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Dhanvarsha Finvest Ltd.

BSE: 540268 Sector: Financials
NSE: DHANVARSHA ISIN Code: INE615R01029
BSE 00:00 | 08 Aug 89.30 -4.45
(-4.75%)
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91.25

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94.80

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88.70

NSE 00:00 | 08 Aug 89.10
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OPEN

93.85

HIGH

94.85

LOW

88.55

OPEN 91.25
PREVIOUS CLOSE 93.75
VOLUME 38174
52-Week high 187.50
52-Week low 22.30
P/E 129.42
Mkt Cap.(Rs cr) 959
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 91.25
CLOSE 93.75
VOLUME 38174
52-Week high 187.50
52-Week low 22.30
P/E 129.42
Mkt Cap.(Rs cr) 959
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dhanvarsha Finvest Ltd. (DHANVARSHA) - Auditors Report

Company auditors report

To the Members of Dhanvarsha Finvest Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Dhanvarsha Finvest Limited ("the Company") which comprise the Balance Sheetas at March 312021 the Statement ofProfit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flows for the yearthen ended and notes to the standalone Ind AS financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "Standalone Ind AS financial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Ind AS financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with theaccounting principlesgenerally accepted in India including the Indian Accounting Standards ("Ind AS")prescribed under section 133 of the Act of the state of affairs of the Company as atMarch 312021 its profit (including other comprehensive income) its changes in equityand its cash flows forthe year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Standards on Auditing (SAs)specified under section 143(10) of the Act. Our responsibilities under those Standards arefurther described in the Auditor'sResponsibilities 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 toouraudit of the Standalone Ind AS financial statements under the provisions of the Act andRules 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 haveobtained is sufficient and appropriate to provide a basis for our opinion on theStandalone Ind AS financial statements.

Key Audit Matters

Key Audit Matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements ofthe current year. These matters were addressed in the context of our audit of theStandalone Ind AS financial statements as a whole andin forming our opinion thereon andwe do not provide a separate opinion on these matters. We havedetermined the mattersdescribed below to be the Key Audit Matters that are to be communicated in our report.

Key audit matter How our audit addressed the key auditmatter
Impairment of loans and advances (as described in Note 737 47 and 48 of the Standalone Ind AS financial statements)
Ind AS 109 requires the Company to provide for impairment of its Loans and Receivables (designated at amortised cost and fair value through other comprehensive income) using the expected credit loss ("ECL") approach. We have started our audit procedures with understanding of the internal control environment related to Impairment loss allowance.
ECL approach involves an estimation of the probability weighted loss on financial instruments over their life considering reasonable and supportable information about past events current conditions and forecasts of future economic conditions which could impact the credit quality of the Company's loans and advances. In the process a significant degree of judgment has been applied by the Management for: Our procedures over internalcontrols focused on recognition and measurement of impairment loss allowance.
• Staging of loans [i.e. classification in 'significant increase in credit risk' ('SICR') and 'default' categories]; We assessed the design and tested the operating effectiveness of the selected key controls implemented by the Company.
• Grouping of borrowers based on homogeneity by using appropriate statistical techniques; For loans and advances which are assessed for impairment on a portfolio basis we performed particularly the following procedures:
• Estimation of behavioral life; • We tested the reliability of key data inputs and related management controls;
• Determining macro-economic factors impacting credit quality of receivables; • We checked the stage classification as at the balance sheet date in accordance with the definition of Default of the Company;
• Estimation of losses for loan products with no/ minimal historical defaults. • We recalculated the ECL provision for selected samples;
Additional considerations on account of COVID-19 Pursuant to the Reserve Bank of India circular dated 27 March 2020 April 17 2020 and 23 May 2020 ('RBI circular')allowing lending institutions • to offer moratorium to borrowers on payment of instalments falling due between 1 March 2020 and 31 August 2020 the Company has extended moratorium to its borrowers in accordance with its approved Board policy. • We have reviewed the process of the Company to grant moratorium to the borrowers as per the Regulatory Package announced by the Reserve Bank of India ("RBI").
In Management's view and considering the guidance provided by theI nstitute of Chartered Accountants of India providing moratorium to borrowers at a mass scale based on RBI directives by itself is not considered to result in a SICR for such borrowers. Further we have relied on the assumption of the management that there will be no significant increase in the credit risk in the cases where moratorium is given and thatt he staging based on the days past due ("DPD") will be considered as per the RBI COVID-19 Regulatory Package.
During the year the Company has scaled up the growth in t he low risky sector. Further there has been good collection efficiencies post completion of the moratorium period and none of the customers approached for one- time restructuring benefit allowed under the Resolution Framework by Reserve Bank of India dated August 6 2020 for COVID-19 related stress to the borrowers. We have tested on samples basis the DPD freeze for cases wheremoratorium is provided and not provided in accordance with RBI COVID-19 Regulatory Package;
Basis the abovementioned factors the Company estimates that no additional ECL provision on Loans is required on account of COVID — 19 during the year ended March 312021. We have checked the provision on Loan Assets as per IRACP norms as required under RBI circular dated March 13 2020. We have checked the DPD and provision in accordance with the RBI regulations in that regard further considering the COVID-19 related
The impact of COVID-19 is dynamic evolving uncertain and based on the current situation. Regulatory Packages issued by RBI; and With respect to impact assessment on provision for ECL on account of the impact of COVID-19 pandemic we broadly reviewed the underlying assumptions and estimates used by the management for the same as the extent of impact is dependent on future developments which are highly uncertain we have primarilyrelied on those assumptions and estimates.
In view of the high degree of management's judgment involved in estimation of ECL accentuated by the COVID-19 pandemic impairment of Loans and advances has been identified as a Key Audit Matter. These assumptions and estimates are a subject matter of periodic review by the Company.

Emphasis of Matter

We draw attention to Note 37 to the accompanying Statement whichdescribes the staging of accounts to whom moratorium benefit was extended in accordancewith the RBI COVID-1 9 Regulatory package and the uncertainty caused by COVID-19 pandemicwith respect to the Company's estimates of Impairment of loans to customers. Further theextent to which the COVID-19 pandemic will impact the Company's operations and financialresults is dependent on future developments which are highly uncertain at this point oftime.

Our opinion is not modified in respect of this matter.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis the Director's Report and the Corporate Governance Report butdoes not include the Standalone Ind AS financial statements consolidated Ind AS financialstatements and our auditor's report thereon. The above mentioned other information havenot been made available to us as at the date of this auditor's report.

Our opinion on the Standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the Standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the Standalone Ind ASfinancial statements or our knowledge obtained in the auditor otherwise appears to bematerially misstated.

When we read the other information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.

Responsibilities of Management and Those Charged with Governance forthe Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these Standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance (including other comprehensive income) changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding Ind AS prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the Standalone Ind AS financial statements management isresponsible 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.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of this standalone Ind AS financialstatements. As part of an audit in accordance with SAs we exercise professional judgmentand maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theStandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate 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 theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)

(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone Ind AS financial statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies ini nternal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the Standalone IndAS financial statements of the current year 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

(1) As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of section143(11) of the Act we give in "Annexure 1" a statement on the mattersspecified in paragraphs 3 and 4 of the 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

b. In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss (including OtherComprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flowsdealt with by this report are in agreement with the books of account;

d. In our opinion the aforesaid Standalone Ind AS financial statementscomply with the Ind AS prescribed under section 1 33 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended;

e. On the basis of the written representations received from thedirectors as on March 312021and taken on record by the Board of Directors none of thedirectors is disqualified as on March31 2021 from being appointed as a director in termsof section 164(2) of the Act;

f. With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure 2";

g. With respect to the other matter to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act:

In our opinion and to the best of our information and according to theexplanations given to us managerial remuneration has been paid / provided in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act;

h. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

(i) The Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone Ind AS financial statements — Refer Note 35 onContingent Liabilities to the Standalone Ind AS financial statements;

(ii) The Company did not have any long-term contracts includingderivative contracts. Hence the question of any material foreseeable losses does notarise;

(iii) There were no amounts which were required to be transferred tothe Investor Education and Protection Fund by the Company.

ANNEXURE 1 TO THE INDEPENDENT

AUDITOR'S REPORT

[Referred to in paragraph 1 under 'Report on Other Legal and RegulatoryRequirements' section in the Independent Auditor's Report of even date to the members of DhanvarshaFinvest Limited ("the Company") on the standalone Ind AS financialstatements for the year ended March 312021]

Based on the audit procedures performed for the purpose of reporting atrue and fair view on the standalone Ind AS financial statements of the Company and takinginto consideration the information and explanations given to us and the books of accountand other records examined by us in the normal course of audit we report that:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) During the year the fixed assets of the Company have beenphysically verified by the management and no material discrepancies were noticed on suchverification. In our opinion the frequency of verification is reasonable having regard tothe size of the Company and the nature of its assets.

(c) The Company does not hold any immovable property. Accordinglyclause 3 (i) (c) of the Order is not applicable to the Company.

(ii) The Company is a Non- Banking Finance Company primarily engagedin the business of lending and does not hold any inventory. Accordingly the provisions ofclause 3(ii) of the Order are not applicable.

(iii) The Company has granted loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189oftheAct.

(a) The terms and conditions of the aforesaid loans granted by theCompany are not prejudicial to the interest of the Company.

(b) The schedule of repayment of principal and payment of interest inrespect of such loans has been stipulated and the repayments or receipts of principalamounts and interest are regular.

(c) In respect of the aforesaid loans there is no overdue amount inrespect of loans granted to companies firms Limited Liability Partnerships or otherparties listed in the register maintained under section 189 of the Act.

(iv) The Company has complied with the provisions of section 185 and186 (1) of the Act in respect of grant of loans making investments and providingguarantees and securities as applicable. Further as the Company is a Non-Banking FinanceCompany engaged in the business of financing the provision of section 186 [except forsubsection (1)] are not applicable to the Company.

(v) In our opinion the Company has not accepted any deposits from thepublic within the provisions of sections 73 to 76 of the Act and the rules framed thereunder. Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) The Central Government has not prescribed the maintenance of costrecords for any of theproducts of the Company under sub-section (1) of section 148 of theAct and the rules framed there under.

(vii) (a) The Company is generally regular in depositing withappropriate authorities undisputed statutory dues including provident fund income taxgoods and services tax(GST) cess and any other material statutory dues applicable to itexpect that there have been slight delay in few cases. At present the provisions ofemployees' state insurance and customs duty are not applicable to the Company.

No undisputed amounts payable in respect of provident fund employees'state insurance income tax GST customs duty cess and any other material statutory duesapplicable to it were outstanding at the year end for a period of more than six monthsfrom the date they became payable.

(b) The dues outstanding with respect to income tax sales taxservice tax value added tax GST customs duty excise duty on account of any disputeare as follows:

Name of the statute Nature of dues Amount Rs. in Lakhs Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 52.79* AY 2016-17 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 83.29 AY 2018-19 Assessing Officer

*Net of Rs. 13.20 Lakhs paid under protest.

(viii) During the year the Company has not defaulted in repayment ofloans or borrowings to banks or financial institution or dues to debenture holders. TheCompany has not taken any loans or borrowings from government.

(ix) The Company did not raise moneys by way of initial public offer orfurther public offer (including debt instruments) of equity shares during the year.Further as represented by management and relied upon by us the term loans were appliedfor the purposes for which the loans were obtained though idle/surplus funds which werenot required for immediate utilisation were either gainfully invested in liquid assetspayable on demand or lying in the current account with Bank. We have not performed anyother procedures in this regard.

(x) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of fraud by the Company or any fraud on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any suchinstance by the management.

(xi) Managerial remuneration has been paid / provided in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Thereforeclause 3(xii) of the Order is not applicable to the Company.

(xiii) All transactions entered into by the Company with the relatedparties are in compliance with sections 177 and 188 of Act where applicable and thedetails have been disclosed in the standalone Ind AS financial statements as required bythe applicable accounting standards.

(xiv) The Company has made preferential allotment or private placementof shares or fully or partly convertible debentures during the year and in our opinionthe 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.

(xv) The Company has not entered into any non-cash transactions withdirectors or persons connected with them during the year and hence provisions of section 192 of the Act are not applicable.

(xvi) The Company is required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934 and the registration has been obtained by the Company.

ANNEXURE 2 TO THE INDEPENDENT

AUDITOR'S REPORT

[Referred to in paragraph 2(f) under 'Report on Other Legal andRegulatory Requirements' section in our Independent Auditor's Report of even date to themembers of Dhanvarsha Finvest Limited on the standalone Ind AS financial statements forthe year ended March 312021]

Report on the Internal Financial Controls with reference to FinancialStatements under clause (i) of sub-section 3 of section 143 of the Companies Act 2013("the Act")

We have audited the internal financial controls with reference tofinancial statements of Dhanvarsha Finvest Limited ("the Company") as of March312021 in conjunction with our audit of the standalone Ind AS financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India ("ICAI"). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating 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 Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing specifiedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both issued by the ICAI. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness.

Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal controls basedon the assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.

Meaning of Internal Financial Controls with reference to FinancialStatements

A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control with reference to financial statements includes those policies andprocedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorisedacquisition use or disposition of the company's assets thatcould have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to 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 evaluationof the internal financial controlswith reference to financial statements to future periods are subject tothe 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.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2021 based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrols stated in the Guidance Note issued by the ICAI.

ICAI Firm For Haribhakti & Co. LLP Chartered Accountants Registration No.103523W / W100048
Sd/-
Snehal Shah
Partner
Place: Mumbai Membership Number: 048539
Date: June 10 2021 UDIN: 21048539AAAACH9188

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