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CARE Ratings Ltd.

BSE: 534804 Sector: Others
NSE: CARERATING ISIN Code: INE752H01013
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NSE 10:29 | 22 Jun 751.70 22.25
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OPEN 739.00
PREVIOUS CLOSE 729.20
VOLUME 26178
52-Week high 759.00
52-Week low 296.05
P/E 25.88
Mkt Cap.(Rs cr) 2,221
Buy Price 753.40
Buy Qty 54.00
Sell Price 754.15
Sell Qty 63.00
OPEN 739.00
CLOSE 729.20
VOLUME 26178
52-Week high 759.00
52-Week low 296.05
P/E 25.88
Mkt Cap.(Rs cr) 2,221
Buy Price 753.40
Buy Qty 54.00
Sell Price 754.15
Sell Qty 63.00

CARE Ratings Ltd. (CARERATING) - Auditors Report

Company auditors report

To the Members of

CARE Ratings Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

1. We have audited the Standalone Ind AS Financial Statements of CARE Ratings Limited('the Company') which comprise the standalone Balance Sheet as at March 31 2020 thestandalone Statement of Profit and Loss (including Other Comprehensive Income) thestandalone Statement of Changes in Equity and the standalone Statement of Cash Flows forthe year then ended and notes to the Standalone Ind AS Financial Statements including asummary of significant accounting policies and other explanatory information. (hereinafterreferred to as "the Standalone Ind AS Financial Statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS Financial Statements give the informationrequired by the Companies Act 2013 ('the Act') in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2020 and its profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

2. We conducted our audit in accordance with the Standards on Auditing ('SAs')specified under section 143(10) of the Act. Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial 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 ('ICAI') together with the ethical requirements that are relevant to our audit ofthe Standalone Ind AS Financial Statements under the provisions of the Act and the Rulesthereunder; and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on theStandalone Ind AS Financial Statements.

Emphasis of Matter

3. Attention is drawn to Note 48 of the Standalone Ind AS Financial Statements whichdescribes the impacts of COVID-19 Pandemic on the financial statements as also on businessoperations of the Company assessment thereof by the management of the Company based onits internal external and macro factors involving certain estimation uncertainties. Ouropinion is not modified in respect of this matter.

Key Audit Matters

4. Key audit matters are those matters that in our professional judgement were ofmost significance in our audit of the Standalone Ind AS Financial Statements of the yearunder report. These matters were addressed in the context of our audit of the StandaloneInd AS Financial Statements as a whole and in forming our opinion thereon and we do notprovide a separate opinion on these matters.

Key Audit Matters Our audit approach
Recognition measurement presentation and disclosures of revenues and other related balances in accordance with Ind AS 115 "Revenue from contracts with customers" and other regulatory requirements We assessed the entity's process to comply with the applicable Ind AS and other regulatory requirements
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
• Evaluated the design of internal controls relating to implementation of the revenue accounting standard.
The recognition measurement presentation and disclosures of revenues and other related balances in accordance with Ind AS 115 and other regulatory requirements involve significant judgements and estimation as also timing of recognition by the management of the Company. Further the recognition of revenue involves various complexities with respect to nature and category of clients of the Company. • Evaluated the report of expert on the application of the standard on the entity as per its accounting policies.
• Evaluated the reasonableness of the significant judgements and estimation involved in the process.
• Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to timing and extent of recognition of revenue therefrom based on the policy adopted by the Company.
We determined this matter to be a key audit matter due to the complexity associated to comply with the applicable Ind AS and other regulatory requirements. [Note 1(j) to the Standalone Ind AS Financial Statements] • Selected a sample of continuing and new contracts and performed the following procedures:
• Read analysed and identified the distinct performance obligations in these contracts.
• Compared these performance obligations with that identified and recorded by the entity.
• Sample of revenue disaggregated by type and service offerings was tested with the performance obligations specified in the underlying contracts.
Regulations - Litigations and claims Our Audit approach in relation to the matter involved the following:
The Company is exposed to various laws and regulations. In this regulatory environment there is an inherent risk of litigations and claims. Consequently provisions and contingent liabilities disclosures may arise from direct and indirect tax proceedings legal proceedings including regulatory and other government / department proceedings as well as out of investigations by the authorities. • Review the outstanding litigations against the Company for comparing consistency with the previous years. Enquire and obtain explanations for movements during the year.
• Reading the latest correspondences between the Company and the various tax/legal authorities for significant matters.
• Examined selectively the Company's legal expenses and read fully the minutes of the board meetings in order to ascertain all cases have been identified.
As at March 31 2020 the Company's has ascertained contingent liabilities of Rs. 72.51 Lakhs and also has unascertained liabilities (refer note 31 to the Standalone Ind AS Financial Statements) • With respect to tax matters involving our tax specialists and discussing with the Company's personnel dealing with tax matters their views and strategies on significant cases as well as the related technical grounds relating to their conclusions based on applicable tax laws and precedence.
Management applies significant judgement in estimating the likelihood of the future outcome in each case when considering whether and how much to provide or in determining the required disclosure for the potential exposure of each matter. • Assessing the decisions and rationale for provisions held or for decisions not to record provisions or make disclosures.
This is due to the highly complex nature and magnitude of the legal matters involved along with the fact that resolution of tax and legal proceedings may span over multiple years and may involve protracted negotiation or litigation. These estimates could change substantially over time as new facts emerge and each legal case progresses. • For those matters where management concluded that no provisions should be recognised considering the adequacy and completeness of the Company's disclosures.
• For complex regulatory litigations reviewing the relevant correspondence by the Company studying the matters in the light of past precedence and views of Company's legal advisor as made available by the Company.
We determined this matter to be a key audit matter due to the inherent complexity and magnitude of potential exposures across the Company and the judgment necessary to estimate the amount of provisions required or determine the required disclosures. • For claims made against the Company but neither acknowledged nor disclosed assessed the tenability of such claims based on reading the basis of such claims with relevant provisions of the law or regulations and considering the legal advice obtained by the Company.

Information other than the Standalone Ind AS Financial Statements and Auditors' ReportThereon

5. The Company's Management and Board of Directors are responsible for the preparationof the other information comprising of the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and such other disclosures relatedInformation excluding the Standalone Ind AS Financial Statements and auditor's reportthereon ('Other Information'). The Other Information is expected to be made available tous after the date of this Auditors' Report. Our opinion on the Standalone Ind AS FinancialStatements does not cover the Other Information and we do not express any form ofassurance conclusion thereon.

In connection with our audit of the Standalone Ind AS Financial Statements ourresponsibility is to read the Other Information when it becomes available and in doingso consider whether the Other Information is materially inconsistent with the StandaloneInd AS Financial Statements or our knowledge obtained during the course of our audit orotherwise appears to be materially misstated. When we read the Other Information and if weconclude that there is a material misstatement therein we are required to communicate thematter to those charged with governance as required under SA 720 'The Auditor'sresponsibilities Relating to Other Information'.

Responsibility of Management's & Board of Directors for Standalone Ind AS FinancialStatements

6. The Company's Management and Board of Directors are responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these StandaloneInd AS Financial Statements that give a true and fair view of the state of affairs profitand other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards (Ind AS) specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgements and estimates that are reasonable and prudent; 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 Ind AS FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the Standalone Ind AS Financial Statements managementand Board of Directors are responsible for assessing the Company's ability to continue asa going concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Company's Management and Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

7. Our objectives are to obtain reasonable assurance about whether the Standalone IndAS Financial Statements as a whole are free from material misstatement whether due tofraud or error and to issue an Auditor's Report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs 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 Standalone Ind AS Financial Statements. Our auditprocess in accordance with the SAs is narrated in detail in Annexure 1 to this report.

Other Matter

8. Due to complete lockdown imposed by the Government to restrict the spread ofCOVID19 the audit finalization process for the year under report was carried out fromremote locations i.e. other than the Office of the Company based on the data/ detailsmade available and based on financial information/records remitted by the managementthrough digital medium. Our report is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

9. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of sub-section (11) of section 143 of the Act wegive in the Annexure 2 a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

10. 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 Other ComprehensiveIncome the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d. In our opinion the aforesaid Standalone Ind AS 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 3.

g. In terms of provisions of Section 197(16) of the Act as per the information andexplanations given we report that the managerial remuneration paid by the Company to itsDirectors is in accordance with provisions of Section 197 of the Act.

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 has disclosed the impact of pending litigations on its financialposition in its Standalone Ind AS Financial Statements - Refer Note 31 to the StandaloneInd AS Financial Statements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts - Refer Note 32 to the Standalone Ind AS Financial Statements;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Khimji Kunverji & Co LLP Hasmukh B Dedhia
Chartered Accountants Partner (F - 033494)
FRN: 105146W/W100621 UDIN: 20033494AAAAEZ3008
Place: Mumbai
Date: June 18 2020

Annexure 1

(referred to in paragraph 7 of Independent Auditors' Report)

As part of our audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Standalone Ind ASFinancial Statements whether due to fraud or error to design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof 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 in the standalone Ind AS financialstatement made by the Management and Board of Directors

• Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the Standalone Ind AS Financial Statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the Standalone IndAS Financial Statements including the disclosures and whether the Standalone Ind ASFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

• Communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 determinethose matters that were of most significance in the audit of the Standalone Ind ASFinancial Statements of the current period 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.

Annexure 2

(referred to in paragraph 9 of Independent Auditors' Report)

i (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. According to theinformation and explanation given to us no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

ii. The Company does not hold any inventory or securities as stock in trade henceclause 3(ii) of the Order is not applicable to the Company.

iii. 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 theAct

Accordingly the provisions of clause 3 (iii) (a) (b) and (c) of the Order are notapplicable to the Company.

iv. In our opinion and according to the information and explanations given to usprovisions of Section 185 and 186 of the Act in respect of loans to directors includingentities in which they are interested and in respect of loans and advances giveninvestments made and guarantees and securities given have been complied with by theCompany.

v. According to the information and explanations given to us the Company hasnot accepted any deposits from the public.

vi. According to the information and explanations given to us the Company is notrequired to maintain any cost records as prescribed by the Central Government undersub-section (1) of Section 148 of the Act.

vii. (a) According to the information and explanations given to us and based on therecords of the Company examined by us the Company is regular in depositing the undisputedstatutory dues including Provident Fund Employees' State Insurance Income-tax Goodsand Service Tax and other material statutory dues as applicable with the appropriateauthorities in India. There are no undisputed statutory dues payable in respect to theabove statues outstanding as at March 31 2020 for a period of more than six months fromthe date they became payable.

As informed the Company is not liable to pay Custom Duty and Cess during the year.

(b) According to the information and explanations given to us and based on the recordsof the Company examined by us there are no dues of Income Tax Service Tax Value AddedTax Sales Tax Customs Duty Excise Duty Goods and Service Tax and Cess which have notbeen deposited on account of any disputes except the following:

Name of the statute Nature of the dues Amount (Rs.) Period to which the amount relates Forum where dispute is pending
The Income Tax Act 1961 Income Tax 2466238 AY 2016-17 Commissioner of Income Tax (Appeals)
The Income Tax Act 1961 Income Tax 3055506 AY 2017-18 Commissioner of Income Tax (Appeals)

viii. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no loans taken from financialinstitutions government and banks nor has the Company issued any debentures hence clause3(viii) of the Order is not applicable.

ix. The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Hence theprovision of clause 3(ix) of the Order is not applicable to it.

x. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven to us by the management we report that no fraud by the Company or no fraud on theCompany by the officers and employees of the Company has been noticed or reported duringthe year.

xi. According to the information and explanations given to us the managerialremuneration has been paid / provided in accordance with the requisite approvals mandatedby the provisions of Section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Therefore the provisions of clause 3(xii) of the orderare not applicable to it.

xiii. According to the information and explanations to us and based on our examinationof the records of the Company transactions with the related parties are in compliancewith Section 177 and 188 of the Act where applicable and the details have been disclosedin the Standalone Ind AS financial statements as required by the applicable accountingstandards.

xiv. According to the information and explanations 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 under report. Hence reporting requirements under clause 3(xiv) of the Order arenot applicable to the Company.

xv. According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him asreferred to in Section 192 of the Act.

xvi. According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For Khimji Kunverji & Co LLP Hasmukh B Dedhia
Chartered Accountants Partner (F - 033494)
FRN: 105146W/W100621
UDIN: 20033494AAAAEZ3008
Place: Mumbai
Date: June 18 2020

Annexure 3

(referred to in paragraph 10(f) of Independent Auditors' Report)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ('the Act') Opinion

In conjunction with our audit of the Standalone Ind AS Financial Statements of theCompany as of and for the year ended 31 March 2020 we have audited the internal financialcontrols with reference to Standalone Ind AS Financial Statements of CARE Ratings Limited('the Company') as of that date.

In our opinion the Company has in all material respects adequate internal financialcontrols system with reference to Standalone Ind AS Financial Statements and such internalfinancial controls were operating effectively as at 31 March 2020 based on the internalfinancial controls with reference to Standalone Ind AS Financial Statements 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 (the 'Guidance Note').

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to Standalone Ind AS Financial Statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as 'the Act').

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to Standalone Ind AS Financial Statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to Standalone Ind AS Financial Statements.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 with reference to Standalone Ind AS Financial Statements wereestablished and maintained and whether such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to Standalone Ind AS FinancialStatements and their operating effectiveness. Our audit of internal financial controlswith reference to Standalone Ind AS Financial Statements included obtaining anunderstanding of such internal financial controls assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of theStandalone Ind AS Financial Statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to Standalone Ind AS Financial Statements.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial controls with reference to Standalone Ind AS FinancialStatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of Standalone Ind AS Financial Statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial controls with reference to Standalone Ind AS Financial Statementsinclude 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 Standalone Ind AS Financial Statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of theCompany; and

3. provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the Standalone Ind AS Financial Statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls with reference toStandalone Ind AS Financial Statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to Standalone Ind AS Financial Statements to future periods aresubject to the risk that the internal financial controls with reference to Standalone IndAS Financial Statements may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

For Khimji Kunverji & Co LLP Hasmukh B Dedhia
Chartered Accountants Partner (F - 033494)
FRN: 105146W/W100621
UDIN: 20033494AAAAEZ3008
Place: Mumbai
Date: June 18 2020