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Adharshila Capital Services Ltd.

BSE: 539493 Sector: Financials
NSE: N.A. ISIN Code: INE269F01012
BSE 05:30 | 01 Jan Adharshila Capital Services Ltd
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Adharshila Capital Services Ltd. (ADHARSHILACAP) - Auditors Report

Company auditors report

TO THE MEMBERS OF

ADHARSHILA CAPITAL SERVICES LIMITED

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Adharshila CapitalServices Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 and the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Cash Flows and Statement of Changes in Equity and for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information. (hereafter referred to as the FinancialStatements).

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid 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 and other accounting principles generally accepted in India of the stateof affairs of the Company as at 31st March 2021 and its profit/loss totalcomprehensive income its cash flows and changes in equity for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountantsof India together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act 2013 and the Rules there under andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Key Audit Matters

Key Audit Matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters are addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated.

Key Audit Matters Auditor's Response
Valuation of investments carried at fair value Our audit procedures in relation to valuation of investments included but were not limited to the following:
As at 31st March 2021 the Company held investments amounting to Rs. 20.83 crores which represent 94.34 % of the total assets of the Company as at 31 March 2021. These investments comprise of investment in unquoted equity shares and preference shares of related companies which are fair valued using Level 2 and 3 inputs. The fair valuation of these investments is determined by a management appointed independent valuation specialist. The process of computation of fair valuation of investments include use of unobservable inputs and management judgements and estimates.
(a) Obtained a detailed understanding of the management's process and controls for determining the fair valuation of these investments. The understanding was obtained by performance of walkthroughs which included inspection of documents produced by the Company and discussion with those involved in the process of valuation;
(b) Evaluated the design and the operational effectiveness of relevant key controls over the valuation process including the Company's review and approval of the estimates and assumptions used for the valuation including key authorization and data input controls;
The key assumptions underlying management's assessment of fair value of these investments include application of liquidity discounts; calculation of discounting rates and the estimation of fair market value of assets of related companies.
(c) Assessed the appropriateness of the valuation methodologies for varied type of investments in accordance with the Company's policy and tested the mathematical accuracy of the management's model adopted for different types of investments;
The valuation of these investments was considered to be one of the areas which required significant auditor attention and was one of the matters of most significance in the financial statements due to the materiality of the value of such investments and the complexity involved in the valuation of these investments.
(d) Obtained the valuation reports received from the management's expert and assessed the expert's competence objectivity and independence in performing the valuation of these investments;
(e) Ensured the appropriateness of the carrying value of these investments in the financial statements and the gain or loss recognised in the financial statements as a result of such fair valuation; and
(f) Ensured the appropriateness of the disclosures in accordance with the applicable accounting standards

Information Other than the Financial Statements and Auditor'sReport Thereon

The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report including Annexureto Board's Report and Shareholder's Information but does not include thefinancial statements and our auditor's report thereon. Our opinion on the financialstatements does not cover the other information and we do not express any form ofassurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. 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.

Responsibilities of Management and Those Charged with Governance forthe Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the Indian Accounting Standards (Ind AS) specified under section 133 ofthe Act and other accounting principles generally accepted in India. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements Board of Directors isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The Board of Directors isresponsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the FinancialStatements

Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of thefinancial 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 controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for ex- pressing 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 reasonableness ofaccounting 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 theCompany's ability to continue as a going concern. If we conclude that a materialuncer- tainty exists we are required to draw attention in our auditor's report tothe related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in:

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the financialstatements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards. From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government in terms of section 143(11) of the Act wegive "Annexure A" statement on the matters specified in paragraphs 3 and 4 ofthe said Order.

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 Statement of Cash Flow and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.

d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act

e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct.

f) With respect to the adequacy of internal financial controls over financial reportingof the Company and the operating effectiveness of such controls refer to our separatereport in "Annexure B". Our report expresses an unmodified opinion on theadequacy and operating effectiveness of the Company's internal financial controlsover financial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

As the Company is not providing any managerial remuneration provisions of section 197of the Act are not applicable to it.

h) 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 did not have any pending litigations which would have material impacton its financial position.

(ii) The Company did not have any long-term contracts including derivative contractsfor which 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.

3. Further as required by ‘Non Banking Financial Companies Auditor's Report(Reserve Bank) Directions2016' we further state that we have submitted a separatereport to the Board of Directors of the Company on the matters specified in saiddirections as under:-

a) The company applied for registration as provided in section 45IA of the Reserve Bankof India Act 1934 and has obtained certificate of registration from the Reserve Bank ofIndia.

b) The Company is entitled to continue to hold the Certificate of Registration in termsof its asset/income pattern as on 31st March 2021.

c) The Board of Directors of the company has passed a resolution for non - acceptanceof any public deposits.

d) The company has not accepted any public deposit during the year under reference.

e) The company has complied with the prudential norms relating to income recognitionaccounting standards assets classification and provisioning of bad and doubtful debts asapplicable to it in terms of Non-Banking Financial (Non-Deposit Accepting or Holding)Companies Prudential Norms (Reserve Bank) Directions 2007.

f) The Company has requisite Net Owned Fund as required by Master direction-Non BankingFinancial Company - Non systemically Important Non-Deposit taking Company (Reserve Bank)Direction 2016.

For RAJENDAR K. KUMAR & ASSOCIATES
Chartered Accountants
FRNo. 010142C
R.K. KUMAR
Place : Ghaziabad Proprietor
Dated : 09.06.2021 M.No. 071803
UDIN : 21071803AAAAEF5839

ANNEXURE ‘A' TO INDEPENDENT AUDITORS' REPORT

Referred to in our report of even date on the accounts of AdharshilaCapital Services Limited for the year ended on 31st March 2021.

As required by the Companies (Auditors Report) Order 2016 issued bythe Government of India in terms of section 143(11) of the Act and on the basis of suchchecks as we considered appropriate and as per information and explanations given to uswe report that:-

1. The company has maintained proper records showing full particulars includingquantitative details and situation of its property plant and equipment. These have beenphysically verified during the year by the management at reasonable intervals and nomaterial discrepancies between the book records and the physical inventory have beennoticed on such verification. The company does not hold any immovable property.

2. The inventory of the company comprises equity shares which are in dematerializedform and which have been verified by the management with reference to holding statementfrom depository participant. In our opinion the procedure of verification of inventoryfollowed by the management is satisfactory. Further the company is maintaining properrecords of its inventory and no discrepancies were noticed on verification.

3. (a) According to information made available to us the company has granted unsecuredloans to companies covered in the register maintained under section 189 of the Act and inour opinion the terms and conditions of such loans are not prejudicial to thecompany's interest.

(b) As per the information and explanation given to us the said loans are repayable ondemand.

(c) As per the information and explanation given to us no amount is overdue for morethan ninety days towards principal as well as interest.

4. On the basis of information and explanation given to us and on our scrutiny ofcompany's records we report that the Company has not entered into any transactioncovered under the provisions of section 185 of the Companies Act 2013. Further theprovisions of section 186 of the Companies Act 2013 have been complied with in respect ofloans investments guarantees and security made by the company.

5. On the basis of information and explanation given to us and on our scrutiny ofcompany's records in our opinion the company has not accepted any deposits from thepublic.

6. To the best of our knowledge and belief and according to information given to usCentral Government has not prescribed maintenance of cost records under sub-section (1) ofsection 148 to the Act for any of the activities of the Company.

7. (a) According to the information and explanation given to us the company isgenerally regular in depositing with appropriate authorities the undisputed statutory duesincluding provident fund employees' state insurance income-tax wealth-tax servicetax duty of customs duty of excise value added tax cess and any other statutory duesapplicable to it. Further there were no arrears of undisputed statutory dues outstandingas at last day of the financial year concerned for a period of more than six month fromthe date they became payable.

(b) According to the information and explanations given to us there are no such duesas stated above which have not been deposited on account of any dispute.

8. Based on our examination and according to the information and explanations given tous the company has not taken any loans from any financial institution bank orGovernment. The company has not issued any debentures.

9. According to the information and explanations given to us the company has notraised any moneys by way of initial public offer or further public offer (including debtinstruments) or term loans during the year.

10. Based on audit procedures performed and according to the information andexplanations given to us we report that no fraud on or by the company has been noticed orreported during the year.

11. To the best of our knowledge and belief and according to information given to usthe Company has not given any managerial remuneration during the year under review.

12. The company is not a Nidhi Company.

13. According to the information and explanations given to us all the transactionswith the related parties are in compliance with the provisions of sections 177 and 188 ofCompanies Act 2013 and the details of such transactions have been properly disclosed inthe financial statements as required by the applicable accounting standards.

14. According to the information made available to us the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review.

15. According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with them.

16. The company is required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934 and the registration has been duly obtained.

For RAJENDAR K. KUMAR & ASSOCIATES
Chartered Accountants
FRNo. 010142C
R.K. KUMAR
Place : Ghaziabad Proprietor
Dated : 09.06.2021 M.No. 071803

ANNEXURE ‘B' TO THE AUDITORS' REPORT

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of Adharshila Capital Services Limited ("the Company") as of 31stMarch 2021 in conjunction with our audit of the financial statements of the Company forthe year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting 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 tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlover financial reporting 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 havea material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2021 based onthe 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.

For RAJENDAR K. KUMAR & ASSOCIATES
Chartered Accountants
FRNo. 010142C
R.K. KUMAR
Place : Ghaziabad Proprietor
Dated : 09.06.2021 M.No. 071803

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