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GSB Finance Ltd.

BSE: 511543 Sector: Financials
NSE: N.A. ISIN Code: INE777C01011
BSE 16:00 | 28 Jan 11.64 -0.36
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NSE 05:30 | 01 Jan GSB Finance Ltd
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VOLUME 16
52-Week high 16.10
52-Week low 6.06
P/E 15.95
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 12.00
CLOSE 12.00
VOLUME 16
52-Week high 16.10
52-Week low 6.06
P/E 15.95
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

GSB Finance Ltd. (GSBFINANCE) - Auditors Report

Company auditors report

To the Members of GSB Finance Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of GSB Finance Limited ("theCompany") which comprise the balance sheet as at 31st March 2021 and the statementof Profit and Loss statement of changes in equity and statement of cash flows for theyear then ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory 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 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 31st March 2021 and profit/loss changes in equity andits cash flows 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 theFinancial 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 thefinancial 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.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

Due to the COVID-19 pandemic the lockdown and other restrictions imposed by theGovernment and Local Administration the audit processes were carried out based on theremote access to the extent available/feasible and necessary records made available by themanagement through digital medium.

Key Audit Matter Auditors' Response
Management estimates impairment provision using Expected Credit loss model for the loan exposure. Principal audit procedures performed:
Measurement of loan impairment involves application of significant judgment by the management. The most significant judgments are: We examined Board Policy approving methodologies for computation of ECL that address policies procedures and controls for assessing and measuring credit risk on all lending exposures commensurate with the size complexity and risk profile specific to the Company. The parameters and assumptions used and their rationale and basis are clearly documented.
? Timely identification and classification of the impaired loans and We evaluated the design and operating effectiveness of controls across the processes relevant to ECL including the judgments and estimates.
? Determination of probability of defaults (PD) and estimation of loss given defaults (LGD) based on the value of collaterals and relevant factors These controls among others included controls over the allocation of assets into stages including management's monitoring of stage effectiveness model monitoring including the need for post model adjustments model validation credit monitoring multiple economic scenarios individual provisions and production of journal entries and disclosures.
The estimation of Expected Credit Loss (ECL) on financial instruments involve significant judgments and estimates. Following are points with increased level of audit focus: We tested the completeness of loans and advances included in the Expected Credit Loss calculations as of 31 March 2020 by reconciling it with the balances as per loan balance register and loan commitment report as on that date.
? Classification of assets to stage 1 2 or 3 using criteria in accordance with Ind AS 109 which also include considering the impact of recent RBI's Covid- 19 regulatory circulars; We tested assets in stage 1 2 and 3 on sample basis to verify that they were allocated to the appropriate stage.
? Accounting interpretations modeling assumptions and data used to build and run the models; For samples of exposure we tested the appropriateness of determining EAD PD and LGD.
? Measurement of individual borrowers' provisions including Covid-19 impact assessment of multiple economic scenarios; For exposure determined to be individually impaired we tested samples of loans and advances and examined management's estimate of future cash flows assessed their reasonableness and checked the resultant provision calculations.
? Inputs and Judgments used in determination of management overlay at various asset stages considering the current uncertain economic environment with the range of possible effects unknown to the country arising out of the COVID 19 Pandemic and We performed an overall assessment of the ECL provision levels at each stage including management's assessment on Covid-19 impact to determine if they were reasonable considering the Company's portfolio risk profile credit risk management practices and the macroeconomic environment.
? The disclosures made in financial statements for ECL especially in relation to judgments and estimates by the Management in determination of the ECL. Refer note 33 to the standalone financial statements. We assessed the adequacy and appropriateness of disclosures in compliance with the Ind AS 107 in relation to ECL especially in relation to judgments used in estimation of ECL provision.

Our opinion is not qualified in respect of the above matters

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the [information included in the Management report but does notinclude the financial statements and our auditor's report thereon.] Our opinion on thefinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon. In connection with our audit of the financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information; we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Financial Statements

The Comp any'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 financia lposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting 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 controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

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

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements are free from material misstatement whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

• We communicate with those charged with governance regarding among othermatters 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 we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

• From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the 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

Report on Other Legal and Regulatory Requirements

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 Companies Act 2013 we give in the Annexure "B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable. As required bySection 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 was necessary for the purposes of our audit. In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books.

(b) The Balance Sheet the Statement of Profit and Loss (including other compressiveincome statement of Changes in Equity and statement of the Cash Flow dealt with by thisReport are in agreement with the books of account.

(c) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(d) On the basis of the written representations received from the directors as on 31stMarch 2021taken on record by the Board of Directors none of the directors is disqualifiedas on 31st March 2021from being appointed as a director in terms of Section 164 (2) of theAct.

(e) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".

(f) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

 

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 29 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe investor education and protection fund by the company.

Annexure A- To the Independent Auditors' Report:

The Annexure referred to in paragraph 1 under the ‘Report on Other Legal andRegulatory Requirements' our report in the members of GSB Finance Limited ("TheCompany") for the year ended on 31st March 2020 We report that:-

(i) (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) Fixed assets have been physically verified by the management at reasonableintervals; and no material discrepancies were noticed on such verification

(c) The company does not hold any immovable property. Hence clause 3(i)(c) about titledeeds of immovable properties is not applicable in the present case.

(ii) Company has inventory in electronic mode hence verification of inventory has beendone through demat statement at reasonable intervals by the management and no materialdiscrepancies were noticed.

(iii) The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013.

(a) as the company has not granted any loans to parties covered under section 189clause 3(iii)(a) which deals with terms and conditions of the grant of such loans is notapplicable;

(b) as the company has not granted any loans to parties covered under section 189clause 3(iii)(b) which deals with schedule of repayment of principal and payment ofinterest is not applicable;

(c) as the company has not granted any loans to parties covered under section 189 thequestion of amount being overdue does not arise;

(iv) In our opinion and according to the information and explanations given to us theCompany has not granted any loans or provided any guarantee or security to the partiescovered under Section 185 and hence provisions of Clause 3(iv) of the aforesaid Order inthis regard are not applicable to the Company. Further the Company has complied withprovision of Section 186 of the Act in respect of the investments made by it.

(v) In our opinion and according to the information and explanations given to us TheCompany has not accepted any deposits. Hence clause 3(v) which deals with directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Companies Act 2013 and the rules framed there under are notapplicable

(vi) In our opinion and according to the information and explanations given to us theCompany is not required to maintain cost records pursuant to the Rules made by the CentralGovernment for the maintenance of cost records under sub-section (l) of section 148 of theCompanies Act.

(vii) According to the records of the Company the Company is generally regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income -tax sales tax wealth tax duty of customsduty of excise value added tax or cess and other statutory dues applicable to it. Noundisputed amounts payable in respect of provident fund employees' state insuranceincome -tax sales tax wealth tax duty of customs duty of excise value added tax orcess and other statutory dues were outstanding as at 31-03-2020 for a period of morethan six months from the date they became payable.

a) According to the records of the Company and information and explanations given to usno dues of income tax sales tax wealth tax service tax duty of customs duty ofexcise value added tax or cess that have not been deposited on account of any disputesexcept as follows:

Name of the Statue Nature of Dispute Amount paid under Protest (Rs in lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 0.07 AY 2011-12 Under Re-assessment Proceedings raised on 26.12.2018
Income Tax Act 1961 Income Tax 4.75 AY 2012-13 Demand As Per Order u/s.143(1)(a)

(viii) Based on our audit procedures and according to the information and explanationsgiven to us by the management we are of the opinion that the Company has notdefaulted in repayment of dues to financial institutions and bank.

(ix) Based on our audit procedures and according to the information and explanationsgiven to us by the management the Company has not raised any money during the year underreview.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor we have been informed of any such case by themanagement

(xi) Managerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct;

(xii) The company is not a Nidhi Company. Hence clause 3(xii) will not be applicable

(xiii) The Company has entered into the transaction with the related parties incompliance with the provisions of the Section 177

and 188 of the Act. The details of such related party transactions have been disclosedin the standalone financial statements as required under Indian Accounting Standard (IndAS) 24 Related Party Disclosures specified under Section 133 of the Act read with Rule 7of the Companies (Accounts) Rules 2014.

Name of Related Party Designation Remuneration
1. Shri Ramakant S. Biyani Mg. Director 600000/-
2. Shri Suyash Ramakant Biyani Director 600000/-

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review and henceprovisions of Clause 3(xiv) of the aforesaid Order are not applicable to the Company.

(xv) The Company has not entered into any non-cash transactions with its directors orthe persons connected with him and hence provisions of Clause 3(xv) of the aforesaid Orderare not applicable to the Company.

(xvi) The company is registered under section 45-IA of the Reserve Bank of India Act1934 and the registration is enforced for the same.

AUDITORS' CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OFCORPORATE GOVERNANCE UNDERSEBI

(Listing Obligations and Disclosure Requirements) Regulations 2015 and as per theListing Agreement

To

The Members GSB Finance Ltd.

We have examined the compliance of the conditions of Corporate Governance by GSBFinance Ltd.(‘the Company') for the year ended 31st March 2021 as stipulated inClause 49 of the Listing Agreement (‘Listing Agreement') of the Company with theStock exchanges for the period 01st April 2015 to 30thNovember2015 and as per the relevant provisions of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations) as referred to inRegulation 15(2) of the Listing Regulations for the period . The complianceof conditions of corporate governance is the responsibility of the management. Ourexamination was limited to review of the procedures and implementations thereofadopted by the Company for ensuring the compliance of the conditions of theCorporate Governance. It is neither an audit nor an expression of an opinion on thefinancial statements of the company.

In our opinion and to the best of our information and according to the explanationsgiven to us and based on representations made by directors and Management we certifythat the Company has complied with the conditions of Corporate Governance as stipulated inthe above-mentioned Listing Agreement/Listing Regulations as applicable.

We further state that such compliance is neither an assurance as to the futureviability of the Company nor of the efficiency or effectiveness with which the managementhas conducted the affairs of the company.

Annexure B- to the Independent Auditor's 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 over financial reporting of GSB FinanceLimited ("the Company") as of March 31 2021in conjunction with our audit of thestandalone 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 Financi al Reporting(the "Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccur acy and completeness of the accounting records and the timely preparation ofreliable 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 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 controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial 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 systemover financial reporting.

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.

Opinion

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 March 31 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theInstitute of Chartered Accountants of India .

For H. P. Jadeja & Associates
Chartered Accountants
Firm Registration No. 135374W
Date : 29th June 2021
Place : Mumbai
UDIN : 21152374AAAAEF1054

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