ARIHANT CAPITAL MARKETS LIMITED
Report on the Standalone Financial Statements
We have audited the standalone financial statements of ARIHANT CAPITAL MARKETS LIMITED(the Company) which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss (including the statement of Other Comprehensive Income)Statement of Changes in Equity and statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand 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 (the Act) in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2020 and profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Companies Act 2013. 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 ethical requirements that are relevantto our audit of the financial statements under the provisions of the Companies Act 2013and the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Key Audit Matters
KEY AUDIT MATTERS ('KAM') are those matters that in our professional judgment were ofmost significance in our audit of the standalone financial statements of the currentperiod. 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 matters described below to be the key audit matters to becommunicated in our report.
Impact of Covid-19 on Audit
Due to outbreak of pandemic Covid 19 and consequent country wide lockdown enforced byGovernment of India we could not carry out normal audit procedures by visiting the officeand audit was carried out using Work from Home approach. This is considered asKey Audit Matter since alternate audit procedures were performed for carrying out theaudit.
Due to work from home approach adopted we performed following alternativeaudit procedures:
Remote Access to financial accounting and taxation software on laptops of team members.
Various data and confirmation were received either electronically through email orthrough data sharing on drive.
For various audit procedures reliance was placed on scanned copies of originaldocuments shared with us electronically.
The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Director'sreport but does not include the financial statements and our auditor's report 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 identified above and in doing so consider whether such otherinformation is materially inconsistent with the financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the standalone financial statements
The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Companies Act 2013 (the Act) with respect to thepreparation of these standalone financial statements that give a true and fair view of thestate of affairs Profit/Loss (including other comprehensive income) changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS)specified under section 133. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Management and Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibility for 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 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 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 Requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order)issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified inthe paragraph 3 and 4 of the Order to the extent applicable.
2. Further 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 (including the Statement ofOther Comprehensive Income) the Statement of Changes in Equity and the statement of CashFlow dealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Companies Act 2013.
f) With respect to the adequacy of the internal financial control over financialreporting of the company with reference to these standalone financial statements and theoperating effectiveness of such control refer to our separate report in AnnexureB.
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 as detailed in note 41 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position as at 31st March2020.
ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
iv. The disclosures in the financial statements regarding holdings as well as dealingsin specified bank notes during the period from 8th November 2016 to 30th December 2016have not been made in these standalone financial statements since they do not pertain tothe financial year ended 31st March 2020.
3. With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act we report that the Company has paid remuneration to its directorsduring the year in accordance with the provisions of and limits laid down under section197 read with Schedule V to the Act.
|For Dinesh Ajmera & Associates ||CA Dinesh Ajmera |
|Chartered Accountants ||Partner |
|Firm Reg. No:011970C ||Membership No. :402629 |
| ||UDIN : 20402629AAAAAE1014 |
| ||Indore July 9 2020 |
ANNEXURE A REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING OF REPORT ONOTHER LEGAL AND REGULATORY REQUIREMENTS OF OUR REPORT OF EVEN DATE TO THE MEMBERS OFARIHANT CAPITAL MARKETS LIMITED ON THE STANDALONE ACCOUNTS FOR THE YEAR ENDED 31st MARCH2020
1. (a) The Company has maintained proper records to show full particulars includingquantitative details and situation of its fixed assets.
(b) The fixed assets of the Company are physically verified by the management atregular intervals. During the year as informed to us no discrepancies have been noticedon such verification. (c) According to the information and explanations given to us andthe records examined by us we report that the title deeds comprising all the immovableproperties of buildings are held in the Company's name as at the balance sheet date.
2. The securities held as stock in trade have been verified by the Management with thestatement of holdings provided by depository participants and brokers at reasonableintervals. In our opinion the frequency of verification 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 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 forthe repayment schedule however the rate of interest is stipulated for the loan granted tothe body corporate listed in the register maintained under section 189 of the Act. Theborrower has been regular in the payment of interest.
(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 Act with respectto the loans given investments made guarantees and securities given.
5. According to the information and explanation given to us the company has notaccepted deposits from the public within the meaning of the directives issued by theReserve Bank of India under provisions of section 73 to 76 or any other relevantprovisions of the Companies Act and the rules framed there under.
6. According to the information and explanations given to us the maintenance of costrecords has not been prescribed by the Central Government under sub-section (1) of section148 of the Companies Act 2013 in respect of the activities carried by the company.
7. a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company account in respect of undisputed statutory duesincluding Provident fund Employees' State Insurance Income-tax Goods and Services taxduty of Customs Cess and other material statutory dues have generally been regularlydeposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income tax Goods andServices tax duty of Customs Cess and other material statutory dues were in arrears asat 31 March 2020 for a period of more than six months from the date they became payable.b) According to the information and explanations given to us the following duesoutstanding of income tax have not been deposited by the Company on account of disputes:
|Name of the Statute ||Nature of Due ||Amount ||Amount paid under protest ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||16985250 ||16985250 ||2013-14 ||CIT Appeals |
|Income Tax Act 1961 ||Income Tax ||4244752 ||1006869 ||2014-15 ||CIT Appeals |
|Income Tax Act 1961 ||Income Tax ||539430 ||539430 ||2017-18 ||CIT Appeals |
8. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to banks financialinstitutions or government and there are no dues to debenture holders during the year.
9. In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly paragraph 3(ix)of the Order is not applicable to the Company.
10. To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.
11. In our opinion and according to the information and explanations given to usmanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.
12. According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under Section 406 of the Act. Accordinglyparagraph 3(xii) of the Order is not applicable to the Company.
13. According to the information and explanation given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with sections 177 and 188 of Companies Act 2013 where applicable and thedetails of such transactions have been disclosed in financial statements as required bythe applicable Indian accounting standards.
14. According to the information and explanation 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. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.
15. According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable to the Company.
16. According to the information and explanation given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.
|For Dinesh Ajmera & Associates ||CA Dinesh Ajmera |
|Chartered Accountants ||Partner |
|Firm Reg. No:011970C ||Membership No. :402629 |
| ||UDIN : 20402629AAAAAE1014 |
| ||Indore July 9 2020 |
ANNEXURE B AS REFERRED TO IN PARAGRAPH 2(f) UNDER THE HEADING OFREPORT ON LEGAL AND REGULATORY REQUIREMENTS OF OUR REPORT OF EVEN DATE TO THEMEMBERS OF ARIHANT CAPITAL MARKETS LIMITED ON THE STANDALONE ACCOUNTS FOR THE YEAR ENDED31st MARCH 2020
Report on the Internal Financial Controls with reference to the aforesaid Standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013
We have audited the internal financial controls with reference to standalone financialstatements of Arihant Capital Markets Limited (the Company) as of 31st March2020 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 31st March 2020 based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India (the Guidance Note).
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 with reference to these standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the Guidance Note) and the Standards onAuditing issued by ICAI 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 with reference to these standalone financial statements were 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 with reference to thesestandalone financial statements and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting with reference to these standalonefinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto 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 with reference to these standalone financial statements.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that;
1. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
3. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial with reference to standalonefinancial statement including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to standalone financial statements to future periods are subject to the riskthat the internal financial control with reference to standalone financial statement maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.
|For Dinesh Ajmera & Associates |
|Chartered Accountants |
|Firm Reg. No:011970C |
|CA Dinesh Ajmera |
|Membership No. :402629 |
|UDIN : 20402629AAAAAE1014 |
|Indore July 9 2020 |