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Hybrid Financial Services Ltd.

BSE: 500262 Sector: Financials
NSE: MAFATLAFIN ISIN Code: INE965B01014
BSE 05:30 | 01 Jan Hybrid Financial Services Ltd
NSE 05:30 | 01 Jan Hybrid Financial Services Ltd

Hybrid Financial Services Ltd. (MAFATLAFIN) - Auditors Report

Company auditors report

To

The Members

HYBRID FINANCIAL SERVICES LIMITED (formerly known as MAFATLAL FINANCE COMPANY LIMITED)

Report on the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of HYBRID FINANCIALSERVICES LIMITED (formerly known as MAFATLAL FINANCE COMPANY LIMITED) ("theCompany") which comprise the balance sheet as at 31st March 2019 and the statementof Profit and Loss statement of changes in equity and statement of cash flows for theyear then ended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2019 and profit changes in equity and its cash flows for the year endedon 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 Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion on thestandalone financial statements.

Emphasis of Matter

We draw attention to Note 2.19.12 of the standalone financial statements which statesthat the Company has made provision towards gratuity on the basis of Gratuity Act insteadof Ind AS 19 as prescribed by ICAI. "Employee Benefit. Our opinion is not modified inrespect of this matter

Key Audit Matters

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 key audit matters to be communicated in our report.

Key Audit Matters Auditor's Response
1 Disputed Tax and other liabilities. Principal Audit Procedures
The company has received demand from income tax department The Company has material uncertain tax positions including matters under dispute demand from FEMA and other different regulators like civil court labour court consumer forums etc. which involves significant judgment to determine the possible outcome of these disputes. Refer Notes 2.19.1 to the Standalone Financial Statements 2 Immovable properties acquired in satisfaction During the year 2004-2005 the company has accounted for the immovable properties acquired in satisfaction of claims valued at Rs.5976429/-. Though the company is in possession of the property registration in the name of company is still pending.

Obtained details of completed tax assessments and correspondences from different regulators made by the company during the year. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and other demand from various regulators and the possible outcome of those disputes. Our internal experts and company's legal consultant also considered legal precedence and other rulings in evaluating management's position on these uncertain liabilities. Additionally we considered the effect of new information in respect of uncertain tax positions and other matters as at April 1 2018 to evaluate whether any change was required to management's position on these uncertainties. Principal Audit Procedures We have been informed by the Management that the documents related to the property are still pending for registration and follow up is being made for registration of the same.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone 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 ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing 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 changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

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

Auditor's Responsibilities for the Audit of the Standalone 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.

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 A" 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 andobtained all the information and explanations subject to Item No 4 of Note No. 2.19regarding non-receipt of confirmation of certain bank balances which to the best of ourknowledge and belief were necessary for the purpose of our audit. b) 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 c) The Balance Sheet the Statement of Profitand Loss and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account. d) In our opinion the aforesaid standalone financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014. e) On the basis of the written representationsreceived from the Directors as on 31st March 2019 taken on record by the Board ofDirectors none of the Directors is disqualified as on 31st March 2019 from beingappointed as a Director in terms of Section 164 (2) of the Act. f) With respect to theadequacy of the internal financial controls over financial reporting of the Company andthe operating effectiveness of such controls refer to our separate Report in"Annexure B". g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 in our opinion and to the best of our information and according to the explanationsgiven to us: i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements Refer Note 2.19.1 to the financialstatements; ii. Company did not have any long-term contracts including derivativescontracts for which there were any material foreseeable losses. iii. There were no amountswhich required to be transferred to the Investor Education and Protection Fund by theCompany.

FOR S. RAMANAND AIYAR & CO

Chartered Accountants Firm Registration No: 000990N

BINOD C. MAHARANA

Place: Mumbai Partner Date: 21st May 2019 Membership No. 056373

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

[The annexure referred to in our Independent Auditors' Report of even date to themembers of the Company on the standalone Ind AS financial statements for the year ended 31March 2019 in paragraph 1 under the heading "Report on Other Legal and RegulatoryRequirements" of HYBRID FINANCIAL SERVICES LIMITED (formerly known as MAFATLALFINANCE COMPANY LIMITED) (i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets (b) The fixedassets were physically verified during the year by the Management in accordance with aregular programme of verification which in our opinion provides for physicalverification of all the fixed assets at reasonable intervals. According to the informationand explanation given to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) The Company being in the service sector clause (ii) of paragraph 3 of the Orderis not applicable to the Company.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties which arecovered in the Register to be maintained under Section 189 of the Companies Act 2013.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public during the year and hence the directives issued bythe Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed there under are not applicableto the Company.

(vi) According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records under Section 148(1) of the Act.Therefore the provisions of clause (vi) of the Order are not applicable to the Company.

(vii) (a) The Company has generally been regular in depositing undisputed statutorydues including provident fund employees' state insurance income-tax sales-tax goodsand service tax customs duty excise duty value added tax cess and any other materialstatutory dues applicable to it with the appropriate authorities.

According to the information and explanations given to us there were no undisputedamounts payable in respect of provident fund employees' state insurance income-taxsales-tax goods and service tax customs duty excise duty value added tax cess and anyother material statutory dues in arrears as at 31st March 2019 for a period of more thansix months from the date they became payable.

(b) According to the information and explanations given to us detail of statutory dueswhich has not been deposited as on 31st March 2019 on account of dispute is given below:

Name of Statute Nature of the dues Amount (Rs.) Period to which the amount relates Forum where dispute is pending
Sub-Regional Office Employees' Provident Fund Vashi Demand Under Section 7A proceedings 2106154/- 2013-2014 The Company had appealed against the order and obtained a favourable decision in its favour from Employee Provident Fund Appellate Tribunal. The Company is unaware of any appeal made by the Department against the same.
Income Tax Act 1961. Income Tax 81451511/- 1993-94 to 1998-99 Assessing Officer

(viii) The Company does not have any loans or borrowings from any financialinstitution banks government or debenture holders during the year. Accordinglyparagraph 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.

Accordingly paragraph 3 (ix) of the Order is not applicable.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany 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 Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations give 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.

(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 not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

FOR S. RAMANAND AIYAR & CO

Chartered Accountants Firm Registration No: 000990N

BINOD C. MAHARANA

Place: Mumbai Partner Date: 21st May 2019 Membership No. 056373

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 over financial reporting of HybridFinancial Services Limited (formerly known as Mafatlal Finance Company Limited) ("theCompany") as of 31st March 2019 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

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 the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions 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 authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised 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 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

FOR S. RAMANAND AIYAR & CO

Chartered Accountants Firm Registration No: 000990N

BINOD C. MAHARANA

Partner4 Membership No. 056373 Place: Mumbai Date: 21st May 2019

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