To the Members of
Aditya Birla Money Limited
Report on the Audit of the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Aditya Birla MoneyLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss including the statement of Other Comprehensive Incomethe Cash Flow Statement and the Statement of Changes in Equity for the year then endedand notes to the financial statements including a summaiy of significant accountingpolicies and other explanatoiy information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2019 its profit including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) as specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements' section of our report.We are independent of the Company in accordance with the 'Code of Ethics' issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of the Act andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the Ind AS financial statements
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements for the financial year endedMarch 31 2019. These matters were addressed in the context of our audit of the Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. For each matter below our description of how ouraudit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the Ind AS financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind AS financial statements.
|Key Audit Matter ||How our audit addressed the key audit matter |
|Information System (IT) Control || |
|IT system is being used for critical operations including revenue earned. ||We understood and assessed the overall IT control environment and the controls in place which included controls |
|Due to the complexity large volume of transactions processed daily and reliance on automated and IT dependent manual controls matter pertaining to adequacy and effectiveness of IT control environment is ||over access to systems and data as well as system changes. We tailored our audit approach based on the financial significance of the system and whether there were automated procedures supported by that system. |
|considered as Key Audit Matter. Our areas of audit focus included user access management developer access to the production environment and changes to the IT environment. These are key to ensuring IT dependent and application based ||The procedures performed included testing the operating effectiveness of controls over appropriate access rights and validating that only appropriate users had the ability to create modify or delete user accounts for the relevant in-scope applications. |
|controls are operating effectively. ||In addition we tested the operating effectiveness of controls around system development and program changes to establish that changes to the system were authorized. |
|Amalgamation of Aditya Birla Commodities Broking Limited (as d'n ||^closed in note 37 of the financial statements) |
|The entity "Aditya Birla Money Limited" ("ABML" or the "Transferee") has acquired the business of "Aditya Birla Commodities Broking Limited" ("ABCBL" or the "Transferor") vide Scheme of Amalgamation ("Scheme") as per the NCLT ||We have read the Scheme of Amalgamation and assessed whether the accounting has been carried out as per the provisions of para 9 of Appendix C of Ind-AS 103 "Business Combinations". |
|order dated December 14 2018. The scheme was made effective with effect from April 01 2018. Hence application of Ind AS 103 along with the terms of scheme of amalgamation and its effect on the figures presented in the financial statement is considered as key audit matter. ||We have also assessed the disclosure in the financial statements including impact on the comparative financial statements presented. |
|Disclosure of related party transactions (as described in note 50 of the financial statements) |
|Due to high volume of business transactions with related ||Our procedures included: |
|parties during the year ended 31 March 2019 the matter pertaining to completeness of disclosure of related party || We have assessed the procedures adopted by the management in order to establish arm's length price. |
|transactions in the financial statements and determination of the Related Party Transactions at Arm's length Price transactions is considered as key audit matter. || Obtaining an understanding of the Group's policies and procedures in respect of the capturing of related party transactions and how management ensures all transactions and balances with related parties have been accurately disclosed in the financial statement; |
| || Read the audit committee approvals for the transactions to be at arm's length and in the ordinary course of business as required under Section 188 of the Act. |
| || Obtained and read the balance confirmation received from the Related Parties by the Company in order to test the transaction amounts and closing balances. |
| || Agreeing the amounts disclosed to underlying documentation and relevant agreements on a sample basis as part of our evaluation of the disclosure; and |
| || Reading of statutory information books and records and other documents obtained during the course of our audit to identify related party transactions. |
|Key Audit Matter ||How our audit addressed the key audit matter |
|Provision for Litigation and Claims (as described in note 38 of the financial statements) |
|The Company provides broking services and margin funding to its customers. The Company receives complaints from the customers towards the transactions undertaken and the amount charged from the customer for the services offered to them. The amounts of claims are significant and estimates of the amounts of provisions or contingent liabilities are subject to significant management judgement. There are certain demands raised by such authorities based on their assessments performed with respect to past periods. The Company has disputed such demands by appealing them to relevant statutory forums (High Court/Supreme Court/Tribunals etc.). Ind AS 37 requires the Company to determine whether any obligation needs to be recognised as a provision/contingent liability primarily based on its assessment of probability of economic outflow such as payment to occur. ||We performed following procedures which included tests of controls and substantive procedures: |
| || Obtained an understanding of the process laid down by the management for performing their assessment based on underlying factors like evaluation of legal precedents laws and regulations; |
| || Obtained an understanding of the process and controls established by the Company to ensure completeness and accuracy of information with respect to litigations; |
| || Read underlying communications including notices/demands/orders etc; |
|Considering the significant degree of judgement applied by the management in making such assessments and possible outcome of regulatory /statutory actions we believe such litigations to be key audit matter for our audit. || Perused the opinions provided by various subject matter experts involved by the Company based on which such management assessment was performed and independently evaluated the same; |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe Ind AS financial statements and our auditor's report thereon.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Ind AS FinancialStatements
The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of 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 the 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company'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 the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS 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 SAswill 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 Ind AS 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 Ind AS 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 collusionforgeiy 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)0)of the Act 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 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 Ind AS financial statements forthe financial year ended March 31 2019 and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 sub-section (11) of Section 143 ofthe Act we give in the "Annexure 1" a statement on the matters specifiedin paragraphs 3 and 4 of the 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 necessaiy 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 the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these Ind AS financial statements and theoperating effectiveness of such controls refer to our separate Report in "Annexure2" to this report;
(g) The provisions of Section 197 read with Schedule V of the Act are applicable to theCompany for the year ended March 31 2019;
(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 has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements-Refer Note 49 to the Ind AS financialstatements;
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.
For S.R. BATLIBOI & CO. LLP
ICAI Firm Registration Number: 301003E/E300005
per Jayesh Gandhi
Membership Number: 037924
Place : Mumbai Date : April 25 2019
Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our Report of even date
Re: Aditya Birla Money Limited ("the Company")
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.
(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment/fixed assets areheld in the name of the company except for immovable properties aggregating Rs.15 lakhsfor which the title is in dispute and the matter is subjudice. Also refer Note No.11 tothe financial statements.
(ii) The Company does not hold any security in physical form. The securities held asstock in trade by the custodian are verified with the confirmation statement received bythe management at regular intervals.
The Company is maintaining proper records of securities held as stock in trade and nodiscrepancies were noticed on comparing the statement from the custodian with bookrecords/ books of account.
(iii) According to the information and explanations 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. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities granted in respect of whichprovisions of Section 185 and 186 of the Act are applicable and hence not commented upon.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under Section 148(1) of the Act for theproducts/services of the Company.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputedstatutoiy dues including provident fund employees' state insurance income-taxsales-tax service tax value added tax goods and service tax cess and other statutoiydues applicable to it. The provisions relating to duty of customs and duty of excise arenot applicable to the Company.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax wealth-taxservice tax sales-tax value added tax cess and other material statutoiy dues wereoutstanding at the year end for a period of more than six months from the date theybecame payable. The provisions of duty of customs and duty of excise are not applicable tothe Company.
As more fully discussed in Note No.36 to the Financial Statements stamp dutiescollected by the Company in respect of States wherein the manner of payment has not beennotified from July 2011 onwards and remaining unpaid as of March 31 2019 isRs.14279356/-. As the manner of payment of the same has not been notified we are notin a position to comment if any portion of the stamp duties collected has become due andoutstanding for more than six months as at the Balance Sheet date.
(c) According to the records of the Company the dues outstanding of income-taxsales-tax provident fund wealth-tax service-tax value added tax and cess on account ofany dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs.) ||Period to which the amount relates ||Forum where dispute is pending |
| || ||376714 ||October 2004-September 2009 ||CESTAT |
|Finance Act || ||248952 ||March 2009-November 2009 ||CESTAT |
|1994 ||Seivice Tax ||21821 ||October 2009-March 2010 ||CESTAT |
| || ||32034 ||April 2006-May 2008 ||CESTAT |
|Employee's Provident Funds and Miscellaneous Provisions Act 1952 ||Provident Fund ||10527433* ||April 2009-May 2011 ||High Court Chennai |
|Income Tax Act 1961 ||Income Tax ||741885 ||AY 2010-2011 ||Commissioner of Income Tax (Appeals) Chennai |
|Tamil Nadu ||Value ||40439 ||April 2006-March 2007 ||Appellate Assistant |
|Value Added Tax Act 2006 ||Added Tax ||1020586 ||April 2007-March 2008 ||Commissioner of Commercial Taxes |
* Excludes payment of Rs.3509145/- paid under protest.
The provisions of duty of customs and excise duty are not applicable to the Company.
(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of dues to a financial institutionbank or debenture holders or government.
(ix) In our opinion and according to the information and explanations given by themanagement the Company has utilized the monies raised by way of debt instruments in thenature of commercial paper for the purposes for which those were raised.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the company or no fraud on the Companyby the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with Section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in Section 192 of Companies Act 2013.
(xvi) According to the information and explanations given to us the provisions ofSection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
For S.R. BATLIBOI & CO. LLP
ICAI Firm Registration Number: 301003E/E300005
per Jayesh Gandhi
Membership Number: 037924
Place : Mumbai
Date : April 25 2019
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF ADITYA BIRLA MONEY LIMITED
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 AdityaBirla Money Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the financial 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 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 the 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 ('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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 internal financial controls system overfinancial 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 financial reporting includes those policiesand procedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessaiy topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton 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 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 S.R. BATLIBOI & CO. LLP
ICAI Firm Registration Number: 301003E/E300005
per Jayesh Gandhi
Membership Number: 037924
Place : Mumbai
Date : April 25 2019.