The Members of
East India Securities Limited
Report on the Financial Statement
We have audited the accompanying financial statements of EAST INDIA SECURITIESLIMITED (the Company) which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and a summaryof significant accounting policies and other explanatory information for the year thenended.
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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2020 and its profit and Loss and Cash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial 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 independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.
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.
We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key Audit Matter ||How our audit addressed the key audit matter |
|Information Technology system for the financial reporting process ||Our key audit procedures with the involvement of our IT specialists included but were not limited to the following: |
|The Company is highly dependent on its information technology (IT) systems for carrying on its operations which require large volume of transactions to be processed on a daily basis. Further the Company's accounting and financial reporting processes are dependent on the automated controls enabled by IT systems which impacts key financial accounting and reporting items such as Brokerage income Trade receivable ageing amongst others. The controls implemented by the Company in its IT environment determine the integrity accuracy completeness and validity of data that is processed by the applications and is ultimately used for financial reporting. || Obtained an understanding of the Company's IT environment and conducted risk assessment and identified IT applications databases and operating systems that are relevant to our audit. Also obtained an understanding of key controls operating over the such identified systems; |
|We have focused on user access management change management segregation of duties developer access to the production environment and changed to IT environment. || Tested the design and operating effectiveness of the Company's IT controls over IT applications as identified above; |
|Further we also focussed on key automated controls relevant for financial reporting. || For the IT applications identified above tested IT general controls particularly logical access change management and aspects of IT operational controls. Tested that requests for access to systems were appropriately reviewed and authorised; tested controls around Company's periodic review of access rights; inspected requests of changes to systems for appropriate approval and authorisation. |
|Accordingly our audit strategy has focused on key IT systems and controls due to pervasive impact and performing an extensive testing of automated controls and ITGCs; we have determined the same as a key audit matter for current year audit. || Tested related interfaces configuration and other application layer controls identified during our audit and report logic for system generated reports relevant to the audit mainly for Brokerage income Trade receivable ageing for evaluating completeness and accuracy. |
|Evaluation of uncertain tax positions || Where deficiencies were identified tested compensating controls or performed alternative procedures. |
|The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||Obtained details of completed tax assessments and demands upto year ended March 31 2020 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. |
|Refer Notes to the Financial Statements ||Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions to evaluate whether any change was required to management's position on these uncertainties. |
INFORMATION OTER THAN FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report and Shareholder's Information but does not include the financialstatements 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 during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters in section 134(5) ofthe Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flow of the Company inaccordance with the accounting principles generally accepted in India inclu ding theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes the maintenance ofadequate accounting records in accordance with the provision of the Act for safeguardingof the assets of the Company and for preventing and detecting the frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of internal financial control that were operating effectively for ensuringthe accuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair v iew and are free frommaterial 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 is also responsible for overseeing the Company's financialreporting process.
AUDITORS' RESPONSIBILITY 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 these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 controls.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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 sub-section (11) of Section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.
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 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 appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss and Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e) On the basis of written representations received from the directors as on 31 March2020 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2020 from being appointed as a director in terms of Section 164(2) of theAct.
f) With Respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
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 by the Company to its directors during the year is inaccordance 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) Rule2014 in our opinionand to the best of our information and according to the explanations given to us.
i. The Company does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.
iii. No amount is required to be transferred to the Investor Education and ProtectionFund by the Company as on 31 March 2020.
For Nokari & Associates
Bhal Chandra Khaitan
Date: 29th June 2020
"Annexure A" to the Auditor's Report
The Annexure referred to in our report to the members of EAST INDIA SECURITIES LIMITED('the Company7) for the year ended 31st March 2020.We report that:
1 (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) The Fixed Assets have been physically verified by the management at reasonableintervals and no material discrepancies between the books records and the physical fixedassets have been noticed.
In our opinion and according to the information and explanations given to us nosubstantial part of fixed asset has been disposed off during the year and therefore doesnot affect the going concern assumption.
2. (a) As explained to us the Stock-in-Trade (Securities) is kept in demat form hencethe stock in trade are only reconciled/verified with the demat account statements by themanagement at reasonable intervals.
(b) In our opinion and according to the information and explanations given to us theprocedure for verification of demat stock followed by the management is reasonable andadequate in relation to the size of the Company and the nature of its business.
(c) In our opinion and on the basis of our examination of the records the Company isgenerally maintaining proper records of its stocks. No discrepancies have been noticed onverification of demat stocks statement as compared to book records.
3. The Company has complied with the section 189 of the Act in regards to the grant ofany loans secured or unsecured to any companies firms Limited Liability Partnershipsor other parties covered in the register maintained under section 189 of the Act.
4. In respect of loans investments guarantees and security the provisions of section185 and 186 of the Companies Act 2013 have been complied with.
5. The Company has not accepted any deposit within the meaning of section 73 to 76 orany other relevent provisions of the Act and the rules framed there under. The directivesissued by Reserve Bank of India are not applicable to the Company.
6. The Company is not required to maintain cost records pursuant to the Rules made bythe Central Government for maintenance of cost records under sub-section (1) of section148 of the Act.
7. According to the information and explanations given to us in respect of statutorydues:
a) The company has generally been regular in depositing undisputed statutory duesincluding provident fund Employee's State Insurance Income Tax Service Tax GST andother material statutory dues applicable to it to the appropriate authorities.
b) There was no undisputed amounts payable in respect of provident fund Employee'sState Insurance Income Tax Service Tax GST and other material statutory dues in arrearsas on 31st March 2020 for a period of more than six months from the date theybecame payable.
(c) Details of statutory dues which have not been deposited on account of disputes aregiven below:
|Nature of Demand ||Disputed Amount ||Current Status |
|Income Tax Demand for AY 2014-15. Date of Order- 26.08.2018 ||Rs. 74564360 ||The Company has filed appeal against the assessment order. The company has already partly paid demand of Rs 11184654/- |
8. Based on our audit procedures and according to the information and explanationsgiven to us we are of the opinion; that the company has not defaulted in repayment ofLoans or borrowings to financial institutions banks or Government.
9. Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
10. Based upon the audit procedures performed and according to the information andexplanations given to us no fraud by the company or any fraud on the company by itsofficers or employees has been noticed or reported during the course of our audit thatcauses the financial statements to be materially misstated.
11. Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
12. In our opinion the Company is not a Nidhi Company therefore clause (xii) ofparagraph 3 of the said order are not applicable to the Company.
13. According to the information and explanations given to us and based on our examination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of Act where applicable and the details of suchtransactions have been disclosed in the Financial Statements as required by the applicableaccounting standards.
14. 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.
15. According to the information and explanations given to us and based on ourexamination of the records of the Company the company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly clause (xv) ofParagraph 3 of the said order is not applicable to the Company.
16. In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.
For Nokari & Associates
Bhal Chandra Khaitan
Date: 29th June 2020
"Annexure B" to the Independent Auditor's Report
(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of EAST INDIA SECURITIES LIMITED ofeven date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of EASTINDIA SECURITIES LIMITED ("the Company") as of March 31 2020 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement 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 system overfinancial reporting of the Company.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (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.
Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2020 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For Nokari & Associates
Bhal Chandra Khaitan
Date: 29th June 2020