To the Members of Capital Trade Links Limited
Report on the Audit of the Indian Accounting Standard (Ind AS') FinancialStatements Opinion
We have audited the accompanying Ind AS financial statements of Capital Trade LinksLimited ("the Company) which comprise the Balance sheet as at March 31 2020the Statement of Profit and Loss including the statement of Other Comprehensive Incomethe Cash Flow Statement and the Statement of Changes in Equity for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 as amended ("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 2020 its profitincluding other comprehensive income its cash flows and the changes in equity for the yearended on that date.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements' section of our report.We are independent of the Company in accordance with the 'Code of Ethics' issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of the Act andthe 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 our auditopinion on the Ind AS financial statements.
Emphasis of Matter - Assessment of COVID 19 Impact
We draw attention to Note 2.18 to the Statement which describes the uncertaintyarising from COVID -19 pandemic and impacting the Company's operations and estimatesrelated to impairment of assets which are dependent on future developments regarding theseverity and duration of the pandemic.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements for the financial year endedMarch 31 2020. These matters were addressed in the context of our audit of the Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. For each matter below our description of how ouraudit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the Ind AS financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statements. The results of our audit proceduresincluding the
procedures performed to address the matters below provide the basis for our auditopinion on the accompanying Ind AS financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
| Adoption of new accounting framework (Ind AS) Effective 1 April 2019 the Holding Company adopted the Indian Accounting Standards (Ind AS') notified by the Ministry of Corporate Affairs with the transition date of 1 April 2018. || Our key audit procedures included: |
| ||* Evaluated management's transition date choices and exemptions for compliance/acceptability under Ind AS 101. |
| ||* Understood the methodology implemented by management to give impact on the transition. |
|The following are the major impact areas for the Holding Company upon transition: ||* Assessed the accuracy of the computations related to significant Ind AS adjustments |
|- Classification and measurement of financial assets and financial liabilities - Measurement of loan losses (expected credit losses) || |
|- Accounting for loan fees and costs ||* Tested the select system reports with the help of our IT specialists to check the completeness and accuracy of the data and reports used to perform computations for giving effect to Ind AS transition adjustments. |
|- Accounting for employee stock options ||* Confirmed the approvals of Audit Committee for the choices and exemptions made by the Company for compliance/acceptability under Ind AS 101. |
|The migration to the new accounting framework (Ind AS) is a complicated process involving multiple decision points upon transition. Ind AS 101 First Time Adoption prescribes choices And exemptions for first time application of Ind AS principles at the transition date. || |
| ||* Assessed areas of significant estimates and management judgment in line with principles under Ind AS. |
| ||* Assessed the appropriateness of the disclosures made in the Financial Statements. |
|(b) Impairment of financial assets (expected credit losses) ||Our audit procedures included: |
Design and operating effectiveness of controls
| || Evaluated the appropriateness of the impairment principles based on the requirements of Ind AS 109 our business understanding and industry practice. |
| Recognition and measurement of impairment of loans involve significant management judgement. || |
|With the applicability of Ind AS 109: Financial Instruments credit loss assessment is now based on expected credit loss (ECL') model. The Holding Company's impairment allowance is derived from estimates including the historical default and loss ratios. Management exercises judgement in determining the quantum of loss based on a range of factors. || We obtained understanding of the management's new / revised processes systems and controls implemented in relation to impairment allowance process. |
| || Assessed the design and implementation of key internal financial controls over loan impairment process used to determine the impairment charge. |
| || We used our internal specialist to test the model methodology and reasonableness of assumptions used. |
| || We tested the management review controls over measurement of impairment allowances and disclosures in the Financial Statements. |
|The most significant areas are: || |
|- Segmentation of loan book ||Substantives tests |
|- Loan staging criteria || We focused on appropriate application of accounting principles validating completeness and accuracy of the data and reasonableness of assumptions used in the model. |
|- Calculation of probability of default / Loss given default || |
|- Consideration of probability weighted scenarios and forward looking macro-economic factors || |
|- Management overlays || Test of details over calculation of impairment allowance to assess the completeness accuracy and relevance of data. |
| There is a large increase in the data inputs required by the ECL model. This increases the risk of completeness and accuracy of the data that has been used to create assumptions in the model. In some cases data is unavailable and reasonable alternatives have been applied to allow calculations to be performed. || The appropriateness of management's judgments was also independently reconsidered in respect of calculation methodologies segmentation economic factors the period of historical loss rates used and the valuation of recovery assets and collateral. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe Ind AS financial statements and our auditor's report thereon.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether such other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of 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 the 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company'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.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process
Auditor's Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS 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 Ind AS 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 Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent 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 Ind AS financial statements forthe financial year ended March 31 2020 and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication
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 Act we give in the "Annexure 1 a statement on the matters specified inparagraphs 3 and 4 of the Order.
As required by Section 143(3) of the Act we report that:
We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit;
In our opinion proper as required by law have been kept by the Company so far as itappears from our examination of those books;
The Balance Sheet the Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;
In our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Companies (Indian AccountingStandards) Rules 2015 as amended;
On the basis of the written representations received from the directors as on March 312020 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct;
With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these Ind AS financial statements and theoperating effectiveness of such controls refer to our separate Report in "Annexure2 to this report;
In our opinion the managerial remuneration for the year ended March 31 2020 has beenpaid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;
With respect to the other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinionand to the best of our information and according to the explanations given to us:
The Company does not have any pending litigations which would impact its financialposition;
The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
There were no amounts which were required to be transferred to the Investor Educationand Protection Fund by the Company.
|For A C Gupta & Associates |
|Chartered Accountants |
|FRN 008079N |
|Pankaj Mahajan |
|Membership No. 091876 |
|Date : New Delhi |
|Place: 27th Jun 2020 |
Annexure 1 of Independent Auditor Report
Referred to under the heading "Report on other legal and regulatoryrequirements of our report of even date
Re: Capital Trade Links Limited (the Company')
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the year and nomaterial discrepancies were identified on such verification.
(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment are held in thename of the Company.
2. As explained to us the inventories were verified during the year by the Managementin accordance with a regular programme of verification in DEMAT form which in ouropinion provides for verification of inventories at reasonable intervals and no materialdiscrepancies were noticed on such verification.
3. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3 (iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
4. In our opinion and according to the Information and explanations given to us thereare no loans Investments guarantees and securities granted In respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.
5. The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable.
6. To the best of our knowledge and as explained the Company is not in the business ofsale of any goods. Therefore in our opinion the provisions of clause 3(vi) of the Orderare not applicable to the Company.
7. (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund income-tax goods and service tax sales-taxservice tax value added tax cess and other statutory dues applicable to it. Theprovision relating to sales tax custom duty excise duty and value added tax arecurrently not applicable to the Company.
(b)According to the information and explanations given to us no undisputed amountspayable In respect of provident fund Income-tax goods and service tax service tax andother statutory dues applicable to it were outstanding at the year end for a period ofmore than six months from the
date they became payable. The provision relating to sales tax custom duty excise dutyand value added tax are currently not applicable to the Company.
(c)According to the information and explanations given to us there was a demand raisedby the income-tax which have been partially deposited on account of dispute is as under.
|Name of Statue ||Nature of the Dues ||Amount ||A. Y. to which the amount relates ||Forum where dispute is pending |
|Income tax ||Section 143(3) ||3828708 (Amount deposited 766000) ||2016-17 ||Appellate Tribunal |
8. In our opinion and according to the information and explanations given by themanagement the Company has no loans or borrowing to a financial institution bank orgovernment or dues to debenture holders. Therefore in our opinion the provisions ofclause 3(viii) of the Order are not applicable to the Company.
9. In our opinion and according to the information and explanations given by themanagement the Company has not raised money by way of initial public offer or furtherpublic offer (including debt instruments). Therefore in our opinion the provisions ofclause 3(ix) of the Order are not applicable to the Company
10. Based upon the audit procedures performed for the purposes of reporting the trueand fair view of the financial statements and according to the information andexplanations given by the management we report that no fraud by the Company or no fraudon the Company has been noticed or reported during the year.
11. According to the information and explanations given by the management themanagerial remuneration has been paid/ provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.
12. In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
13. According to the information and explanations given by the management transactionswith the related parties are in compliance with section 177 and 188 of Companies Act 2013where applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.
14. According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has made preferential allotment of sharewarrants fully convertible into equity shares during the year under review in accordancewith the LODR approvals mandated by the provisions of section 62 and 42 of companies' act2013.
15. According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013.
16. According to the information and explanations given to us we report that theCompany has been registered as required under the provisions of section 45-IA of theReserve Bank of India Act 1934.
|For A C Gupta & Associates |
|Chartered Accountants |
|FRN 008079N |
|Pankaj Mahajan |
|Membership No. 091876 |
|Date : New Delhi |
|Place: 27th June 2020 |
Annexure 2 of Independent Auditor Report
To the independent auditor's report of even date on the financial statements of CapitalTrade Links Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act)
We have audited the internal financial controls over financial reporting of CapitalTrade Links Limited ("the Company) as of March 31 2020 in conjunction with ouraudit of the financial statements of the Company for the year 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 the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these financial statements based onour audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the "Guidance Note) andthe Standards on Auditing as specified under section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that 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 financial statements was established and maintained andif such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to these financialstatements and their operating effectiveness. Our audit of internal financial controlsover financial reporting included obtaining an understanding of internal financialcontrols over financial reporting with reference to these financial statements assessingthe risk that a material weakness exists and testing and evaluating the design andoperating 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 internal financial controls over financialreporting with reference to these financial statements.
Meaning of Internal Financial Controls Over Financial Reporting With Reference to theseFinancial Statements
A company's internal financial control over financial reporting with reference to thesefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial control over financial reporting with reference to these financialstatements includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting WithReference to these Financial Statements
Because of the inherent limitations of internal financial controls over financialreporting with reference to these financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls over financial reporting with reference to these financialstatements to future periods are subject to the risk that the internal financial controlover financial reporting with reference to these financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these financial statements and suchinternal financial controls over financial reporting with reference to these financialstatements were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
|For A C Gupta & Associates |
|Chartered Accountants |
|FRN 008079N |
|Pankaj Mahajan |
|Membership No. 091876 |
|Date : New Delhi |
|Place: 27th June 2020 |