To the Members of Dhanvarsha Finvest Limited
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Dhanvarsha Finvest Limited("the Company") which comprise the Balance Sheet as at March 31 2019 theStatement of Profit and Loss and the Statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 its profit and its cash flows forthe year ended on that date.
Basis for Opinion
We conducted our audit in accordance with Standards on Auditing (SAs) specified undersection 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India ("ICAI")together with the ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Act and Rules thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
Obtaining appropriate audit evidence with regard to Loan Assets
Obtaining appropriate audit evidence with regard to Loan Assets is a Key Audit Matteras the Loan Assets constitute a significant portion of the Company's assets and in thepast we were not able to obtain the appropriate audit evidence for few of these LoanAssets. Compliance with IRAC norms is utmost important when the company has manual processof identification of non-performance assets.
Principal Audit Procedures:
We developed an understanding of the controls relevant to our audit related toexistence accuracy and valuation of Loan Assets including controls over theidentification of loans assets as nonperforming assets and assessed whether they wereappropriately designed and were operating effectively.
Our audit procedures includes the following:
a. For new Loan Assets disbursed during the year we tested on sample basisdocumentation and approvals as per Company's policy.
b. We assessed whether the methodology used by the Company for provisioning and assetclassification is in line with RBl's Master Direction.
c. We assessed the methodology used by the Company for accelerated provision in case ofspecified standard unsecured loan assets.
d. We tested on sample basis Loan Assets to assess whether impairments had beenidentified in a timely manner.
e. For loans and advances which are assessed as Non- performing assets we performedparticularly the following procedures:
We tested the reliability of key data inputs and related management controls;
We checked the stage classification as at the balance sheet date as perdefinition of days past due of the company;
We validated the cases to be identified as Non-performing assets throughStatement of accounts of the default cases;
On sample basis we have also calculated the provision manually
f. For Loan Assets which are written off during the year under audit we understood thesteps taken by the Company for recovery before write off and verified the necessaryapprovals for write off.
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion &Analysis Director's Report and Corporate Governance Report but does not include thefinancial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the 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 and Those Charged with Governance for the FinancialStatements
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 financial statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Accounting Standards specified under section 133 of the Act read withrelevant rules issued thereunder. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; 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.
In preparing the financial statements management is responsible for assessing theCompany'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.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements.
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of this financial statements. As part of an audit in accordance with SAs weexercise professional judgment and maintain professional skepticism throughout the audit.We also:
Identify and assess the risks of material misstatement of the 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 with reference to financial statements in place andthe operating effectiveness 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 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of section 143(11) of the Act we givein "Annexure 1 " a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.
2) 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 arnd 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 and the Statement of Cash Flowsdealt with by this report are in agreement with the books of account;
d. In our opinion the aforesaid financial statements comply with the AccountingStandards ecified under section 133 of the Act read with relevant rules issued thereunder;
e. On the basis of the written representations received from the directors as on March31 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 from being appointed as a director in terms of section164(2) of the Act;
f. With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controls wegive our separate report in "Annexure 2".
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 opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid/ provided by the Company to its directors during theyear is in accordance with the 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 financial statements - Refer Note 27 on Contingent Liabilities to thefinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts.Hence the question of any material foreseeable tosses does not arise;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
For Haribhakti & Co. LLP
ICAI Firm Registration No. 103523W / W100048 Sd/-
Membership No. 118970
May 22 2019
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of Dhanvarsha FinvestLimited on the financial statements for the year ended 31st March 2019]
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) During the year the Property Plant and Equipment of the Company have beenphysically verified by the management and as informed no material discrepancies werenoticed on such verification. In our opinion the frequency of verification is reasonablehaving regard to the size of the Company and the nature of its assets.
(c) The Company does not have any immovable properties recorded as Property Plant andEquipment in the books of account of the Company and hence not commented upon.
ii. The Company's business does not involve inventories and accordingly therequirements under paragraph 3(ii) of the Order are not applicable to the Company andhence not commented upon.
iii. As informed the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Act. Accordingly paragraph 3 (iii)(a) 3 (iii)(b) and3 (iii)(c) of the Order are not applicable to the Company.
iv. Based on information and explanation given to us in respect of loans investmentsguarantees and securities the Company has complied with the provisions of section 185 and186(1) of the Act. Further the provisions of section 186 [ except for 186(1)] of the Actare not applicable to the Company as it is engaged in the business of financing of loansand advances.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the provisions of section 73to 76 of the Act and the rules framed there under.
vi. The Central Government has not prescribed the maintenance of cost records for anyof the services of the Company under sub-section (1) of section 148 of the Act and therules framed there under.
vii. (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund income tax goods and service tax andany other material statutory dues applicable to it however delays in deposit have notbeen serious. At present the provisions of employees' state insurance sales tax valueadded tax customs duty and excise duty are 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 and any othermaterial statutory dues applicable to it were outstanding at the year end for a periodof more than six months from the date they became payable.
(c) According to the information and explanation given to us the dues outstanding withrespect to income tax sales tax service tax value added tax goods and service taxcustoms duty excise duty on account of any dispute are as follows:
|Name of the Statue ||Nature of Due ||Amount ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income tax ||Rs.5278966 ||F.Y. 2015-16 ||Commissioner of Income Tax (Appeals |
viii. According to the information and explanations given to us the Company has nottaken any loans or borrowings from financial institution(s) bank(s) government(s) ordebenture holder(s) and hence not commented upon.
ix. Company has neither raised money by way of public issue offer nor has obtained anyterm loans. Therefore paragraph 3(ix) of the Order is not applicable to the Company.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.
xi. According to the information and explanations given to us managerial remunerationhas been paid / provided in accordance with the requisite approvals mandated by theprovisions 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 paragraph 3(xii) of the Order is not applicableto the Company.
xiii. According to the information and explanation given to us all transactionsentered into by the Company with the related parties are in compliance with sections 177and 188 of Act where applicable and the details have been disclosed in the FinancialStatements etc. as required by the applicable accounting standards.
xiv. The Company has made preferential allotment of equity shares during the year underreview and in our opinion and according to the information and explanations given to usthe requirement of section 42 of the Act have been complied with and the amount raisedhave been used for the purposes for which the funds were raised. Further the company hasnot issued any fully or partly convertible debentures during the year hence not commentedupon.
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 duringthe year.
xvi. According to the information and explanation given to us the Company is requiredto be registered under section 45-IA of the Reserve Bank of India Act 1934 and theregistration has been obtained by the Company.
For Haribhakti & Co. LLP
ICAI Firm Registration No. 103523W / W100048 Sd/-
Membership No. 118970
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of Dhanvarsha FinvestLimited on the financial statements for the year ended March 31 2019]
Report on the Internal Financial Controls with reference to Financial Statements underclause (i) of sub-section 3 of section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls with reference to financial statementsof Dhanvarsha Finvest Limited ("the Company") as of March 31 2019 inconjunction with our audit of the financial statements of the Company for the year endedon 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India ("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. 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 with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness.
Our audit of internal financial controls with reference to financial statementsincluded obtaining an understanding of internal financial controls with reference tofinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal controls based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial control with reference to financial statements 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 withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at March 312019 based on the internal control with reference to financial statements criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note issued by the ICAI.
For Haribhakti & Co. LLP
ICAI Firm Registration No. 103523W / W100048 Sd/-
Membership No. 118970
May 22 2019