The Members of
Arco Leasing Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Arco LeasingLimited ("the Company") which comprise the Balance Sheet as at March 31 2019and the Statement of Profit and Loss the Statement of Changes in Equity and Statement ofCash Flows for the year then ended and notes to the financial statements including asummary of significant 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 standalone financial statements give the Information requiredby the Companies Act 2013 in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and its profit changes in equity and itscash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013 ("the Act"). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the independence requirements that arerelevant to our audit of the financial statements under the provisions of the CompaniesAct 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
We have determined that there are no key audit matters to communicate in our report.
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 Directors Report but does notinclude the financial statements and our auditor's report thereon. The Directors Report isexpected to be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the Directors Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance anddescribe actions applicable in the applicable laws and regulations.
Responsibility of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance 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 mattersrelated to going concern and using the going concern basis of accounting unless the Boardof Directors either intends to liquidate the Company or to cease operations or has norealistic alternative 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 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 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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 Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 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 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 the Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on March312019 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 and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company
For N KR & CO
Firm's Registration No. 127820 W
Membership No. 48453
Date: May 30 2019
ANNEXURE REFERRED TO IN PARAGRAPH 1 REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS' OF OUR REPORT TO THE MEMBERS OF ARCO LEASING LIMITED OF EVEN DATE FOR THEYEAR ENDED MARCH 31 2019
(i) Since the company does not have fixed assets as at the end of the year. Clauses (i)(a) (i) (b) and (i)
(c) are not applicable
(ii) Since the company does not have inventory Clause (ii) is not applicable
(iii) Based on the audit procedures applied by us and according to the information andexplanations provided by the management the company has not granted any loans secured orunsecured to companies firms Limited Liability Partnerships or other parties covered inthe register maintained under section 189 of the Companies Act. 2013.
(iv) In our opinion and according to the information and explanations given to ussince during the year there are no transactions of loans investments guarantees andsecurity compliance of the provisions of section 185 and 186 of the Companies Act 2013 donot arise.
(v) In our opinion and according to the information and explanations given to usduring the year the company has not accepted any deposits from the public within themeaning of the provisions of sections 73 to 76 or any other relevant provisions of theCompanies Act and the rules framed there under.
(vi) As informed to us maintenance of cost records has not been specified by theCentral Government under sub-section (1) of section 148 of the Companies Act 2013.
(vii) (a) According to the records of the company the company is generally regular indepositing undisputed statutory dues of income-tax (except non deposit of advance incometax) with the appropriate authorities. According to the records of the company thecompany does not have undisputed statutory dues of provident fund employees' stateinsurance goods and service tax service tax sales-tax duty of customs duty of excisevalue added tax and cess. The arrears of statutory dues of income tax of? 0.88 Lakhs as atMarch 31 2019 were outstanding for a period of more than six months from the date theybecame payable.
(b) According to the records of the company there are no dues of income tax sales taxor service tax or duty of customs or duty of excise or value added tax have not beendeposited on account of any dispute.
(viii) As the company has not borrowed any amount from Bank or Financial Institution ordebenture holders. the reporting under this clause do not arise
(ix) In our opinion and according to the information and explanations given to us thecompany has not raised moneys by way of initial public offer or further public offer(including debt instruments) and during the year the company has not raised any term loan
(x) Based upon the audit procedures performed and information and explanations given bythe management we report that no fraud by the company or any fraud on the company by itsofficers or employees has been noticed or reported during the course of our audit.
(xi) Since the company has not paid/provided managerial remuneration Clause (xi) is notapplicable
(xii) Since the company is a not Nidhi Company Clause (xii) is not applicable
(xiii) In our opinion and according to the information and explanations given to usall transactions with the related parties are in compliance with sections 177 and 188 ofCompanies Act 2013 and the details have been disclosed in the Financial Statements asrequired by the applicable accounting standards.
(xiv) According to the records of the company in respect of preferential allotment orprivate placement of shares made by the company during the year under review therequirement of section 42 of the Companies Act 2013 have been complied with and theamount raised have been partly used for the purposes for which the funds were raised andpart utilisation thereof is pending.
(xv) According to the records of the company and in our opinion and according to theinformation and explanations given to us the company has not entered into any non-cashtransactions with directors or persons connected with him and accordingly compliance withthe provisions of Section 192 of Companies Act 2013 does not arise.
(xvi) In our opinion and according to the information and explanations given to usthough the company's financial assets are more than 50% of total assets as at the end ofthe year and income from financial assets during the year is more than 50% of totalincome in view of interest on deposits with bank (financial asset) being of short termnature not to form part of principal business of the company the company is not requiredto be registered under section 45-IA of the Reserve Bank of India Act 1934.
For N K R & CO
Firm's Registration No. 127820 W
Membership No. 48453
Date: May 30 2019
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF ARCO LEASING 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 ArcoLeasing Limited ("the Company") as of March 312019 in conjunction with ouraudit of the Standalone financial statements of the Company for the year ended on thatdate.
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 th'e Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by the Institute ofChartered Accountants of India and deemed to be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 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 judgement including the assessment of the risks of materialmisstatement 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 regardjng the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance v/ith 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 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 N K R & CO
Firm's Registration No. 127820 W
K.M. Mahadik M
Membership No. 48453
Date: May 30 2019.