The Members of
ARMAN FINANCIAL SERVICES LIMITED
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying Standalone Financial Statements of ArmanFinancial Services Limited (the 'Company') which comprise the Balance Sheet as atMarch 31 2021 the Statement of Profit and Loss Statement of Cash Flow for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.
2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (the'Act') in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2021 and its profit andits cash flows for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditingspecified under Section 143(10) of the Act. 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 ('ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Emphasis of Matter
4. As described in Note 45 to the Standalone Financial Results theextent to which the COVID-19 pandemic will impact the company's operations and financialperformance is dependent on future developments which are highly uncertain.
Our opinion is not modified in respect of the above matters.
Key Audit Matters
5. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statementsof the current period.These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
Key audit matters identified in our audit is in respect of
Provision for Expected Credit Losses on loans as follows:
Provision for Expected Credit Losses on loans
[Refer Para 3.6 for the accounting policy and Note 3 for the relateddisclosures]
|Key Audit Matter ||How our audit addressed the key audit matter |
|As at March 31 2021 the Company has financial assets (loans) amounting to C15174.60 Lakhs. As per Ind AS 109- Financial Instruments the Company is required to recognise allowance for expected credit losses on financial assets. ||Our audit procedures in relation to expected credit losses were focused on obtaining sufficient appropriate audit evidence as to whether the expected credit losses recognised in the standalone financial statements were reasonable and the related disclosures in the standalone financial statements made by the management were adequate. These procedures included but not limited to the following: |
|Under Ind-AS framework the management had to estimate the provision for expected credit losses as at March 31 2021. Expected credit loss cannot be measured precisely but can only be estimated through use of statistics. The calculation of expected credit losses is complex and requires exercise of judgment around both the timing of recognition of impairment provisions and estimation of the amount of provisions required in relation to loss events. Further due to COVID Pandemic and moratorium granted by the company the calculation of expected credit loss had further challenges as the future outcome is dependent on various events the outcome of which is uncertain. ||(a) obtaining an understanding of the model adopted by the Company for calculation of expected credit losses including how management calculated the expected credit losses and the appropriateness data on which the calculation is based; |
|The management has recognised a provision of Rs.1383.64 Lakhs in the Statement of Profit and Loss for the year ended March 31 2021. ||(b) testing the accuracy of inputs through substantive procedures and assessing the reasonableness of the assumptions used; |
|Considering the significance of the above matter to the standalone financial statements and since the matter required our significant attention to test the calculation of expected credit losses we have identified this as a key audit matter for current year audit. ||(c) developing a point estimate by making reference to the expected credit losses recognised by entities that carry comparable financial assets; |
| ||(d) testing the arithmetical calculation of the expected credit losses; |
| ||(e) verifying the adequacy of the related disclosures; and |
| ||(f) Obtaining written representations from management whether they believe significant assumptions used in calculation of expected credit losses are reasonable. |
Information other than the Financial Statements and Auditor's Reportthereon
6. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the financial statements and our auditor's report thereon.The Annual Report is expected to be made available to us after the date of this auditor'sreport.
Our opinion on the financial statements does not cover the otherinformation and we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.
When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and as may be legally advised.
Responsibilities of Management and Those Charged with Governancefor the Standalone Financial Statements
7. The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the state of affairs profit andcash flows of the Company in accordance with the accounting principles generally acceptedin India specified under Section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring 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.
8. In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
9. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the
10. Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing weexercise professional judgment and maintain professional scepticism throughout the audit.We also:
Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3) (i) of the Act we are also responsible for explaining our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
12. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
13. We aIso provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
14. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
15. As required by the Companies (Auditor's Report) Order 2016 (the'Order') issued by the Central Government of India in terms of Section 143(11) of the Actwe give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.
16. Further to our comments in Annexure A as required by Section143(3) of the Act we report that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination ofthose books;
c) The standalone financial statements dealt with by this report are inagreement with the books of account;
d) In our opinion the aforesaid standalone financial statements complyaccounting principles generally accepted in India specified under Section 133 of the Act.
e) On the basis of the written representations received from thedirectors and 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;
f) We have also audited the internal financial controls over financialreporting (IFCoFR) of the Company as on March 31 2021 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date and ourreport as per Annexure B expressed an unmodified opinion;
g) With respect to the other matters to be included in the Auditor'sReport in accordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (asamended) in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in the standalone financial statements; (Refer Note 29 to the financialstatements);
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company..
|For Samir M Shah & Associates |
|Chartered Accountants |
|[Firm Regd. No. 122377W] |
|Sneha Jethani Partner |
|Place: Ahmedabad |
|[M. No. 160932] |
|Date: 24.06.2021 |
|UDIN: 21160932AAAAAZ8425 |
Annexure"A" to the Independent Auditor's Report
Referred to in paragraph 15 of our report of even date to the Membersof ARMAN FINANCIAL SERVICES LIMITED for the year ended March 312021.
1. In respect of Fixed Assets:
(a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets on the basis of availableinformation.
(b) As per the information and explanations given to us the managementat reasonable intervals during the year in accordance with a programme of physicalverification physically verified the fixed assets and no material discrepancies werenoticed on such verification as compared to the available records.
(c) As explained to us the title deeds of all the immovable propertiesare held in the name of the Company.
2. In respect of its Inventories:
The Company does not have any Inventories and hence clause 3(ii) of theCompanies (Auditor's Report) Order 2016 is not applicable.
3. In respect of Loans and Advances granted during the year:
As per information and explanation given to us the Company has grantedsecured and unsecured loans to Companies covered in the registered maintained undersection 189 of the Companies Act 2013 and with respect to the sa me.
a. in our opinion the terms and conditions of grant of such loans areprima facie not prejudicial to the Company's interest.
b. the schedule of repayment of principal and payment of interest hasbeen stipulated and the repayment / receipts of the principal amount and the interest areregular;
c. there is no overdue amount in respect of loans granted to suchcompanies.
4. Loans Investments and Guarantees:
According to the information and explanation given to us the Companyhas complied with the provisions of Section 185 & 186 of the Companies Act 2013 withrespect to the loans given investments made and guarantees and securities given.
5. During the year the Company has not accepted any deposits frompublicand hence the directives issued by the Reserve Bank of India and the provisions ofsections 73 to 76 or any other relevant provisions of the Companies Act and the rulesframed there under are not applicable to the Company. Therefore clause (v) of Companies(Auditor's Report) Order 2016 is not applicable.
6. According to the information and explanations given to us theCompany is not required to maintain cost records as required by the central governmentunder sub section (1) of section 148 of the Companies Act 2013. Hence clause (vi) of the(Auditor's Report) Order 2016 is not applicable.
7. In respect of Statutory Dues:
(a) According to the records of the Company the Company is by andlarge regular in depositing with appropriate authorities undisputed statutory duesincluding provident fund employee's state insurance income tax goods and service taxwealth tax duty of customs duty of excise cess and any other statutory dues with theappropriate authorities applicable to it.
According to the information and explanations given to us noundisputed amounts payable in respect statutory dues which remained outstanding as atMarch 31 2021 for a period of more than six months from the date they became payable.
(b) According to the records of the Company following dues of incometax sales tax wealth tax or service tax or duty of customs or duty of excise or valueadded tax which have not been deposited on account of dispute.
|Name of Statute ||Nature of Dues ||Amount (Rs. In Lakhs) ||Period to Which amount Relates (A.Y.) ||Forum Where Dispute is Pend- Remarks if any ing |
|Income Tax Act 1961 ||Income Tax ||594.23 ||2012-13 ||CIT (Appeals) |
8. Based on our audit procedure and according to the information andexplanation given to us we are of the opinion that the Company has not defaulted inrepayment of dues to a financial institutions banks or debenture holders.
9. According to the information and explanations given to us theCompany had not raised any money by way of public issue during the year. According to theinformation and explanations given to us and on an overall examination of the balancesheet of the Company in our opinion the term loans taken during the year were appliedfor the purpose for which they were obtained.
10. Based upon the audit procedures performed and information andexplanations given by the management we report that no fraud by the Company or any fraudon the Company by it's officer or employees has been noticed or reported during the courseof our audit.
11. In our opinion and according to the information and explanationsgiven to us the Company has paid managerial remuneration which is in accordance with therequisite approvals mandated by the provisions of section 197 read with schedule V of TheCompanies Act 2013.
12. In our opinion and according to the information and explanationsgiven to us the provisions of special statute applicable to chit funds and nidhi / mutualbenefit funds / societies are not applicable to the company. Hence clause (xii) of theCompany's (Auditor's Report) Order 2016 is not applicable.
13. In our opinion and according to the information and explanationsgiven to us the transactions entered by the Company with related parties are incompliance with the provisions of section 177 and 188 of The Companies Act 2013 anddetails thereof are properly disclosed in the financial statements.
14. During the year the Company has not issued any preferentialallotment or private placement of shares or fully or partly convertible debentures.
15. The Company has not entered in to any non cash transactions withthe directors or persons connected with him during the year hence section 192 of theCompanies Act 2013 and clause (xvi) of Company's (Auditor's Report) Order 2016 is notapplicable.
16. In our opinion and according to the information and explanationgiven to us the Company is registered under section 45-IA of Reserve Bank of India Act1934 and registration certificate for the same has been obtained.
|For Samir M Shah & Associates |
|Chartered Accountants |
|[Firm Regd. No. 122377W] |
|Sneha Jethani Partner |
|Place: Ahmedabad |
|[M. No. 160932] |
|Date: 24.06.2021 |
|UDIN: 21160932AAAAAZ8425 |
Annexure"B" to the Independent Auditor's Report
Referred to in paragraph 16 (f) of our Report of even date to theMembers of ARMAN FINANCIAL SERVICES LIMITED for the year ended March 312021.
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of ARMAN FINANCIAL SERVICES LIMITED as of March 31 2021 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 andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the guidance note on audit of internal financial controls overfinancial reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business.including adherence to Company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial informationas required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the guidance note on audit of internal financial controls over financialreporting (the "Guidance Note") and the standards on auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls with reference to StandaloneFinancial Statements. Those standards and the guidance note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that:
(1) Pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;
(2) Provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorizations of management and directors of theCompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the Company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2021 basedon the internal control over financial reporting 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.
|Place: Ahmedabad ||For Samir M Shah & Associates Chartered Accountants [Firm Regd. No. 122377W] Sneha Jethani Partner [M. No. 160932] |
|Date: 24.06.2021 ||UDIN: 21160932AAAAAZ8425 |