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Ascom Leasing & Investments Ltd.

BSE: 535350 Sector: Financials
NSE: ASCOM ISIN Code: INE08KD01015
BSE 05:30 | 01 Jan Ascom Leasing & Investments Ltd
NSE 05:30 | 01 Jan Ascom Leasing & Investments Ltd

Ascom Leasing & Investments Ltd. (ASCOM) - Auditors Report

Company auditors report

A Opinion

We have audited the accompanying standalone financial statements of Ascom Leasing &Investments Limited ("the Company") which comprise the standalone balance sheetas at March 31 2020 and the standalone Statement of Profit and Loss standaloneStatement of changes in Equity and standalone statement of cash flows for the year thenended and notes to the financial statements including a summary of significantaccounting 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 ('Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2020 its profit changes in equity and its cashflows for the year ended on that date.

B Basis of Opinion

We conducted our audit in accordance with the standards on auditing specified undersection 143 (10) of the Companies Act 2013. Our responsibilities under those standardsare further described in the auditor's responsibilities for the audit of the standalonefinancial 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 thestandalone financial statements under the provisions of the Coampnies Act 2013 and therules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the code of ethics.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

C Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Sr. No. Key Audit Matters Auditor's Response
1 Impact of COVID-19 Substantive Tests
On 11 March 2020 the World Health Organisation declared the Novel Coronavirus (COVID-19) outbreak to be a pandemic. • Focus on appropriate application of accounting principles validating completeness and accuracy of the data and reasonableness of assumptions used in the business.
We have identified the impact of and uncertainty related to the COVID-19 pandemic as a key element and consideration for recognition and measurement of impairment on loans and advances on account of Involving special efforts to test the business methodology and reasonableness of assumptions used including management overlays.
- short and long term macroeconomic effect on businesses in the country and its consequential first order and cascading negative impact on revenue and employment generation opportunities. Test of details over calculation of impairment allowance for assessing the completeness accuracy and relevance of data.
Model calculations testing through reperformance where possible.
- impact of the pandemic on the Company's customers and their ability to repay dues; and • The appropriateness of management's judgments was also independently reconsidered in respect of calculation methodologies economic factors the period of historical loss rates used and the valuation of recovery assets and collateral.
- application of regulatory package announced by the Reserve Bank of India (RBI) on asset classification and provisioning.
Assessing the appropriateness of management rationale for determination of criteria for SICR considering both: adverse effects of COVID-19 and mitigants in the form of the RBI/Government financial relief package.
Management has conducted a qualitative assessment of significant increase in credit risk ('SICR') of its loan and advances with respect to the moratorium benefit to borrowers prescribed by the RBI and considered updated macro-economic scenarios to factor in the potential impact of COVID-19 on expected credit loss provision.
Assessing the appropriateness of changes made in macroeconomic factors and management overlays to calibrate the risks that are not yet fully captured by the existing model.
Checked the reasonableness of management's assessment of grading of severity of impact of COVID-19 on its loan portfolio and the resultant impairment thereto.
Assessing the factual accuracy and appropriateness of the additional financial statements disclosures made by the Company regarding impact of COVID-19.
2 Information Technology
IT Systems and Controls Our audit procedures to assess the IT system access management included the following.
The Company's key financial accounting and reporting processes are highly dependent on the automated controls in information systems such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being materially misstated. The Company primarily uses three systems for its overall financial reporting.
Genral IT controls/user access management
• We tested a sample of key controls operating over the information technology in relation to financial accounting and reporiting systems including system access and system change management program development and computer operations.
We tested the design and operating effecetiveness of key controls over user access management which includes granting access right new user creation removal of user rights and preventative control designed to enforce segregation of duties.
We have focused on user access management change management segregation of duties system reconciliation controls and system application controls over key financial accounting and reporting systems.
For a selected group of key controls over financial and reporting system we independently performed procedures to determine that these controls remained unchanged during the year or were changed following the standard change management process.
Sr. No. Key Audit Matters Auditor's Response
• Evaluating the design implementation and operating effectiveness of the significant accounts-related IT automated controls which are relevant to the accuracy of system calculation and the consistency of data transmission.
• Other areas that were independently assessed included password policies system configurations system interface controls controls over changes to applications and databases and that business users developers and production support did not have access to change applications the operating system or databases in the business environment.

D Information other than the financial statements and auditors' report thereon

The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the financial statements and our auditor's report thereon. The Director's reportto the shareholders is expected to be made available to us after the date of thisAuditor's Report.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

E Responsibility of the Management and those charged with governance for the stanaloneFinancial Statements

The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Coampnies Act 2013 ('the Act') with respect to the preparationof these 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. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements Management and the Board of Directorsare responsible 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 board of directors are also responsible for overseeing the Company's financialreporting process.

F Auditor's Responsibilities for the audit of the standalone financial statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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 SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis 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 standalonefinancial statements

whether 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.

• 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial

statements including the disclosures and whether the standalone financial statements

represent the underlying transactions and events in a manner that achieves fairpresentation.

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.

G Report on Other Legal and Regulatory Requirements

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 "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

As required by section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The standalone balance sheet the standalone statement of profit and loss thestandalone Statement of Changes in Equity and the standalone cash flow statement dealtwith by this report are in agreement with the books 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 March31 2020 taken on record by the board of directors none of the directors is disqualifiedas on March 31 2020 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 B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us thecompany had paid/provided for managerial remuneration in accordance with the requisiteapprovals mandated by provisions of section 197 read with Schedule V to the Act; and

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us;

(i) The Company does not have any pending litigations which would impact its standalonefinancial position;

(ii) The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses; and

(iii) There has been no amount which was required to be transferred to the InvestorEducation and Protection Fund by the Company during the year.

As per our report of even date For K A R M A & CO LLP Chartered Accountants ICAIFRN : 127544W/W100376

Sd/-
Rakesh M Ruparelia
Designated Partner
Place : Surat Membership No. 124077
Date : 29-07-2020 UDIN : 20124077AAAAID2710

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Paragraph 1 under 'Report on other legal and regulatory requirements'section of our report to the members of Ascom Leasing & Investments Limited of evendate)

1 In respect of its fixed assets:

(a) According to the information and explanation given to us the company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) According to the information and explanation given to us all the fixed assets havebeen physicaly verified by the management during the year and no material discrepancieswere noticed on such verification.

(c) According to the information and explanation given to us and in absence of anyimmovable properties as at the end of the year the Provisions of clause 1(iii) of theorder are not applicable to the company.

2 In respect of its inventories:

The company is in the business of lending and hence does not have physicalinventories. Therefore clause (ii) of paragraph 3 of the Order is not applicable to thecompany.

3 Loans granted by the company:

According to the information and explanations provided to us the company has notgranted any loans secured or unsecured to the companies firms or other parties covered inthe register maintained under section 189 of the Act whereas the company has grantedloan to limited liability partnership covered in the register maintained in the registerunder section 189 of the Act in the ordinary course of lending business where the rate ofinterest and other terms and conditions of grant of such loan are not prejudicial to theinterest of the company and the repayment and receipts thereof are regular.

4 Loans Investment. Gurantees and Securities:

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 inrespect of grant of loans as applicable. The company has not made any investments orprovided any gurantees or securities.

5 Public Deposits :

In our opinion and according to the information and explanations given to us thecompany has not accepted any deposits and consequently the directives issued by theReserve Bank of India provisions of Section 73 to 76 or any other relevant provisions ofthe Companies Act 2013 and the rules framed thereunder with regard to the depositsaccepted from the public are not applicable.

6 Cost Records :

According to information and explanations given to us the Central Government has notspecified the maintenance of cost records under Section 148(1) of the Companies Act 2013.Therefore the provisions of Clause (vi) of the Paragraph 3 of the Order is not applicablein the case of the company.

7 Statutory Dues :

(a) According to the information and explanation given to us undisputed statutory duesincluding provident fund employee's state insurance income tax duty of customes goods& service tax cess and other statutory dues if applicable have been generallyregularly deposited with the Appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of the aforesaid dueswere outstanding as at March 31 2020 for a period of more than six months from the datethey became payable.

(b) According to the information and explanation given to us there was no dues ofprovident fund employee's state insurance income tax duty of customes goods &service tax cess and other statutory dues which have not been deposited on account ofany dispute as at the year end.

8 Repayment of financial dues :

Based on our audit procedures and according to the information and explanations givento us we are of the opinion that the Company has not defaulted in repayment of loans orborrowings to banks. The company does not have any loans or borrowings from financialinstitutions or government and has not issued any debentures.

9 Utilization of Term Loans and Initial Public Offer (IPO):

In our opinion and according to the information and explanations given to us thecompany has raised monies by way of initial public offer and availed demand term loans andthey have been applied for the purpose for which they were raised.

10 Frauds :

According to the information and explanations given to us no fraud on or by thecompany its officer or employees has been noticed or reported during the year.

11 Managerial Remuneration:

According to the information and explanations given to us the managerial remunerationhas been paid or provided in accordance with the requisite approvals mandated by theprovisions of section 197 read with schedule V of the Companies Act 2013.

12 Compliance of Nidhi Company:

In our opinion the company is not a Nidhi Company. Therefore the provisions of Clause(xii) of the Paragraph 3 of the Order is not applicable in the case of the company.

13 Transactions with the related parties:

In our opinion and according to the information and explanations given to us thecompany is in compliance with Section 177 and 188 of the Act where applicable for alltransactions with the related parties and the details of related party transactions havebeen disclosed in the financial statements as required by the applicable accountingstandards.

14 Preferencial Allotment or Private Placement of Shares or Convertible Debentures(Fully or Partly):

During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence the provisionsof Clause (xiv) of the Paragraph 3 of the Order is not applicable in the case of thecompany.

15 Non - Cash Transactions:

In our opinion and according to the information and explanations given to us duringthe year the company has not entered into any non-cash transactions with its directors orpersons connected to its directors and hence provisions of section 192 of the Act are notapplicable.

16 Registeration u/s. 45 IA of Reserve Bank of India Act1934:

The Company is required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934 and it has obtained certificate of registration (CoR) No. B-01.00559 dated17 December 2015.

As per our report of even date For K A R M A & CO LLP Chartered Accountants ICAIFRN : 127544W/W100376

Sd/-
Rakesh M Ruparelia
Designated Partner
Place : Surat Membership No. 124077
Date : 29-07-2020 UDIN : 20124077AAAAID2710

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Paragraph 2(F) under 'Report on other legal and regulatoryrequirements' section of our report to the members of Ascom Leasing & InvestmentsLimited of even date)

Report on the internal financial controls over financial reporting under clause (i) ofsub - section 3 of section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of AscomLeasing & Investments Limited ("the Company") as at March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's responsibility for internal financial controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India 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.

Auditors' responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 judgement including the assessment of the risks ofmaterial misstatement in 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 control 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 (i) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (ii) 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 (iii) 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 of 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.

Opinion

In our opinion and according to the information and explanations given to us theCompany has in all material respects an adequate internal financial control system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2020 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.

As per our report of even date For K A R M A & CO LLP Chartered Accountants ICAIFRN : 127544W/W100376

Sd/-
Rakesh M Ruparelia
Designated Partner
Place : Surat Membership No. 124077
Date : 29-07-2020 UDIN : 20124077AAAAID2710

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