the Company for the year ended March 31 2018and the transition date opening balance sheet as at April 01 2017 included in thesestandalone financial statements are based on the previously issued statutory financialstatements prepared in accordance with the Accounting Standards Specified under Section133 of the Act read with relevant rules issued there under and other accounting principlesgenerally accepted in India audited by us in our report for the year ended March 31 2018dated May 26 2018 and predecessor auditor whose report for the year ended March 31 2017dated May 20 2017 respectively expressed an unmodified opinion on those standalonefinancial statements as adjusted for the differences in the accounting principles adoptedby the Company on transition to the Ind AS which have been audited by us.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 (the Order) issued by theCentral Government of India in terms of subsection (11) of Section 143 of the Act we givein the Annexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
2. As required by Section 143(3) of the Act based on our audit 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) Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the books of account;
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March31 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 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'
(g) With respect to the other matters to be included in the Auditors Report inaccordance with the requirements of Section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid or provided to its directors during the year is inaccordance with the provision of Section 197 of the Act.
(h) With respect to the other matters to be included in the Auditors 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 does not have any pending litigations which would impact its standalonefinancial position.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For PYS & CO. LLP
Firms Registration No. 012388S/S200048
Membership No.: 39407
Date: May 25 2019
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 under the heading Report on Other Legal and RegulatoryRequirements of our report of even date)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of x ed assets.
(b) The Company has regular programme of physical verification of its x ed assets bywhich all the x ed assets are verified in a phased manner on yearly basis. In our opinionthe periodicity of physical verification is reasonable having regard to the size of theCompany and nature of its assets. No material discrepancies were noticed on suchverification.
(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) Considering the nature of business the Company does not have inventory. In viewof this paragraph 3(ii) of the Order is not applicable to the Company.
(iii) The Company has not granted any loans secured or unsecured to companies r mslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Act. Accordingly the Paragraph 3 (iii) (a) 3 (iii) (b) and 3 (iii)(c) of the Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us theCompany has not advanced or granted any loan covered under Section 185 of the Act.Further the Company has complied with provisions of Section 186 of the Act with respectto the loans guarantee or security and investments made.
(v) The Company has not accepted any deposits during the year from the public to whichthe directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76and any other relevant provisions of the Act and the rules framed thereunder apply.
(vi) In our opinion and according to the information and explanations given to us theCentral Government has not prescribed maintenance of cost records under Sub-section (1) ofSection 148 of the Act.
(vii) (a)According to the information and explanations given to us the Company hasbeen generally regular in depositing undisputed statutory dues including provident fundincome tax goods and service tax cess and any other statutory dues with the appropriateauthorities. There are no arrears of outstanding statutory dues as at the March 31 2019for a period of more than six months from the date they became payable. As informedstatutory dues in the nature of employee state insurance and duty of customs are notapplicable to the Company.
(b) According to information and explanations given to us there are no dues on accountof sales tax wealth tax service tax goods and service tax duty of customs duty ofexcise value added tax and cess which have not been deposited with the appropriateauthorities on account of any dispute.
(viii) In our opinion and according to information and explanations given to us theCompany has not defaulted in repayment of dues to banks or financial institutions. TheCompany does not have any loans or borrowings from government and has not issued anydebentures during the year.
(ix) In our opinion and according to the information and explanations given to us theCompany has utilized the term loan for the purpose it was raised. The Company did notraise any money by way of initial public offer or further public offer (including debtinstruments).
(x) To the best of knowledge and according to the information and explanations given tous no fraud by the Company or any fraud on the Company by its officers or employees havebeen noticed or reported during the year.
(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 for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the 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 to the Company.
(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 Section 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 give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(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 directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable to the Company.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For PYS & CO. LLP
Firms Registration No. 012388S/S200048
Membership No.: 39407
Date: May 25 2019
ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 2(f) under the heading 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 of Section143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of A. K.Capital Services Limited (the Company) as of March 31 2019 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date.
Managements 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 (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the 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 ICAI and the Standard on Auditing prescribed underSection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. 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 auditors 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 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 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 repor ting 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 March 31 2019 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 PYS & CO. LLP
Firms Registration No. 012388S/S200048
Membership No.: 39407
Date: May 25 2019