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Hem Holdings & Trading Ltd.

BSE: 505520 Sector: Financials
NSE: N.A. ISIN Code: N.A.
BSE 05:30 | 01 Jan Hem Holdings & Trading Ltd
NSE 05:30 | 01 Jan Hem Holdings & Trading Ltd

Hem Holdings & Trading Ltd. (HEMHOLDINGST) - Auditors Report

Company auditors report

To the Members

HEM HOLDINGS AND TRADING LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Hem Holding & TradingLimited (the 'Company') which comprise the standalone balance sheet as at 31st March2022 and the standalone statement of profit and loss (including other comprehensiveincome) the standalone statement of changes in equity and the standalone statement ofcash flows for the year then ended and notes to the standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as the 'standalone financial statements').

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the 'Act') in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company asat 31st March 2022 and loss .and other comprehensiveincome changes in equity and its 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 Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India (the 'ICAI')together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics; We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

Kev Audit Mattel's

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were addressed in the context of our audit of the Standalone Financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe kev audit matters to be communicated in our report. - NIL

Principal Audit Procedures;

We have started our audit procedures with understanding of the internal controlenvironment related to impairment loss allowance. Our procedures over internal controlsfocused on recognition and measurement of impairment loss allowance. We assessed thedesign and tested the operating effectiveness of the selected key controls implemented bythe Company.

We also assessed whether the impairment methodology used by the company is in line withInd AS 109 "Financial instruments" requirements. Particularly we assessed theapproach of the Company regarding definition of default Probability of Default LossGiven Default and incorporation of forward-looking information for the calculation of ECL.

For loans and advances which are assessed for impairment on a portfolio basis weperformed particularly the following procedures:

• We tested the reliability of key data inputs and related management controls;

• We checked the stage classification as at the balance sheet date as perdefinition of default of the company;

• We validated the ECL model and calculation by involving our InformationTechnolog)' Expert;

• We have also calculated the ECL provision manually for a selected sample; and

• We have assessed the assumptions made by the Company in making acceleratedprovision considering forward looking information and based on an event in a particulargeographical range.

For loans and advances which are written off during the year under audit we read andunderstood the methodology and policy laid down and implemented by the Company in thisregard along with its compliance on sample basis.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion &Analysis Director's Report and Corporate Governance Report but does not include theStandalone Financial Statements and our-auditor's report thereon.

Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so. consider whether the other informationis materially inconsistent with the Standalone Financial Statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required toreport that fact.

We have nothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Ind AS specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statement that give a true and fair view and are free frommaterial 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 as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our Opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

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

• Identify and assess the risks of material misstatement of the 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 resuiting 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 audi) evidence obtained up to the date of our auditor's report.However future events or conditions may cause the Company to cease to continue as a goingconcern.

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

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the- key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2020 ("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" statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by tipr-^Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

(d) 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.

(e) On the basis of the written representations received from the directors as on 31stMarch 2022 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2022 from being appointed as a director in tenns of Section164(2) of the Act.

(f) 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"

(g) 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 noremuneration has been paid/ provided by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

(h) 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 does not have any pending litigations which would impact its financialposition.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses during the year ended 31st March 2022

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

ANINEXURK - A10 THE IISPEPENPENI AUDITORS' RETORT

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 HenHoldings and Trading Limited ("the Company") as of 31st March 2022 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

I'hc Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing 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 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 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 31st March 2022 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by ICAI.

ANNEXURE 'B' TO THE AUDITORS* REPORT -

The Annexure referred to in our Report to the members of Hem Holdings and TradingLimited on the Financial Statements for the year ended 31st March 2022.

i. In respect of its Fixed Assets: -

a. (A) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.

(B) In respect of its Intangible assets there being no intangible assets this clauseis not applicable.

b. As explained to us the Company has a program for the physical verification of fixedassets at periodic intervals. In our opinion the period of verification is reasonablehaving regard to the size of the company and nature of its assets. No significantdiscrepancies were noticed on such verification.

c. We have inspected the original deeds of the immovable properties of the company heldas fixed assets which are in the custody of the Company. Based on our audit procedures andthe information and explanation received by us we report that all title deeds ofimmovable properties of the company held as fixed assets are held in the name of theCompany.

d. The company has not revalued its Property Plant and Equipment (including Right ofUse assets) or intangible assets or both during the year.

e. No proceedings have been initiated or are pending against the company for holdingany Benami property under the "Benami Transactions (Prohibition) Act 1988 and Rulesmade thereunder.

ii. (a) In respect of its Inventories there being no inventory this clause is notapplicable.

(b) During any point of time of the year the Company has not been sanctioned workingcapital limits in excess of Rs. 5 crores in aggregate from banks or financialinstitutions on the basis of security of current assets.

iii. In respect of investments in provided any guarantee or security or granted anyloans or advances in the nature of loans secured or unsecured to companies firmsLimited Liability Partnerships or any other parties:

a (A) The company has granted loan/advances to associate company and year-end balancewas Rs. 3690773/- and the company has made investments in associate company and year-endbalance was Rs. 1775115/-

(B) The company has not granted loan/advances to parties other than subsidiaries jointventures and associates.

b. According to the information and explanations given to us the investments madeguarantees provided security given and the terms and conditions of the grant of all loansand advances in the nature of loans and guarantees provided are not prejudicial to thecompany's interest.

c. According to the information and explanations given to us there is no stipulationas to receipt of principal and interest.

d. According to the information and explanations given to us there is no overdueamount of loans granted to the companies.

e. There are no such loan or advance in the nature of has fallen due during the yearhas been renewed or extended on M^vltfanjiRanted to settle the overdues of existing loansgiven to the same parties.

f. The Company has granted loans or advances in the nature of loans either repayable ondemand or without specifying any terms or period of repayment to associate company andthe year end balance was Rs. 3690773/- percentage thereof to the total loans grantedwas 100% and the company has made investments in associate company and year-end balancewas Rs. 1775115/- percentage thereof to the total investments was 100%.

iv. In our opinion and according to information and explanations given to us theCompany has complied with provisions 4 of Section 185 and 186 of the Act in respect ofloans investments guarantees and security.

v. The Company has not accepted any deposits from the public during the period to whichthe directives issued by the Reserve Bank of India and the provisions of sections 73 to 76or any other relevant provisions of the Companies Act 2013 and the rules made thereunderare applicable. .

vi. According to the information and explanations provided by the management theCompany is not engaged in production of any such goods or provision of any such servicesfor which Central Govt has prescribed particulars relating to utilization of material orlabor or other items of cost. Hence no cost records as prescribed by the centralgovernment under section 148(1) of the Companies Act 2013 have been prepared by theCompany.

vii. In respect of statutory dues: -

a. According to the information and explanations given to us undisputed statutory/dues including Provident Fund Employees State Insurance Income Tax Sales Tax WealthTax Service Tax Duty of Customs Duty of Excise Value Added Tax Cess Goods &Service Tax and other statutory dues have been regularly deposited with the appropriate^authorities. According to the information and explanations given to us no undisputedamounts payable in respect of the aforesaid dues were outstanding as at 31st March 2022for a period of more than six months from the date of becoming payable.

b. There are no disputed statutory dues

viii. No transactions is being recorded in the books of account which have beensurrendered or disclosed as income during the year in the tax assessments under the IncomeTax Act 1961.

ix. (a) The company has not defaulted in repayment of loans or other borrowings or inthe payment of interest thereon to any lender.

(b) The company is not a declared willful defaulter by any bank or financialinstitution or other lender.

(c ) The company has not applied for any term loans during the year.

(d) The company has not raised any funds on short term basis which has utilized forlong term purposes.

(e) The company has not taken any funds from any entity or person on account of or tomeet the obligations of its subsidiaries associates or joint ventimz6*^so^v^

(f) The Company has not raised loans during the year on the plpi^prf^^^aes held in itssubsidiaries joint ventures or associate companies.

x. (a) The company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the year were applied for the purposesfor which those are raised.

(b) The Company has not made any preferential allotment or private placement of sharesor convertible debentures (fully partially or optionally convertible) during the year.

xi. (a) In our opinion and according to the information and explanation given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year that causes the financial statements to be materiallymisstated.

(b) No report under sub-Section (12) of Section 143 of the Companies Act has been filedby the auditors in Form ADT-4 as prescribed under Rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government.

(c ) the auditor has not received any whistle-blower complaints.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company as prescribed under section 406 of the Act. Accordinglyparagraph 3(xii) of the Order is not applicable.

xtit. According to the information and explanations given to us all transactions withthe related parties are in compliance with Section 177 and 188 of Act where applicableand the details have been disclosed in the Financial Statements as required by theapplicable accounting standards.

xiv. The company has an interim! audit system commensurate with the size and nature ofits business.

xv. The company has not entered into any non-cash transactions with directors orpersons connected with him as prescribed under section 192 of the Companies Act 2013.

xvi. (a) The Company is required to be registered under Section 45-IA of the ReserveBank of India Act 1934 and it has obtained the registration.

(b) The Company has not conducted any Non-Banking Financial or Housing Financeactivities without a valid Certificate of Registration (CoR) from the Reserve Bank ofIndia as per the Reserve Bank of India Act 1934.

(c ) The Company is not a Core Investment Company (CIC) as defined under theRegulations by the Reserve Bank of India.

xvii. the Company has incurred cash losses in the current financial year of Rs.275999/- and in the immediately preceding financial year of Rs. 617500/-.

xviii. There has been any resignation of the statutory auditors during the year and wehave taken into consideration the issues objections or concerns raised by the outgoingauditors.

xix. As per our opinion there is no material uncertainty exist^^^oir4fi^date of theaudit report that company is capable of meeting its liabilities e^^^^yf^jdate of balancesheet as and when they fall due within a period of one yearyfrom ‘il^IMjmce sheetdate.

xx. Since the company has no project other than ongoing projects in which the companymay have transferred unspent amount to a Fund specified in Schedule VII to the CompaniesAct within a period of six months of the expiry of the financial year in compliance withsecond proviso to sub-section (5) of section 135 of the said Act.

xxi. Since the company's financial statement is not being consolidated with any othercompanies. Therefore this clause is not applicable.

.