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Edelweiss Financial Services Ltd.

BSE: 532922 Sector: Financials
NSE: EDELWEISS ISIN Code: INE532F01054
BSE 00:00 | 17 Sep 82.90 1.65
(2.03%)
OPEN

81.85

HIGH

84.80

LOW

81.05

NSE 00:00 | 17 Sep 82.95 1.65
(2.03%)
OPEN

81.70

HIGH

84.70

LOW

81.00

OPEN 81.85
PREVIOUS CLOSE 81.25
VOLUME 261480
52-Week high 100.80
52-Week low 50.00
P/E 8.47
Mkt Cap.(Rs cr) 7,773
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 81.85
CLOSE 81.25
VOLUME 261480
52-Week high 100.80
52-Week low 50.00
P/E 8.47
Mkt Cap.(Rs cr) 7,773
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Edelweiss Financial Services Ltd. (EDELWEISS) - Auditors Report

Company auditors report

To the Members of Edelweiss Financial Services Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Edelweiss Financial Services Limited ("the Company") which comprise theBalance Sheet as at March 31 2020 the Statement of Profit and Loss including thestatement of Other Comprehensive Income the Cash Flow Statement and the Statement ofChanges in Equity for the year then ended and notes to the standalone Ind AS financialstatements including a summary of significant accounting policies and other explanatoryinformation.

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 as amended ("the Act") in themanner 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 March31 2020 its profit including other comprehensive income its cash flows and the changesin equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the 'Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.

Emphasis of Matter

We draw attention to note 52 of the standalone Ind AS financialstatements which describes the economic and social disruption as a result of COVID-19pandemic of the Company's business and financial metrics including the Company's estimatesof impairment of investments and other assets which are highly dependent on uncertainfuture developments. Our opinion is not modified in respect of this matter.

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 forthe financial year ended March 31 2020. These matters were addressed in the context ofour audit of the standalone Ind AS financial statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters. For eachmatter below our description of how our audit addressed the matter is provided in thatcontext.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone Ind AS financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone Ind AS financial statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit matters How our audit addressed the key audit matter
Impairment of Investments in subsidiary companies (as described in Note 1.4.1.3 and note 7 of the standalone Ind AS financial statements)
The Company has investments in various subsidiaries aggregating Rs. 34648.92 million which are not listed or quoted. These investments are valued at cost and are required to be assessed for impairment in accordance with Ind AS 36 when any indicators of impairment are observed. Our audit procedures included considering the appropriateness of the processes laid down by the management for assessment of impairment in the value of investments in subsidiaries combined with procedures performed as follows:
• We considered management's assessment of impairment from the management experts wherever considered necessary and assessed whether any impairment indicators existed for investment in individual subsidiaries.
In carrying out such impairment assessment a significant judgement of the management is involved in estimating the investee company's "value in use" with in accordance with Ind AS 36. Estimation of the value in use requires the management to apply appropriate assumptions with respect to the growth rates for future cash flow projections of the investee company and discount rates for determining present value of such cash flows.
• We traced the net-worth of the individual subsidiaries to their audited financial statements to assess whether any
In view of the high degree of management's judgement involved in estimation of the recoverable amount of investments in unlisted subsidiaries and the inherent uncertainty relating to the assumptions supporting such estimates we considered this area as a key audit matter.
• We assessed information used to determine the key assumptions including growth rates and discount rates
• We assessed the disclosures relating to investments in subsidiaries included in the standalone Ind AS financial statements in accordance with the requirements of Ind AS.
IT systems and controls
Financial accounting and reporting processes especially in the financial services sector are fundamentally reliant on IT systems and IT controls to process significant transaction hence we identified IT systems and controls over financial reporting as a key audit matter for the Company. Our audit procedures focused on the IT infrastructure and applications relevant to financial reporting of the Company:
• We tested the design and operating effectiveness of the Company's IT access controls over the information systems that are important to financial reporting and various interfaces configuration and other identified application controls.
Automated accounting procedures and IT environment controls which include IT governance general IT controls over program development and changes access to programs and data and IT operations are required to be designed and to operate effectively to ensure reliable financial reporting.
• We tested IT general controls (logical access changes management and aspects of IT operational controls). This included testing requests for access to systems were reviewed and authorized.
• We tested the Company's periodic review of access rights. We also tested requests of changes to systems for approval and authorization.
• In addition to the above we tested the design and operating effectiveness of certain automated controls that were considered as key internal controls over financial reporting.
• tested the design and operating effectiveness of compensating controls in case deficiencies were identified and where necessary extended the scope of our substantive audit procedures.

Information Other than the Financial Statements and Auditor's ReportThereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Board reportbut does not include the standalone Ind AS financial statements and our auditor's reportthereon which we obtained prior to the date of this auditors report and the Annualreport which is expected to me made available to us after that date.

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 such other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

Responsibilities of Management for the Standalone Ind AS FinancialStatements

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 cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating 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 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 these standalone Ind AS financialstatements.

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

As part of an audit in accordance with SAs we exercise professionaljudgment and 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto 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 in internal 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.

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 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 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 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 havebeen kept by the Company so far as it appears from our examination of those books;

Report on Other Legal and Regulatory Requirements (Continued)

(c) The Balance Sheet the Statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the email confirmation received from the directorsas on March 31 2020 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2020 from being appointed as a director in terms of Section164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone Ind ASfinancial statements and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 31 2020 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V 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 asamended in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - (Refer Note 40 (a)& (b) to the standalone Ind AS financial statements);

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts - (Refer Note 54 to the standalone Ind ASfinancial statements);

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

For S.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

per Shrawan Jalan

Partner

Membership Number:102102 UDIN: 20102102AAAAHZ2099

Place of Signature : Mumbai Date : July 04 2020

Annexure 1 referred to in paragraph 1 under the heading "Report onother legal and regulatory requirements" of our report of even date

Re: Edelweiss Financial Services Limited ('the Company')

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

fixed assets.

(b) All fixed assets have not been physically verified by themanagement during the year but there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by themanagement and based upon the audit procedures performed the title deeds of immovableproperties included in property plant and equipment are held in the name of the company.

(ii) The Company's business does not involve inventories andaccordingly the requirements under paragraph 3(ii) of the Order are not applicable to theCompany.

(iii) According to the information and explanations given to us andbased upon the audit procedures performed the Company has not granted any loans securedor unsecured to companies firms Limited Liability Partnerships or other parties coveredin the register maintained under section 189 of the Companies Act 2013. Accordingly theprovisions of clause 3(iii)(a) (b) and (c) of the Order are not applicable to the Companyand hence not commented upon.

(iv) In our opinion and according to the information and explanationsgiven by the management provisions of section 185 and 186 of the Companies Act 2013 inrespect of loans to directors including entities in which they are interested and inrespect of loans and advances given investments made and guarantees and securitiesgiven have been complied with by the company.

(v) The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) To the best of our knowledge and as explained the Company is notin the business of sale of any goods. Therefore in our opinion the provisions of clause3(vi) of the Order are not applicable to the Company.

(vii) (a) Undisputed statutory dues including provident fundemployees' state insurance income-tax goods and service tax

cess and other statutory dues have generally been regularly depositedwith the appropriate authorities though there has been a slight delay in a few cases. Theprovisions relating to duty of custom duty of excise value added tax and sales tax arenot applicable to the Company.

(b) According to the information and explanations given to us and basedupon the audit procedures performed no undisputed amounts payable in respect of providentfund employees' state insurance income-tax goods and service tax cess and otherstatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable. The provisions relating to duty of custom duty ofexcise value added tax and sales tax are not applicable to the Company.

(c) According to the information and explanations given to us and basedupon the audit procedures performed the dues of income-tax goods and service tax andcess on account of any dispute are given below. The provisions relating to duty ofcustom duty of excise value added tax and sales tax are not applicable to the Company.

Name of the statute Nature of the dues Amount (Rs. In million) Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Income Tax 3.23 AY 2001-02 High Court
Income Tax Act 1961 Income Tax 17.95 AY 2008-09 High Court
Income Tax Act 1961 Income Tax 122.73 AY 2009-10 High Court
Income Tax Act 1961 Income Tax 219.45 AY 2010-11 High Court
Income Tax Act 1961 Income Tax 83.53 AY 2011-12 High Court
Income Tax Act 1961 Income Tax 12.97 AY 2015-16 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 39.46 AY 2017-18 Commissioner of Income Tax (Appeals)
Service Tax Service Tax 414.60 2008-09 to 2011-12 CESTAT Mumbai
Service Tax Service Tax 119.75 2009-10 up to Jun 2012 CESTAT Mumbai
Service Tax Service Tax 979.56 October 2010 to March 2015 CESTAT Mumbai

(viii) In our opinion and according to the information and explanationsgiven by the management and based upon the audit procedures performed the Company has notdefaulted in repayment of loans or borrowing to a financial institution and banksgovernment or dues to debenture holders.

(ix) According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not raised any money by wayof initial public offer or further public offer hence not commented upon.

(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 by the Management wehave neither come across any instances of material fraud by the Company or on the Companyby the officers and employees noticed or reported during the year nor have we beeninformed of any such case by the management.

(xi) According to the information and explanations given by themanagement and based upon the audit procedures performed the Company has paid or providedmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V of the Act.

(xii) In our opinion the Company is not a Nidhi Company. Thereforethe provisions of clause 3(xii) of the order are not applicable to the Company and hencenot commented upon.

(xiii) According to the information and explanations given by themanagement and based upon the audit procedures performed transactions with the relatedparties are in compliance with section 177 and 188 of Companies Act 2013 where applicableand the details have been disclosed in the notes to the financial statements as requiredby the applicable accounting standards.

(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet and based upon the audit procedures performedthe Company has not made any preferential allotment or private placement of shares duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the company and not commented upon.

(xv) According to the information and explanations given by themanagement and based upon the audit procedures performed the Company has not entered intoany non-cash transactions with directors or persons connected with him as referred to insection 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us andbased upon the audit procedures performed the provisions of section 45-IA of the ReserveBank of India Act 1934 are not applicable to the Company.

For S.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

per Shrawan Jalan

Partner

Membership Number:102102

UDIN: 20102102AAAAHZ2099

Place of Signature : Mumbai

Date : July 04 2020

Annexure 2 to the Independent Auditor's Report of even date on theFinancial Statements of Edelweiss Financial Services Limited

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

To the Members of Edelweiss Financial Services Limited

We have audited the internal financial controls over financialreporting of Edelweiss Financial Services Limited ("the Company") as of March31 2020 in conjunction with our audit of the financial statements of the Company for theyear 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 over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting 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 the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting with reference to these financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note on Auditof Internal Financial Controls Over Financial Reporting (the "Guidance Note")and the Standards on Auditing as specified under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls and both issuedby the Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to these financial statements was established and maintained andif such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls over financial reporting with reference tothese financial statements and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting with reference to these financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due 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 internal financial controlsover financial reporting with reference to these financial statements.

Meaning of Internal Financial Controls Over Financial Reporting WithReference to these Financial Statements

A Company's internal financial control over financial reporting withreference to these financial statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation ofstatements for external purposes in accordance with generally accepted accountingprinciples. A Company's internal financial control over financial reporting with referenceto these financial statements includes those policies and procedures that (1) pertain tothe maintenance of records that in reasonable detail accurately and fairly reflect thetransactions 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 authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting With Reference to these Financial Statements

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these financial statements to future periods are subject to the risk that the internalfinancial control over financial reporting with reference to these financial statementsmay become inadequate because of changes in conditions or that the degree of compliancewith the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls over financial reporting with reference to these financialstatements and such internal financial controls over financial reporting with reference tothese financial statements were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For S.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

per Shrawan Jalan

Partner

Membership Number:102102 UDIN: 20102102AAAAHZ2099

Place of Signature : Mumbai Date : July 4 2020

.