The Members of
Abhinav Capital Services Limited Opinion
We have audited the standalone financial statements of Abhinav Capital Services Limited("the Company") which comprise the balance sheet as at 31st March 2021 and thestatement of Profit and Loss and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2021 and profit/loss 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.For each matter below our description of how our audit addressed the matter is providedin that context.
We have determined the matter described below to be key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone Ind AS financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis of our audit opinion on the accompanying standalone Ind AS financial statements.
|Key Audit Matter ||How our audit addressed the key audit matter |
|1) Impairment of financial assets (expected credit losses) :- || |
|Ind AS 109 requires the Company to recognize impairment loss allowance towards its financial assets (designated at amortised cost and fair value through other comprehensive income) using the expected credit loss (ECL) approach. Such ECL allowance is required to be measured considering the guiding principles of Ins AS 109 including :- ||We read and assessed the Company's accounting policies for impairment of financial assets and their compliance with Ind AS 109 |
|Unbiased probability weighted outcome under various scenarios; ||We tested the criteria for staging of loans on their past due status to check compliance with requirements of Ind AS 109 . Tested a sample of performing (stage 1) loans to assess whether any loss indicators were present requiring them to be classified under stage 2 or 3 and vice versa. |
|Time value of money; ||We have evaluated the reasonableness of the Management estimates by understanding the process of ECL estimation ad tested the controls around data extraction and validation |
|Impact arising from forward looking macro-economic factors and; ||Tested the ECL model including assumptions and underlying computation |
|Availability of reasonable and supportable information without undue costs; ||Assessed the floor/minimum rates of provisioning applied by the Company for loan products with inadequate historical defaults Audited disclosure included in the Ind AS financial statements in respect of expected credit losses. |
|Applying these principles involves significant estimation in various aspects such as; Grouping of borrowers based on homogeneity by using appropriate statistical techniques; || |
|Staging of loans and estimation of behavioral life; || |
|Determining macro-economic factors impacting credit quality of receivables; || |
|Estimation of losses for loan products with no/minimal historical defaults. || |
|Considering the significance of such allowance to the overall financial statements and the degree of estimation involved in computation of expected credit losses this area is considered as a key audit matter. || |
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate implementation and maintenance ofaccounting 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 financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SA'swill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements. (Refer appendix to our report of even date)
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure - 1 a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account
d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 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 A".
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Annexure - 1 to our report of even date
Re: Abhinav Capital Services Limited ("the company")
In our opinion and on the basis of such checks of the books and records as weconsidered appropriate and according to the information and explanations given to usduring the normal course of audit which were necessary to the best of our knowledge andbelief we report that:
(1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) The Management has physically verified certain assets during the year in accordancewith a program of verification which in our opinion provides for physical verification ofthe fixed assets at reasonable intervals. According to the information and explanationsgiven to us no material discrepancies were noticed on such verification. During the yearCompany has not disposed of any substantial / major part of fixed assets.
(c) There is no immovable properties are held by the company hence this clause is notapplicable.
(2) (a) The Company is registered non banking financial company and main business is togrant and obtain loans and advances and apart from this company invest surplus funds inshares and securities and in view of the same there is no trading activity carried onduring the year hence there is no closing stock as on 31st March 2021.
(b) As company does not deal in trading activity therefore procedures of physicalverification of inventory by the management is not required.
(c) As company does not deal in trading activity therefore maintaining proper recordsof inventory is not required.
(3) According to the information and explanation given to us the company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. As the company is NBFC Loan and advances given in the normal courseof business have not been considered here for reporting. Accordingly the provision ofclause 3(iii)(a) (b) and (c) of the order are not applicable to company and hence notcommented upon.
(4) In our opinion and according to the information and explanations given to us thecompany has wherever applicable complied the provisions of Section 185 and Section 186 ofthe Companies Act 2013 in respect of loans investments guarantees and security.
(5) According to the records of the company and information and explanations given tous the company has not accepted any deposit as per directive issued by Reserve Bank ofIndia and the provision of the section 73 to 76 or any other relevant provision of theCompanies Act 2013 and rules framed there under.
(6) To the best of our knowledge and as explained the company is engaged in NonBanking Financial Company and not dealt in any sale of goods hence the Central Governmenthas not prescribed the maintenance of cost records by the company under sub - section (1)of section 148 of the Companies Act 2013 for any of its products.
(7) (a) According to the records of the company and information and explanations givento us in respect of statutory dues and other dues the company has been generally regularin depositing undisputed statutory dues including Income Tax sales tax goods &services tax wealth tax service tax duty of custom duty of excise value added taxcess and any other statutory dues with the appropriate authorities during the year.
(b) According to the records of the company there is no dues of income-taxservice-tax or value added tax which have not been deposited on account of any dispute.
(8) According to records of the company the company has not borrowed funds fromfinancial institutions banks government or issued debentures till 31st March2021. Hence in our opinion the question of reporting on default in repayment of dues tofinancial institutions or banks or debenture holders does not arise.
(9) According to records of the company the company has not raised money during theyear by way of initial public offer or further public offer (including debt instruments)and term loans. Hence in our opinion this clause is not applicable in respect ofreporting on delay or default made during the year.
(10) Based upon the audit procedure performed for the purpose of reporting true andfair view of the financial statement and according to the information and explanationsgiven by management We report that no fraud on or by the officer or employees of thecompany has been noticed or reported during the year.
(11) Based upon the audit procedure performed for the purpose of reporting true andfair view of the financial statement and according to the information and explanationsgiven by management we report that the company has not paid any managerial remunerationto key person during the year in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Companies Act 2013 hence thisclause is not applicable.
(12) According to records of the company the company is not covered under the categoryof Nidhi company therefore provision of clause 3(xi) of the order are not applicable tothe company and hence not commented upon.
(13) According to the information and explanations given to us the company hascomplied with Section 177 and 188 of Companies Act 2013 in respect of transactions withrelated parties and details have been disclosed in the financial statements as required bythe applicable accounting standards.
(14) To the best of our knowledge and belief and according to information andexplanations given to us the company has not made any preferential allotment or privateplacements of shares or fully or partly convertible debentures during the year. Hence theprovisions of Section 42 of the Companies Act 2013 do not apply.
(15) To the best of our knowledge and belief and according to the information andexplanations given to us the company has wherever applicable complied with provisions ofSection 192 of the Companies Act 2013 in respect of any non cash transactions enteredwith directors or persons connected with him.
(16) The company is registered Non Banking Financial Company and the company is holdingcertificate of registration vide registration number 13.00685 under Section 45-IA of theRBI Act 1934.
Annexure - 2 to our report of even date
Re: Abhinav Capital Services Limited ("the company")
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 AbhinavCapital Services Limited ("the Company") as of 31st March 2021 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls:
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements
Inherent Limitations of Internal Financial Controls over Financial Reporting:
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2021based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
We also have audited in accordance with the standard on Auditing issued by theInstitute of Chartered Accountants of India as specified under section 143(10) of theAct the financial statement of Abhinav Capital Services Limited which comprises theBalance Sheet as at 31st March 2021 and the related statement of Profit &Loss and Cash Flow Statement for the year then ended and summary of significantaccounting policies and other explanatory information and our report dated 25thJune 2021 and expressed an unqualified opinion thereon.
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 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 todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.
| ||For S C Mehra & Associates LLP |
| ||Firm Registration No.: 106156W/W100305 Chartered Accountants |
| ||Sd/- |
|Place : Mumbai ||CA DEEPAK M. OZA |
|Date : 25th June 2021 ||Partner |
|UDIN : 21045890AAAAHY9165 ||Membership No.045890 |