To the Members of Emerald Leasing Finance and Investment Co. Limited.
Report on the Standalone Financial Statements as per Ind AS
We have audited the accompanying standalone financial statements of Emerald LeasingFinance and Investment Co. Limited ("the Company") which comprise the BalanceSheet as at March 31 2020 and the Statement of Profit and Loss Statement of change inEquity and Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2020 and its Profit and its Cash Flow for the year ended on thatdate
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountantsof India together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereere under and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchange in equity of the Company in accordance with the Accounting principles generallyaccepted in India including the Indian Accounting Standard Ind AS specified under Section133 of the Act read with the provision of the Companies ( Indian accounting Standards)Rules 2015 as amended . This responsibility includes the maintenance of adequateaccounting records in accordance with the provision of the Act for safeguarding of theassets 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 adequate internal financial control that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentations of the financial statements that give a true and fair viewand free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the company ability to continue as a going concern disclosing as applicablematter relating to going concern and using the going concern basis of accounting unlessmanagement either intents to liquidate the company or to cease operation or has norealistic alternative but to do so.
Those board of directors are responsible for overseeing the company's financialreporting process.
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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control. Obtain anunderstanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 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 usedand the reasonableness of accounting estimates and related disclosures made by management.Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 Requirement's
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 in the paragraph3 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 explanations which to the bestof our knowledge and belief were necessary for the purpose 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 Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d) in our opinion the financial statements comply with the Indian Accounting Standardsspecified under Section 133 of the Companies Act 2013 read with Rule 7 of theCompanies(Accounts) Rules 2014;
e) On the basis of written representations received from the directors as on March 312020 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of section 164(2) of theCompanies Act 2013.
f) with respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such control refer to ourseparate report in Annexure "B and
g) With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of Companies (Audit and Auditors)Rules 2014 in our opinion and to the bestof our information and according to explanations given to us:
i. There is no pending litigations against /for the Company.
ii. There is no long term contracts including derivative contracts and
iii There is no Pending dues to Investor Education and Protection Fund.
Annexure A to the Independent Auditors' Report
Referred to in paragraph 1 under Report on other Legal and RegulatoryRequirements' section of our report of even date. We report that:
1.(a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) As explained to us fixed assets have been physically verified by the management atreasonable intervals; no material discrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations given to us thecompany does not have any immovable properties in its name. Therefore para 3 (1) ( c) arenot applicable
2. The company is a service company primarily engaged in financial activitiesaccording there are no inventories with the company therefore clause (ii) is notapplicable
3. According to information and explanations given to us the company has not grantedunsecured loan to companies firms. Limited Liability Partnerships or other partiescovered under section 189 of the companies Act. 2013 accordingly the provisions of clause3(iii) (a) to (c) of the order is not applicable to the company and hence cannot becommented upon.
4. The company has not given any loans to directors or to any other persons in whichthe director is interested or given any guarantee or provided any security in connectionwith any loan taken by him or such person as covered under section 185 and 186 of theCompanies act 2013
5 The Company has not accepted deposits. Hence the provisions of Section 73 to 76 orany other relevant provisions of the Act and the rules framed there under are notapplicable to the Company.
6. The Company is not required to maintain cost records as specified by the CentralGovernment under sub section (1) of section 148 of the Act. Therefore the provisions ofpara 3(vi) of the Order is not applicable to the Company.
7.(a) Based on our audit procedures and on the information and explanations given bythe management we report that there were no undisputed statutory dues including ProvidentFund Employees' State Insurance Income-tax Goods and Service Tax Cess and any otherstatutory dues required to be deposited.
(b) Based on our audit procedures and on the information and explanations given by themanagement there are no dues outstanding in respect of Income Tax Goods and Service TaxCess or any other Statutory dues to be deposited on account of any dispute.
8.The Company has obtained loans during from financial institution and bank howeverthere was no default in repayment of dues. The company has not taken any loan fromGovernment or debenture holders during the year.
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year therefore theprovisions of para 3(ix) of the Order is not applicable to the Company.
10.According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
11.The Company has paid managerial remuneration during the financial year ending 31stMarch 2020 hence the necessary approval and mandated as per the provisions of section 197read with schedule V of the Companies Act 2013 has been obtained. 12.In our opinion andaccording to the information and explanations given to us the Company is not a Nidhicompany therefore the provisions of para 3(xii) of the Order is not applicable to theCompany.
13.According to the information and explanations given to us and based on ourexamination of the records of the Company there are no transactions with the relatedparties which requires compliance of sections 177 and 188 of the Act.
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 non-cashtransactions with directors or persons connected with him therefore the provisions ofpara 3
(xv) of the Order is not applicable to the Company.
16.The Company is NBFC and registered under section 45-IA of the Reserve Bank of IndiaAct 1934.
[i] (a) The Company has been granted certificate of registration from Reserve Bank ofIndia under Section 45IA of the Reserve Bank of India Act 1934.
(b) The company is entitled to continue and hold the certificate of registration interms of asset/income pattern as at 31st March 2020.
(c) Considering the asset/income pattern of the company we are of the opinion that thecompany is not an Asset Finance Company.
[ii] As per information and explanation given to us the Board of Directors have passeda resolution for the non-acceptance of any deposits from public.
[iii] As it appears from our examination of the books of account the company has notaccepted any deposits from public during the year under review.
[iv} The Company has given Loans & Advances and has complied with the PrudentialNorms relating to income recognition accounting standards asset classification andprovisioning for bad and doubtful debts as applicable as on 31-03-2020.
Annexure - B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") We have audited the internalfinancial controls over financial reporting of Emerald Leasing Finance and InvestmentCompany Limited ("the Company") as of 31st March 2020 in conjunction with ouraudit of the financial statements of the Company for the year ended on 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 over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). 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 company's policies the safeguarding ofits 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.
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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 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 ICAI.