ARIHANT CAPITAL MARKETS LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of ARIHANT CAPITALMARKETS LIMITED ("the Company") which comprise the Balance Sheet as at 31March 2019 the Statement of Profit and Loss the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2019 and its profit and its cash 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. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have ful lled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsigni cance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
We have determined that there is no key audit matter to communicate in our report.
Management's Responsibility 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 and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement 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 managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
That Board of Directors is also responsible for overseeing the Company's financialreporting process.
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.
A further description of our responsibilities for the audit of the financial statementsis included in Annexure "A" of this auditor's report.
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) 143 of the act wegive in the Annexure "B" a statement on the matters specified in the paragraph3 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 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) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors is disqualied as on 31 March 2019 from being appointed as a director in terms of Section 164 (2) ofthe Act.
(f) With respect to the adequacy of the internal financial control over financialreporting of the company and the operating effectiveness of such control refer to ourseparate report in Annexure "C"; and (g) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements as referred to in Note 28 to the FinancialStatements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE "A" REFERRED TO IN PARAGRAPH UNDER THE HEADING OF "AUDITOR'SRESPONSIBILITY" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF ARIHANT CAPITAL MARKETSLIMITED ON THE ACCOUNTS FOR THE Y EAR ENDED 31 MARCH 2019
As part of audit in accordance with SAs we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
4. Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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.
5. 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 ndings including anysignificant de ciencies in internal control that we identify during our audit.
Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be in uenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Financial Statements.
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 signi cance 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.
ANNEXURE B" REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING OF"REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATETO THE MEMBERS OF ARIHANT CAPITAL MARKETS LIMITED ON THE ACCOUNTS FOR THE Y EAR ENDED 31MARCH 2019
1. a) The Company has maintained proper records to show full particulars includingquantitative details and situation of its fixed assets.
b) All fixed assets of the Company are physically veri ed by the management at regularintervals which in our opinion is reasonable considering the size of the Company and thenature of assets. During the year as informed to us by management no materialdiscrepancies have been noticed on such veri cation.
c) The title deeds of immovable properties are held in the name of the Company.
2. The securities held as stock in trade have been veri ed by the Management with thestatement of holdings provided by depository participants and brokers at reasonableintervals. In our opinion the frequency of veri cation is reasonable and no materialdiscrepancies between the book records and the statement of holdings provided by NSDLother depository participants and brokers have been noticed.
3. The Company has granted unsecured loan to two companies covered in the registermaintained under section 189 of The Companies Act 2013.
(a) The rate of interest and other terms and conditions on which the loan had beengranted to the body corporate listed in the register maintained under section 189 of theAct are not prejudicial to the interest of the company.
(b) There are no stipulations for the repayment schedule however the rate of interestis stipulated for the loan granted to the body corporate listed in the register maintainedunder section 189 of the Act. The borrower has been regular in the payment of principaland interest wherever stipulated.
(c) As per records of the Company and according to the information and explanationgiven to us no amount of principal and interest is overdue.
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of loans investment guarantees and security.
5. In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from public.
6. We are informed that maintenance of cost records has not been prescribed by theCentral Government under section 148 of The Companies Act 2013 in respect of theactivities carried on by the Company.
7. a) As per the records of the Company the company is regular in depositing thestatutory dues including provident fund income tax goods and service tax cess and othermaterial statutory dues applicable to it with the appropriate authorities. According tothe information and explanations given to us no undisputed amount in respect of incometax goods and service tax custom duty excise duty cess applicable to it is outstandingas at the last day of the financial year concerned for a period of more than six monthsfrom the date they became payable.
b) According to the information and explanations given to us there are no dues ofincome tax goods and service tax custom duty excise duty cess which have not beendeposited on account of any dispute.
8. The Company has not defaulted in payments of any dues to financial institutionsbanks or debenture holders. The Company did not have any dues to debenture holder duringthe year.
9. According to the information and explanation given to us and the record examined byus the Company has not raised any money by way of initial public offer or further publicoffer. Hence clause 3(ix) of the order is not applicable.
10. Based upon the audit procedures performed and information and explanations given bythe management we report that no material fraud on or by the Company has been noticed orreported during the period covered by our audit.
11. According to the information and explanation given to us and the record examined byus the Company has provided managerial remuneration during the year in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Companies Act 2013.
12. The Company is not Nidhi Company. Hence clause 3(xii) of the order is notapplicable.
13. According to the information and explanation given to us and the record examined byus all the transactions with the related parties are in compliance with sections 177 and188 of Companies Act 2013 where applicable and the details have been disclosed infinancial statements etc. as required by the applicable accounting standards.
14. According to the information and explanation given to us and the record examined byus the company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year.
15. According to the information and explanation given to us the Company has notentered into any non cash transactions with directors or persons connected with him.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE "C" AS REFERRED TO IN PARAGRAPH 2(f) UNDER THE HEADING OF"REPORT ON LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THEMEMBERS OF ARIHANT CAPITAL MARKETS LIMITED ON THE ACCOUNTS FOR THE Y EAR ENDED 31 MARCH2019
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 ArihantCapital Market Limited ("the Company") as of March 31 2019 in conjunction withour audit 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 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 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 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; 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 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 Dinesh Ajmera & Associates
Firm Reg. No:011970C
CA Dinesh Ajmera
Membership No. : 402629
Indore May 21 2019