ON THE FINANCIAL STATEMENTS
The Members of Anupam Finserv Limited
We have audited the accompanying financial statements of Anupam Finserv Limited("the Company") which comprise the Balance Sheet as at 31stMarch 2021 the statement of Profit and Loss including the statement of OtherComprehensive Income the cash flow statement and the statement of changes in equity forthe year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 as amended ("the Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at 31st March 2021 itsprofit including other comprehensive income its cash flows and the changes in equity forthe year ended on that date.
Basis for Opinion
We conducted our audit in accordance with Standards on 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 FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the financial statements.
Emphasis of Matter
We draw attention to Note 39 to the financial statements which describes theuncertainty caused by Novel Coronavirus (COVID-19) pandemic with respect to the Company'sestimates of impairment of loans to customers and that such estimates may be affected bythe severity and duration of the pandemic. Our opinion is not modified in respect of thismatter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements for the financial year ended 31sMarch 2021. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the following matters to be the keyaudit matters to be communicated in our report:
|Sr. Key Audit Matter No. ||Auditor's Response |
|a. Impairment of financial assets (expected credit losses) (as described in Note No 4 of the financial statements) ||Principal Audit Procedures: |
|Ind AS 109 requires the Company to recognise impairment loss allowance towards its financial assets (designated at amortised cost) using the expected credit loss (ECL) approach. Such ECL allowance is required to be measured considering the guiding principles of Ind AS 109 including: || |
| ||We read and assessed the Company's accounting policies for impairment of financial assets and their compliance with Ind AS 109 read with RBI guidelines. |
| || We tested the criteria for staging of loans based on their past-due status to check compliance with requirement of Ind AS 109 read with RBI guidelines. |
| unbiased probability weighted outcome under various scenarios; ||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 evaluated the reasonableness of the management estimates by understanding the process of ECL estimation and tested the controls around data extraction and validation. |
| impact arising from forward looking macroeconomic factors and; || Tested the ECL model including assumptions and underlying computation. |
| availability of reasonable and supportable information without undue costs. || |
|Applying these principles involves significant estimation in various aspects such as: || |
| grouping of borrowers based on homogeneity; || |
| staging of loans and estimation of behavioural 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. || |
|b. Evaluation of Loans and Advances Given: ||Principle Audit Procedures: |
|Being a non-banking finance Company holding registration under section 45IA of the Reserve Bank of India Act 1934 the loans and advances given by the Company constitute the major component out of the total assets of the Company. Therefore there is a significant inherent exposure of such risk- bearing assets to the uncertainties of default in interest or principle or both. ||Our Audit Procedures involved assessment of Company's policy and control system along with the review of procedures adopted for determining eligibility and thereafter sanctioning of the loans and advances. Furthermore we have selected a sample of loan agreements/ contracts and through inspection of evidence and material available and placed on record verified whether the same comply with set policies of the Company for determining the operating effectiveness of such controls. |
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 financial statements but does not include the financial statements and our auditor'sreport thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe 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 Those Charged with Governance for the FinancialStatements
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 financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the accounting Standards specified under section 133 of the Act read withthe Companies (Indian Accounting Standards) Rules 2015 as amended. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 AS financial statements thatgive a 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 charged with governance are also responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibilities for the Audit of the 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 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 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 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 Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness 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 for thefinancial year ended 31st March 2021 and are therefore the key audit matters.We describe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
With respect to the other matters to be included in the Auditor's Report in accordancewith the requirements of section 197(16) of the Act in our opinion and to the best of ourinformation and according to the explanations given to us the Company has not paid/provided for any remuneration to its directors during the year.
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 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 company has no branch offices whose accounts are audited by branch auditors;
(d) the Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income and the Statement of Cash Flow and the Statement of Changes inEquity dealt with by this Report are in agreement with the books of account;
(e) 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) Rules 2015;
(f) 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 March 31 2021 from being appointed as a director in terms of Section164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
(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 in our opinionand to the best of our information and according to the explanations given to us:
i. there are no pending litigations against the Company.
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 during the year ended March 31 2021.
Annexure - A to the Independent Auditors' Report
Annexure A referred to in paragraph under the heading 'Report on other legal andregulatory requirements' of our report of even date
(i) Th e Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
These fixed assets have been physically verified by the management at regular intervalconsidering the size of the Company and nature of assets. No material discrepancies havebeen noticed on such verification.
According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company does not have any immovableproperties.
(ii) The Company's business does not involve inventories and accordingly therequirements under clause 3(ii) of the Order are not applicable to the Company and hencenot commented upon.
(iii) The Company has granted loans to the companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theAct. The terms and conditions thereof are not prejudicial to the interest of the Company.The principal and the interest have been paid as stipulated and there has been no overduein respect of principal and interest.
(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) In our opinion and according to the information and explanations given to us theCompany being a nonbanking financial company registered with the Reserve Bank of Indiathe provisions of sections 73 to 76 or any other relevant provisions of the Act and theCompanies (Acceptance of Deposits) Rules 2014 as amended with regard to the depositsaccepted are not applicable to the Company. We are being informed by the Management thatthe company is registered as a non-deposit taking NBFC with the RBI.
(vi) According to the information and explanations given to us the Central Governmenthas not prescribed maintenance of cost records under section (1) of section 148 of theCompanies Act 2013 with respect to the Company.
(vii) a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Income tax have been regularlydeposited during the year by the Company with the appropriate authorities. According tothe information and explanations given to us no undisputed amounts payable in respect ofsuch statutory dues were in arrears as at 31st March 2021 for a period of more than sixmonths from the date they became payable.
b) According to information and explanation given to us there are no disputed dueswith statutory authorities.
(viii) According to the information and explanations given to us and on the basis ofrecords of the Company it has not defaulted in repayment of dues to any financialinstitution banks government or debenture holders during the year.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year.
(x) Based upon the audit procedures performed for the purpose of reporting on the trueand fair view of the financial statements and according to the information andexplanations given by the Management we report that no fraud by the Company or nomaterial fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.
(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the company has not paid / provided anyManagerial Remuneration and accordingly the requisite approvals mandated by the provisionsof section 197 read with Schedule V to the Act are not required.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly Clause (xii) of the Order is not applicable
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvi) On the basis of examination of relevant records and according to the informationand explanations given to us the Company is required to be registered under section 45-IAof the Reserve Bank of India Act 1934 and holds a valid certificate of registration underthe same.
Annexure -B to the Independent Auditors' Report
Annexure B referred to in paragraph under the heading 'Report on other legal andregulatory requirements' of our report of even date
Report on the Internal Financial Controls under Clause (i) of Sub-section (3) ofSection 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of AnupamFinserv Limited ("the Company") as of March 31 2021 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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") 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.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial 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 2021 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 J. K. Shah & Co. Chartered Accountants |
|Firm's registration number: 109606W |
|San jay Dhruva |
|Partner Membership number: 038480 |
|UDIN: 21038480AAAABT6166 |
|Place: Mumbai |
|Date: June 29 2021 |