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Frontier Capital Ltd.

BSE: 508980 Sector: Financials
NSE: N.A. ISIN Code: INE977E01013
BSE 05:30 | 01 Jan Frontier Capital Ltd
NSE 05:30 | 01 Jan Frontier Capital Ltd

Frontier Capital Ltd. (FRONTIERCAPITAL) - Auditors Report

Company auditors report

TO

THE MEMBERS OF FRONTIER CAPITAL LIMITED

Report on the Audit of the Ind AS Financial Statements Opinion

We have audited the Ind AS Financial Statements of FRONTIER CAPITAL LIMITED ("theCompany") which comprise the Balance Sheet as at 31st March 2021 theStatement of Profit and Loss (including Other Comprehensive Income)Statement of CashFlows and Statement of Changes in Equity for the year then endedand notes to the Ind ASfinancial statements including a summary of the significant accounting policies and otherexplanatory information

(hereinafter referred to as "the Ind AS Financial Statements).

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS Financial Statements give the information required bythe Companies Act

2013("the Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2021 its loss including other comprehensive lossits cash flows and the changes in equity for the year ended on that date.

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 the IndAS 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 together with the ethical requirements that are relevant to our audit of the Ind ASfinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the Ind AS FinancialStatements.

Emphasis of Matter

We draw attention to Note No. 37 of the Ind AS financial statements which describesthe management's assessment of the impact of COVID-19 pandemic on the significantuncertainties involved in developing some of the estimates involved in preparation of theInd AS financial statements including but not limited to its assessment of liquidity andgoing concern recoverable values of its loans other financial assets and non-financialassets. Based on information available as of this date Management believes that nofurther adjustments are required to the financial position. However in view of the highlyuncertain economic environment impacting this industry a definitive assessment of theimpact is highly dependent upon circumstances as they evolve in future and the actualresults may differ from those estimated as at the date of approval of the Ind AS financialstatements. Our Opinion is not modified in respect of the aforesaid matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. For each matter below our description of how our audit addressed thematter is provided in that context. We have determined the matters described below to bethe key audit matter to be communicated in our report. We have fulfilled theresponsibilities described in the Auditor's responsibilities for the audit of the Ind ASfinancial statements section of our report including in relation to the matter.Accordingly our audit included the performance of procedures designed to respond to ourassessment of the risks of material misstatement of the Ind AS financial statements. Theresults of our audit procedures including the procedures performed to address the matterbelow provide the basis for our audit opinion on the accompanying Ind AS financialstatements. Descriptions of Key Audit Matters are given below-:

Key Audit Matters Auditor's Response
1 Impairment of Financial Assets based on Expected Credit Loss (‘ECL') (as described in Note 3.5 of the Ind AS Financial Statements)
Due to the significance of the judgments used in both classifications of loans into various stages as well as the computation of expected credit losses on such financial assets as per Ind AS 109 this has been considered as a key audit matter. - Read and assessed the Company's impairment provision policy and their compliance with Ind AS 109 and the governance framework approved by the Board of Directors pursuant to Reserve Bank of India guidelines issued on 13 March 2020
Financial instruments which include loans to customers represent a significant portion of the total assets of the Company. - Understood the Company's key credit processes comprising granting recording and monitoring of loans as well as impairment provisioning
The Company has gross loans aggregating Rs 300.24 lakhs as at March 31 2021. - Read and assessed the Company's impairment provisioning policy as per Ind AS 109
Estimates regarding the impairment provision against loans are based on the expected credit loss model developed by the Company based on the guiding principles prescribed under Ind AS 109. As stated in the notes to the financial statements for the year ended March 31 2021 the impairment provision is based on the expected credit loss model requires the management of the Company to make significant judgments in connection with related computation. - Obtained an understanding of the Company's Expected Credit Loss (‘ECL') methodology the underlying assumptions and performed sample tests to assess the staging of outstanding exposures
These include: - Tested the ECL model including assumptions and underlying computation
(a) Segmentation of the loan portfolio into homogenous pool of borrowers; - Assessed the Exposure at Default used in the impairment calculations on a test basis
(b) Identification of exposures where there is a significant increase in credit risk and those that are credit impaired; - Assessed the items of loans credit related contingent items as at the reporting date which are considered in the impairment computation as at the reporting date
(c) Determination of the 12 month and life-time probability of default for each of the segments identified; and - Enquired with the management regarding significant judgments and estimates involved in the impairment computation and additional management overlay provision arising from the effects of the COVID-19 pandemic and evaluated the reasonableness thereof;
(d) Loss given default for various exposures based on past trends / experience management estimates etc.
Additionally the economic and business consequences of the COVID 19 pandemic as described in Note 37 to the Ind AS financial statements.
Note 3.5 to the Ind AS Financial Statements explains the various matters that the management has considered for developing this expected credit loss model.

Information Other than the Ind AS financial statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe

Ind AS financial statements and our auditor's report thereon.

Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the Ind AS financial statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Ind ASfinancial 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation of the Ind AS financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.

In preparing the Ind AS financial statements Board of Directors is responsible forassessing the

Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless the Boardof Directors either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Ind AS financial statements

Our objectives are to obtain reasonable assurance about whether the Ind AS 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 weexercise professional judgment and maintain professional skepticism throughout the audit.We also: ? Identify and assess the risks of material misstatement of the Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures 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 with reference to financial statements inplace and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting 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

Ind AS financial statements or if such disclosures are inadequate to modify ouropinion.

Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the Ind AS financial statements thatindividually or in aggregate make it probable that the economic decisions of a reasonablyknowledgeable user of the Ind AS 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 Ind AS 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 Ind AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when 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.

Other Matter

Due to restrictions imposed by the Government and to restrict the spread of COVID-19the audit finalization process for the year under report was carried out from remotelocations i.e. other than the office of the Company based on the data/ details madeavailable and based on financial information/records remitted by the management throughdigital medium. Our report is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Master Direction- Non-Banking Financial Companies Auditor'sReport (Reserve Bank) Directions 2016 ("the Directions") issued by the ReserveBank of India ("the Bank") in exercise of powers conferred by Section 45MA(1A)of the Reserve Bank of India Act 1934 and on the basis of such checks as we consideredappropriate and according to the information and explanations given to us we herebyreport on the matters specified in paragraphs 3 and 4 of the said Directions to the extentapplicable:

i. The Company is engaged in the business of a non-banking financial institution andhas duly obtained a Certificate of Registration (COR) from the Bank. ii. The Company hasmore than 50% of its assets in financial assets and it has earned more than 50% of itsincome from financial assets. In terms of its principal business criteria (financialasset/income pattern) as on 31st March 2021 the Company is entitled tocontinue to hold CoR issued by the Bank. iii. The Company does not meet the Net Owned Fundrequirement as laid down in the

Master Direction - Non-Banking Financial Company Non-Systemically Important Non-Deposittaking Company (Reserve Bank) Directions 2016. iv. The Board of Directors of the companyhave duly passed a resolution for non-acceptance of the "Public Deposits" withinthe meaning of paragraph 3 (xv) of the Master Direction - Non-Banking Financial CompaniesAcceptance of Public Deposits (Reserve Bank) Directions 2016 for the financial year ended31st March 2021. v. The Company has not accepted any "Public Deposits" withinthe meaning of paragraph 3

(xv) of the Master Direction - Non-Banking Financial Companies Acceptance of PublicDeposits (Reserve Bank) Directions 2016 during the year ended 31st March 2021. vi. Thecompany has complied with the prudential norms relating to income recognition accountingstandards asset classification and provisioning for bad and doubtful debts as applicableto it in terms of Master Direction - Non-Banking Financial Company Non-SystemicallyImportant Non-Deposit taking Company (Reserve Bank) Directions 2016. vii. The Company isnot systematically important non-deposit taking NBFC as defined in

Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposittaking Company and Deposit taking Company (Reserve Bank) Directions 2016& accordinglypara 3(C)(iv) of the Directions is not applicable.

2. 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 Actwegive in the Annexure "A" a statement on the matters specified in the paragraph3 and 4 of the

Order to the extent applicable.

3. 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 opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act. 4. As required by Section 143 (3) of the Act wereport that:

i) 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. ii) In ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books. iii) The Balance Sheet the Statementof Profit and Loss including the Statement of Other Comprehensive Income Cash FlowStatement and Statement of Changes in Equity dealt with by this Report are in agreementwith the books of account. iv) In our opinion the aforesaid Ind AS financial statementscomply with the Indian Accounting Standards specified under section 133 of the Act readwith Rule 7 of the Companies (Accounts) rules 2014. v) On the basis of the writtenrepresentations received from the directors as on 31 March 2021 taken on record by theBoard of Directors none of the directors is disqualified as on 31 March 2021 from beingappointed as a director in terms of Section 164(2) of the Act. vi) With respect to theadequacy of the internal financial controls with reference to the financial statements ofthe Company and the operating effectiveness of such controls refer to our separate Reportin "Annexure B". vii) With respect to the other matters to be included in theAuditor's Report in accordance with

Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us: a. The Company doesnot have any pending litigations which would impact its financial position. b. The Companydid not have any long-term contracts including derivative contracts for which there wereany material foreseeable losses. c. There were no amounts which were required to betransferred to the Investor

Education and Protection Fund by the Company except Unpaid dividend of Rs 4300/-.

For A. C. Bhuteria & Co.
Chartered Accountants
Firm's Registration No. 303105E
Sd/-
Bikas Kumar Burnwal
Partner
Place of Signature: Kolkata Membership No. 311785
Date: 12.08.2021 UDIN: 21311785AAAEC2154

Annexure 'A' to Independent Auditor's Report referred to in Paragraph 2 under theheading of "Report on Other Legal and Regulatory Requirements" of our report ofeven date. (i) (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets. (b) Property Plantand Equipment have been physically verified by the management during the year which inour opinion is reasonable having regard to the size of the company and the nature if itsbusiness. No discrepancies were noticed on such verification. (c) The Company doesnot have an immovable property held as fixed assets therefore paragraph 3(i)(c) of theOrder is not applicable.

(ii) The Company does not have any inventory and therefore paragraph 3(ii) of theOrder is not applicable.

(iii) In our opinion and according to the information and explanations given to usand examination of records we considered necessary the Company has not granted any loansecured or unsecured to Companies firms limited liability partnerships or partiescovered in the register maintained under Section 189 of the Companies Act 2013 (‘theAct'). Accordingly paragraph 3(iii)) of the Order is not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to usand examination of records we considered necessary the Company has complied with theprovisions of Section 185 & Section 186 of the Companies Act 2013 in respect of loansmade as applicable. The company has not given any guarantee or security on behalf of anyparty.

(v) On the basis of our examination of books and records of the Company in ouropinion and according to the information and explanations given to us the company has notaccepted deposits during the year and therefore the directives issued by the Reserve bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theCompanies Act 2013 and the rules framed there under are not applicable to the Company.

(vi) In our opinion the Company is not required to maintain Cost records undersection 148(1) of the Companies Act 2013.

(vii) (a) According to the information and explanations given to us and on thebasis of our examination of the books and records of the Company the company is notregular in depositing undisputed statutory dues (except income-tax) and other materialstatutory dues with the appropriate authorities. According to the information andexplanations given to us and on the basis of our examination of the books and records ofthe Company no undisputed amounts payable in respect of income tax GST cess and othermaterial statutory dues were in arrears as at 31st March 2021 for a period of more thansix months from the date they became payable except for Service tax payable under reversecharge mechanism amounting to Rs 18600/- Profession Tax of `13000/- TDS of Rs653286/- and Goods and Services Tax of Rs 234000/-. (b) According to theinformation & explanation give to us there are no dues of Income tax and otherapplicable Statutory Dues which have not been deposited on account of any dispute.

(viii) The Company does not have any loans or borrowings from any financialinstitution banks orgovernment. The company has not issued any debentures during theyear. Accordingly paragraph 3(viii) of the Order is not applicable.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

(x) On the basis of our examination of books and records of the Company andaccording to the information and explanation provided to us no fraud by the company or onthe Company by its officers or employees has been noticed or reported during the year.

(xi) On the basis of our examination of books and records of the Company andaccording to the information and explanation provided to us the managerial remunerationpaid is according to the provisions of Section 197 read with Schedule V of the CompaniesAct 2013.

(xii) In our opinion and according to the information and explanations given to usthe Company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Companies Act 2013. Details of transactionswith the related parties have been disclosed in the Ind AS financial statements asrequired by the applicable accounting standards.

(xiv) 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 and therefore paragraph 3(xiv) of the Order is not applicable.

(xv) 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. Accordingly paragraph 3(xv) ofthe Order is not applicable.

(xvi) The Company is required to be registered under section 45-IA of the ReserveBank of India Act 1934 as a Non-Banking Finance Company and the registration has been soobtained.

For A. C. Bhuteria & Co.
Chartered Accountants
Firm's Registration No. 303105E
Sd/-
Bikas Kumar Burnwal
Partner
Place of Signature: Kolkata Membership No. 311785
Date: 12.08.2021 UDIN: 21311785AAAEC2154

Annexure ‘B' to the Independent 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 internal financial controls with reference to the financialstatements of

Frontier Capital Limited("the Company") as of 31st March 2021 inconjunction with our audit of the Ind AS financial statements of the Company for the yearended 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 financial control with reference to thesefinancial 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 issued by the Institute of Chartered Accountants ofIndia (‘ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

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 deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 performingprocedures to obtain audit evidence about the adequacy of the internal financial controlswith reference to the financial statements and their operating effectiveness. Our audit ofinternal financial controls with reference to the financial statements included obtainingan understanding of internal financial controls with reference to financial statementsassessing 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 judgment including the assessment of the risks ofmaterial misstatement of the Ind AS 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 Company's internal financial controls withreference to the financial statements.

Meaning of Internal Financial Controls with reference to the financial statements

A company's internal financial control with reference to the financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to the financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial statements.

Inherent Limitations of Internal Financial Controls with reference to the financialstatements

Because of the inherent limitations of internal financial controls with reference tothe financial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to the financial statements to future periods are subject to the risk that theinternal financial control with reference to the financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to the financial statements and such internal financialcontrols with reference to the financial statements were operating effectively as at 31stMarch 2021 based on the internal financial control with reference to the financialstatements 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.

For A. C. Bhuteria & Co.
Chartered Accountants
Firm's Registration No. 303105E
Sd/-
Bikas Kumar Burnwal
Partner
Place of Signature: Kolkata Membership No. 311785
Date: 12.08.2021 UDIN: 21311785AAAEC2154

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