To the Members of Alexander Stamps and Coin Limited
(Formerly known as Rudraksh Cap-Tech Limited)
Report on the Audit of the Financial Statements
We have audited the Standalone financial Statement of Alexander Stamps and Coin Limited(the Company') (Formerly known as Rudraksh Cap-Tech Ltd) which comprises the BalanceSheet as at 31st March 2021 and the statement of Profit & Loss thestatement of changes in equity and the statement of cash flows for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.
In our Opinion and to the best of our information and according to the explanationsgiven to us because of the significance of the matter discussed in the Basis for AdverseOpinion section of our report the standalone financial statement do not give a true andfair view in conformity with accounting principles generally accepted in India of theirstate of affairs of the standalone financial statement as at 31st March 2021of its Profit and Loss Changes in Equity and the Cashflows for the year then ended.
Basis of Adverse Opinion
1. Revenue from operation and purchase of traded goods:
The Company is in trading business of buying and selling of artistic aesthetic thingsproducts drawing literatures journals newspapers and so on but the majority of thetransaction is routed through cash purchase (Purchase of stock in trade) and cash sales(Revenue from operation). We strongly advice management to keep record of identity of alltransactions made through cash. We are unable to cross verify said transactions because oflack of availability of records. Below is the statistics of past 4 years revenue formoperation assessing the accounting principles used and significant estimates made byManagement. We believe that audit evidence obtained by us and other auditors in terms oftheir reports is sufficient and appropriate to provide a basis for our adverse opinion.
(Sales)and holding of stock in trade (Closing Stock) which also shows tremendousdecrease in sales and huge building up of a stock in trade.
|Sr.no Years ||Sales in Rs. ||Closing Stock in Rs. |
|1. 2016-17 ||84059150 ||23907576 |
|2. 2017-18 ||50638090 ||143719179 |
|3. 2018-19 ||10320851 ||149281826 |
|4. 2019-20 ||4363167 ||149281826 |
|5. 2020-21 ||7599204 ||153846806 |
Company is keeping huge amount of stock and of a special nature we strongly believethat management should keep perfect record of stock. Furthermore company has not takeninsurance of the stock in trade which also creates huge risk on company.
Looking at the working pattern margins earned and assets held by the company westrongly recommended management to give more focus on health of the company's performanceand internal control of the company.
2. Note No: 4: - Loans & Advances: -
(Overstatement of Loans & Advances and Non-Provision for Bad & Doubtful Loansand Advances Non-Compliance of IND AS 37)- The balances under the head loans andadvances amounting to Rs. 13.30 lakhs are without Balance Confirmation. In Absenceof Confirmation the Balances might be Overstated and provision for Bad and Doubtful isrequired which has not been provided by the Company. So financial statements do not givetrue and fair view with regards to financial impact of such Loans & Advances given.Furthermore Balance under the head other non-current assets with advance tovendor amounting to Rs.5.02 lakhs is also long outstanding for which no confirmation hasbeen received.
Mr. Anirudh Sethi who is director of the company has taken Rs.19.33 lakhs (Includingentries of Unamortized cost as per IND AS) outstanding as on 31.03.2021 as Loans &Advances from company which is again violation of provisions of Sec 185 of Companies Act2013.
3. Note No: 12 Borrowings:
Absence of balance confirmation-Company is carrying very old balance of unsecured loan.Company has not provided balance confirmation of loan received from Main Dhal Mills pvtltd amounting to Rs. 468889.00/- Linkwise Exports Pvt Ltd amounting to Rs.1875543.00/- and for Loan from retired director amounting to Rs. 1192769/-. so we areunable to comment upon the same so financial statements does not give true and fair viewwith regards to borrowings.
4. Details of statutory dues:-
The details regarding disputed statutory dues in respect of TDS Advance Tax VATSales Tax GST PF ESIC and other taxes has not been provided to us and hence we areunable to comment upon the adequacy of provision and its impact.
5. Non Compliance of SH-7:-
Non-Compliance of requirement of ROC Authorized share capital of the company is Rs.72000000/- whereas paid-up share capital of the company is Rs. 86400000/- hencecompany has not increase it's authorized share capital. Company has not provided forinterest/penalty for the said default in the financial statement. Company has failed tofile SH-7 form also with ROC resulting into non-payment of ROC fees also to increaseauthorized capital.
6. Violation of Sec 73: -
Company has received Rs.6000000.00 from 3 individuals and shown under application forshare capital pending allotment. Out of the said amount Rs.3000000 has been received inDec-2018 and Rs. 3000000 has been received in Jan-2019. Company has neither allotted theshares nor refunded the amount back to them. Company has not followed any of the procedureprescribed under section 62 and Sec 42 of Companies Act 2013 read with Rule 13. This isstraight violation of Sec 73 of Companies Act 2013.
7. Notes No:7 Cash-in-Hand
During our audit of books of accounts we have notice that cash-in-hand as per balanceas on 31.03.2021 is Rs.29.44 lakhs which was not provided for verification to us. Lookingat the business turnover keeping such huge cash on hand is not preferable.
8. Related party Transaction's discloser: -
During our audit we have observed below mentioned related parties Transactions.
|Sr.No Name of Related Parties ||Nature of Transaction ||Amount in Rs. ||Relationship of the party to the company |
|1. AnirudhSethi ||Purchase of Stock# ||2450000.00 ||Director of the company |
|2. Vandana A Sethi ||Advance from Creditors ||1800000.00 ||Relative of Director of Company |
# Company has purchased goods (Stock in trade) worth Rs.24.50 lakhs from director ofthe company but we have not been provided with any of the confirmation w.r.t independentvaluation of the transaction to determine aram's length price.
9. Internal Control: -
There is a lack of internal control over financial reporting which is serious matter ofconcern as a statutory auditor of the company.
We conducted our audit in accordance with Standards of Auditing (SAs) specified undersection 143(10) of the companies Act 2013. Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statement sections our report. We are Independent of the Company in accordancewith the Code of Ethics issued by the Institute of Chartered Accountant of India togetherwith ethical requirements that are relevant to our audit of the financial statements underthe provisions of the Companies Act 2013 and the Rules there under and we have fulfilledout other Ethical responsibilities in accordance with the requirements and Code of Ethics.We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our Opinion.
Responsibilities of the Management and Those Charged with Governance for the StandaloneFinancial Statement.
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 preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In Preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattesrelated 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.
Auditor's Responsibilities for the Audit of the Standalone Financial Statement
Our Objective are to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.
As a 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 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 Standalone 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 ourauditor's 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 StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent 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 Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's 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.
Report on other legal and Regulatory Requirement
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 Companies Act 2013 we give in the Annexure I a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 purpose of our audit.
b) In our opinion proper books of account as required by law have not been kept by theCompany so far as appears from our examination of those books;
c) The Balance Sheet and 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 financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the companies(Accounts) 2014.
e) On the basis of written representations received from the directors for March 312020 and on record by the Board of Directors none of the directors is disqualified as onMarch 31 2020 from being appointed as a director in terms of section 164 (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 II to this report; and
g) With respect to the matters to be included in the Auditor's Report in accordancewith Rule 11 of the companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanation given to us:
i. The Company has not disclosed the impact of pending litigation and taxation dues onits financial position in its financial Statements;
ii. The Company did not have any long-term contract including derivative contract forwhich there are any material foreseeable losses.
iii. There were no amounts which are required to be transferred to the InvestorEducation and protection Fund by the Company.
Annexure I to the Independent Auditor's Report
Referred to in Paragraph 1 under the heading Report on other regulatoryrequirements of our report of even date
FIXED ASSETS: -
a) As informed to us the Company has only one fixed assets i.e. LAPTOP and company hasprepare Fixed Assets registered showing full particulars including quantitative detailsand situation of fixed assets.
b) As explained to us fixed assets according to the practice of the Company FixedAssets are physically verified by the management at reasonable intervals and no materialdiscrepancy has been noticed. Based on our audit procedures performed for the purpose ofreporting the true and fair view of the Ind AS financial Statements and according toinformation and explanations given by the management company is having onlyLaptop/computer which is available with the company which is reported in note-3 Propertyplant & equipment.
c) According to the information and explanations given to us the records examined byus and based on the examination of the invoice provided to us we report that the titleare held in the name of the Company as at the balance sheet date.
a) As informed to us the Inventory was physical verified by the management atreasonable intervals during the year. In our opinion having regard to nature and size ofthe business there is lack of internal control regards to possession of stock.
b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management were notreasonable and not adequate in relation to the size of the company and nature of itsbusiness.
c) In our opinion and according to the information and explanations given to us theCompany has not maintained proper records of inventory. Further company has not maintainedproper record w.r.t. Movement of stock and its valuation.
LOANS GIVEN BY THE COMPANY: -
According to the information and explanations given to us the Company has grantedunsecured loans to companies firms Limited Liability Partnerships or other parties butcompany not maintained register under section 189 of the Companies Act.
Company has not provided complete list and balance confirmation. Loans and advancesgiven by the company are prejudicial to the interest of the company as given without therepayment schedule and without proper security. We are unable to comment on overdue amountabove 90 days in absence of repayment schedule and company has not taken any steps torecover the same.
According to the information and explanations given to us the Company has takenunsecured loan but company has not maintained proper records.
LOAN TO DIRECTORS AND INVESTMENT BY THE COMPANY: -
In our opinion and according to the information and explanations given to us Provisionof section 185 of the Act in respect of loans investment guarantee and security madehave not been complied with by the company. Loan given to director Mr. Anirudh Sethiamounting to Rs. 19.33 lakhs which fall under contravention of section 185 of companiesAct.
According to the Information and Explanation given to us the Company has accepteddeposit in form of unsecured loan Rs.468889 from Main Dhal Mills Pvt Ltd Rs.1875543from Linkwise Exports Pvt Ltd and Rs.1192769 from director.
COST RECORD: -
As per the information and explanation provided by us to the management and to the bestof our knowledge and as explained the Central Government has not specified themaintenance of cost records under clause 148 (1) of the Act for the services of theCompany.
There are undisputed amounts payable in respect of Income Tax Sales Tax Wealth TaxService Tax Excise Duty Custom Duty Cess and other material statutory dues in arrearsas at 31st March 2021 for a period of more than six months for the date theybecome payable.
According to the information explanation and records verified by us the Company hasgenerally been regular in depositing goods and services Tax but company has not paidIncome Tax Service Tax Cess local authority Taxes and other material statutory duesapplicable to it with the appropriate authorities.
REPAYMENT OF LOANS:-
The Company has neither issued debentures nor availed any loan from Banks financialinstitutions or government. Therefore the provision of clause 3(viii) of the order arenot applicable the company.
THE UTILIZATION OF FUNDS:-
Based on our audit procedures performed for the purpose of reporting the true and fairview of the financial statements and according to the information and explanation given bythe management the company has not raised any fund by way of initial public offer orfurther public offer including debt instrument.
REPORTING OF FRAUD: -
Based on our audit procedures performed for the purpose of reporting the true and fairview of the financial statements and according to the information and explanation given bythe management we report that no fraud on or by the management has been noticed orreported during the year.
APPROVAL OF MANAGERIAL REMUNERATION: -
Based on our audit procedures performed for the purpose of reporting the true and fairview of the financial statements and according to the information and explanation given bythe management We report that the managerial remuneration has been paid if any orprovided in accordance with the requisite approvals mandated by the provision of section197 read with schedule V to the Act.
NIDHI COMPANY: -
In our opinion the Company is not a Nidhi company. Therefore the provision of clause3 (xiii) of the order are not applicable to the company and hence not commented upon.
RELATED PARTY TRANSACTIONS: -
Based upon the audit procedures performed for the purpose of reporting the ture andFair view of the financial statements and according to the information and explanationsgiven by the management transaction with the related parties except below are incompliance with section 177 and 188 of the companies Act 2013 where applicable and thedetails have been disclosed in the notes to the financial statements are required by theapplicable accounting standards.
|Sr. No. Name of Related Parties ||Nature of Transaction ||Amount in Rs. || |
Relationship of the party to the company
|1. Anirudh Sethi ||Purchase of Stock in trade ||2450000.00 ||Director of the company |
|2. Vandana A Sethi ||Advance from Creditors ||1800000.00 ||Relative of Director of Company |
PRIVATE PLACEMENT OF PREFERENTIAL ISSUES: -
According to the information and explanations given to us and on overall examination ofthe balance sheet the company has made preferential allotment of equity shares amountingto Rs.90750000 by way of shares issued for consideration other than cash by way ofpreferential allotment in the financial year 2017-18.
Company has received Rs.6000000.00 from 3 individuals and shown under preferentialissue application for share capital pending allotment. Out of the said amountRs.3000000 has been received in Dec-2018 and Rs.3000000 has been received in Jan-2019.Company has neither allotted the shares nor refunded the amount back to them. Company hasnot followed any of the procedure prescribed under section 62 and Sec 42 of Companies Act2013 read with Rule 13. This is straight violation of Sec 73 of Companies Act 2013.
NON-CASH TRANSACTIONS: -
Based on our audit procedures performed for the purpose of reporting the true and fairview of the financial statements and according to the information and explanation given bythe management the Company has not entered into any non-cash transaction with directorsor persons connected with him.
REGISTRATION UNDER RBI ACT: -
According to information and explanation given us the provision of section of section45-IA of the Reserve Bank of India Act 1934 are not applicable to the company.
Annexure II to the Independent Auditor's Report
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 AlexanderStamps and Coin Limited (the company') (Formerly known as Rudraksh Cap-Tech Ltd.) asof 31st March 2021 in conjunction with our audit of the standalone financial statements ofthe 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 (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required 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) 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's 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 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 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 an inadequate internal financial controls system overfinancial reporting and internal financial controls over financial reporting wereoperating less than effectively as at 31 March 2021 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia. We strongly suggest company's management to have independent internal inspectiondepartment along with internal audit system from independent agency to improvetransparency.
|For Sheetal Samriya & Associates |
|Chartered Accountants |
|Firm Registration No.: 011478C |
|CA Ankit Agrawal |
|Membership No.: 173127 |
|UDIN: 21173127AAAACU1055 |
|Place: Vadodara |
|Date: 25.06.2021 |