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Geojit Financial Services Ltd.

BSE: 532285 Sector: Financials
NSE: GEOJITFSL ISIN Code: INE007B01023
BSE 00:00 | 03 Mar 52.75 1.30
(2.53%)
OPEN

51.70

HIGH

53.95

LOW

51.10

NSE 00:00 | 03 Mar 52.75 1.40
(2.73%)
OPEN

51.95

HIGH

53.95

LOW

51.70

OPEN 51.70
PREVIOUS CLOSE 51.45
VOLUME 117060
52-Week high 63.15
52-Week low 15.00
P/E 13.06
Mkt Cap.(Rs cr) 1,258
Buy Price 52.75
Buy Qty 300.00
Sell Price 53.00
Sell Qty 1884.00
OPEN 51.70
CLOSE 51.45
VOLUME 117060
52-Week high 63.15
52-Week low 15.00
P/E 13.06
Mkt Cap.(Rs cr) 1,258
Buy Price 52.75
Buy Qty 300.00
Sell Price 53.00
Sell Qty 1884.00

Geojit Financial Services Ltd. (GEOJITFSL) - Auditors Report

Company auditors report

To the Members of Geojit Financial Services Limited Report on the Auditof the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Geojit FinancialServices Limited ("the Company") which comprise the standalone balance sheet asat 31 March 2020 the standalone statement of profit and loss (including othercomprehensive income) standalone statement of changes in equity and standalone statementof cash flows for the year then ended 31 March 2020 and notes to the standalone financialstatements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2020and profit and other comprehensive income changes in equity and its cash flows for theyear ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder 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 on theStandalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Description of Key Audit Matters Transition date accounting policies

Refer to Note 43 to the Standalone Financial Statements: 'First timeadoption of Ind AS'

Key audit matter How the matter was addressed in our audit
Adoption of new accounting framework (Ind AS) Our audit procedures included:
Effective 1 April 2019 the Company adopted the Indian Accounting Standards ("Ind AS") notified by the Ministry of Corporate Affairs with transition date of 1 April 2018. • We have confirmed the approvals of Audit Committee for the choices and exemptions made by the Company for compliance with Ind AS 101.
The following are the key impact areas for the Company upon transition to Ind AS: • Evaluated management's transition date choices and exemptions for compliance under Ind AS 101.
• Classification and measurement of financial assets and financial liabilities
• Evaluated the appropriateness of the accounting policies based on the requirements of the applicable standards.
• Expected Credit Loss model for determining impairment losses
• Accounting for employee stock options; and • Assessed the accuracy of the computations for selected transactions.
• Accounting for Leases under Ind AS 116;
Key audit matter How the matter was addressed in our audit
Transition adjustments include complex accounting treatments which require determination of new accounting policies; election of various transition options available and practical expedients; and application of higher degree of management judgement and estimates. • Assessed areas of significant estimates and management judgement in line with principles under Ind AS.
We identified transition adjustments as a Key audit matter because of significant degree of management judgment and estimates on the areas noted above.
Information Technology
IT systems and controls We have focused on General IT controls i.e. access management change management and computer operations control and IT application controls on specific system generated reports and system/application processing over key financial accounting reporting systems and control systems for recording of income. Our audit procedures to assess the effectiveness of IT system included the following:
The Company's key financial accounting and reporting processes are highly dependent on the information systems including automated controls in implemented in the Information Technology (IT) systems such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being materially misstated. We have identified 'IT systems and controls' as Key audit matter since for the primary business (broking income) the Company relies on automated processes and controls for recording of income.
• Performed walkthroughs to evaluate the design and implementation of key automated controls.
• Involved our IT specialists to test the effectiveness of identified key IT automated controls and IT systems.
• IT specialists tested relevant key controls operating over IT in relation to financial accounting and reporting systems including general controls i.e. system access and system change management and computer operations.
• IT specialists tested design and operating effectiveness of key controls over user access management which includes granting access right new user creation removal of user rights and other preventive controls.
• For a selected group of key controls over financial and reporting system IT specialists independently performed procedures to determine that these controls remained unchanged during the year or were changed following the standard change management process.
• Other areas that were independently assessed included password policies security configurations system generated reports and system interface controls.
• Evaluating the design implementation and operating effectiveness of identified significant accounts related IT automated controls which are relevant for accuracy of system calculation and consistency of data transmission.

Independent Auditor's Report (Continued)

Other Information

The Company's management and Board of Directors are responsible for theother information. The other information comprises of management reports such asDirectors' report and Corporate Governance report (but does not include the Standalone IndAS Financial Statements and our Auditor's Report thereon) which we obtained prior to thedate of this Auditor's Report and the remaining sections of Annual Report which areexpected to be made available to us after that date.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone 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 other sections of Annual Report (other than thosementioned above) if we conclude that there is a material misstatement therein we arerequired to communicate the matter to those charged with governance and take necessaryactions as applicable under the applicable laws and regulations.

Management's and Board of Directors' Responsibility for theStandalone Financial Statements

The Company's management and Board of Directors are responsible for thematters stated in section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the state of affairsprofit other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act. 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; anddesign implementation and maintenance of adequate internal

financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Boardof Directors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 financial statements.

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 financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate 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. Under

section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the company has adequate internal financial controls with referenceto financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the standalone financialstatements made by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the standalone financial statements or ifsuch disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves 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.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are

therefore the key audit matters. We describe these matters in ourauditors' 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 (Auditors' Report) Order 2016("the Order") issued by the Central Government in terms of section 143 (11) ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. (A) As required by Section 143(3) of the Act we

report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

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

c) The standalone balance sheet the standalone statement of profit andloss the standalone statement of cash flows dealt with by this Report are in agreementwith the books of account.

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2020 from being appointed as a director in termsof Section 164(2) of the Act.

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

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

i. The Company has disclosed the impact of pending litigations as at 31March 2020 on its financial position in its standalone financial statements - Refer Note31 to the standalone financial statements.

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses - Refer Note 31to the standalone financial statements.

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

iv. The disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in standalone financial statements since theydo not pertain to the financial year ended 31 March 2020.

(C) With respect to the matter to be included in the Auditors' Reportunder section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

 

for B S R & Associates LLP

Chartered Accountants

Firm's Registration No: 116231W/ W-100024

Rohit Alexander

Partner

Membership No: 222515

ICAI Unique Document Identification

Number: 20222515AAAAAS2399

Bengaluru

12 June 2020

The Annexure referred to in our Independent Auditor's Report to themembers of the Company on the standalone financial statements for the year ended 31 March2020 we report that:

(i) (a) The Company has maintained proper records

showing full particulars including quantitative details and situationof fixed assets.

(b) The Company has a regular programme of physical verification of itsfixed assets by which fixed assets are verified in a phased manner over a period of threeyears. In accordance with this programme certain fixed assets were verified during theyear and no material discrepancies were noticed on such verification. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.

(ii) The Company is a service company primarily rendering financialservices. Accordingly paragraph 3 (ii) of the Order is not applicable.

(iii) The Company has granted loans to one of its subsidiary covered inthe register maintained under section 189 of the Companies Act 2013 ('the Act').

(a) In our opinion the rate of interest and other terms and conditionson which the loan had been granted to the subsidiary covered in the register maintainedunder Section 189 of the Act was not prima facie prejudicial to the interest of theCompany.

(b) In the case of the loan granted to the subsidiary covered in theregister maintained under Section 189 of the Act the borrower has been regular in thepayment of the principal and interest as stipulated.

(c) There are no overdue amounts in respect of the loan granted to thesubsidiary.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 185 and 186 of theAct with respect to the loans guarantees given and investments made as applicable to theCompany.

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted deposits falling under the directives issued bythe Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Companies Act and the rules framed thereunder.

(vi) The Central Government has not prescribed the maintenance of costrecords under section 148 of the Companies Act 2013 for any of the services rendered bythe Company.

(vii) (a) According to the information and explanations

given to us and on the basis of our examination of the records of theCompany amounts deducted/ accrued in the books of account in respect of undisputedstatutory dues including provident fund employees' state insurance income-tax goods andservices tax cess and other material statutory dues have generally been regularlydeposited during the year by the Company with the appropriate authorities. As explained tous the Company did not have any dues on account of sales tax duty of customs duty ofexcise and value added tax.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome tax goods and services tax cess and other material statutory dues were in arrearsas at 31 March 2020 for a period of more than six months from the date they becamepayable.

(b) According to the information and explanations given to us thefollowing dues of income tax and service tax have not been deposited by the Company onaccount of disputes:

Name of the statute Nature of dues Amount (in Rs.) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 2573221 (2573221)* 2000-01 Honorable High Court of Kerala
Income Tax Act 1961 Income Tax 1033321 (1033321)* 2001-02 Honorable High Court of Kerala
Income Tax Act 1961 Income Tax 909450 (909450)* 2002-03 Honorable High Court of Kerala
Income Tax Act 1961 Income Tax 1516840 (1516840)* 2007-08 Commissioner of Income Tax (Appeals) Kochi
Income Tax Act 1961 Income Tax 2800120 (1623570)* 2008-09 Commissioner of Income Tax (Appeals) Kochi
Income Tax Act 1961 Income Tax 72056240 2009-10 Commissioner of Income Tax (Appeals) Kochi
Income Tax Act 1961 Income Tax 2093220 2010-11 Commissioner of Income Tax (Appeals) Kochi
Income Tax Act 1961 Income Tax 3929883 2015-16 Commissioner of Income Tax (Appeals) Kochi
Income Tax Act 1961 Income Tax 3929883 2016-17 Commissioner of Income Tax (Appeals) Kochi
Finance Act 1994 Service Tax & Penalty 4901978 (250247)* April 2008 to June 2012 Commissioner of Central Excise (Appeals) Kochi
Finance Act 1994 Service Tax & Penalty 1095232 (41492)* 2009-10 Commissioner of Central Excise (Appeals) Kochi
Finance Act 1994 Service Tax & Penalty 813065 (54043)* 2010-11 Commissioner of Central Excise (Appeals) Kochi
Finance Act 1994 Service Tax & Penalty 510258 (18948)* 2012-13 Commissioner of Central Excise (Appeals) Kochi
Finance Act 1994 Service Tax & Penalty 302308 (20271)* April 2015 to June 2017 Commissioner of Central Excise (Appeals) Kochi
Finance Act 1994 Service Tax & Penalty 175608 (6398)* 2012-13 Commissioner of Central Excise (Appeals) Kochi

* Represents the payment made under protest.

(viii) According to the information and explanations given to us theCompany did not have any outstanding term loans debentures and dues to financialinstitutions during the year. Accordingly paragraph 3(viii) of the Order is notapplicable.

(ix) The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) or term loans. Accordingly paragraph3(ix) of the Order is not applicable.

(x) According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations give to us and basedon our examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.

(xii) The Company is not a Nidhi company. Accordingly paragraph 3(xii)of the Order is not applicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails

of such transactions have been disclosed in the financial statements asrequired by the applicable accounting standards.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.

(xvi)The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

 

for B S R & Associates LLP

Chartered Accountants

Firm's Registration No: 116231W/ W-100024

Rohit Alexander

Partner

Membership No: 222515

ICAI Unique Document Identification

Number: 20222515AAAAAS2399

Bengaluru 12 June 2020

Annexure B to the independent Auditors' Report

Report on the internal financial controls with reference to theaforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143of the Companies Act 2013

(Referred to in paragraph 2(A)(f) under 'Report on Other Legal andRegulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference tofinancial statements of Geojit Financial Services Limited ("the Company") as of31 March 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2020 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to 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 (hereinafterreferred to as "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to financial statements. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols 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 standalone financial statements whether due tofraud or error.

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

Meaning of Internal Financial controls with Reference to FinancialStatements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements include those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the

transactions and dispositions of the assets of 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 financialstatements.

Inherent Limitations of Internal Financial controls with Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also

projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

 

for B S R & Associates LLP

Chartered Accountants

Firm's Registration No: 116231W/ W-100024

Rohit Alexander

Partner

Membership No: 222515

ICAI Unique Document Identification

Number: 20222515AAAAAS2399

Bengaluru 12 June 2020

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