The members of
INDIA FINSEC LIMITED
Report on the Audit of Standalone Financial Statements
We have audited the accompanying standalone financial statements of INDIA FINSECLIMITED ("the Company") which comprise the balance sheet as at 31stMarch 2019 the statement of profit and loss and the statement of cash flows for the yearthen ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information (hereby referred as thefinancial statement').
In our opinion and to the best of our information and explanations given to us theaforesaid standalone financial statements give the information required by the CompaniesAct 2013 ("the Act") in the manner so required and give a true and fair view inconformity with the Accounting Standard (AS) prescribed under section 133 of the CompaniesAct 2013 read with the Companies (Accounting Standard) Rules 2006 as amended and theother accounting principles generally accepted in India: -
i. In case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2019;
ii. In case of Statement of Profit and Loss of the profit for the year endedon that date; and
iii. In case of Cash Flow Statement of the cash flows for the year ended onthat 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 standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the FinancialStatements' section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Act and the rules there under and we havefulfilled our ethical responsibilities in accordance with these requirements and the Codeof Ethics. We believe that the audit evidences we have obtained are sufficient andappropriate 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. Wehave determined the matters described hereunder to be key audit matters to be communicatedin our report.
|S.No. Key audit matters ||Auditor's response |
|1. Loans and advances: - ||Our audit procedure inter- alia include the following: - |
|As primary business of Company is advancing of the loan and during the year significant loan advancing transactions taken place. ||1. We evaluated the control environment including authorization sanctioning and disbursement of significant loans advanced during the year. |
|We focused on the conditions of disbursement and appropriateness of sanctioning process. ||2. We have obtained external confirmations from third parties in respect of transactions and closing balance for significant loans advanced by the company. |
| ||3. We tested all material entries recorded in connection with the loan advance and interest thereon to determine whether the accounting was appropriate. |
|2. Compliance of RBI directions and circulars: ||Our audit procedure inter- alia include the following: - |
|The recent RBI regulations increased the responsibility of auditors of NBFCs. ||We have reviewed the conditions for prudential norms prescribed by the RBI including: - |
|As Company is an NBFC it is responsibility of Company to duly follow the directions and circulars. ||a) Provision on standard assets. |
|We focused on the requisite compliance and disclosure as per the requirements in the norms. ||b) Transfer of 20% profit to reserve maintain under section 45-IC of the RBI Act. |
| ||c) Holding of at least 50% of the financial assets and 50% of the financial income respectively. |
| ||d) Maintaining minimum Net Owned Fund of Rs. 200 Lakhs. |
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 Annexure to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and the auditor's report thereon.
Our opinion on the standalone financial statement 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 during the course 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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance and cashflows of the Company in accordance with the AS and the other accounting principlesgenerally accepted in India. 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 are operating effectively for insuring 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 misstatements whether due 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 Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain a reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue our report that includes our opinion. Reasonable assurance is ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arise dueto fraud or error and are considered material if individually or in 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 the SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
(i) Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.
(ii) Obtain an understanding of the internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
(iii) Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
(iv) Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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.
(v) 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.
Materiality is the magnitude of misstatements in the financial statement individuallyor in aggregate makes it probable that the economic decision of reasonable knowledgeableuser of the financial statement may be influenced.
We consider quantitative materiality and qualitative factors in (i) Planning the scopeof our audit work and in evaluating the results of our work; and (ii) to evaluate theeffect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal controls 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 reasonable be thought to bear on ourindependence and where applicable relevant 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 or 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
1. As required by the Companies (Auditor's Report) Order 2016 (the Order') asamended issued by the Central Government of India in terms of sub-section (11) of section143 of the 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. The Company is a Non-Banking Financial Company not accepting public deposits andholding certificate of Registration No.: B-14.00127 dated 09/03/2012 from Reserve Bank ofIndia has been issued to the Company.
a) The Board of Directors has passed resolution for the non-acceptance of any publicdeposits.
b) The Company has not accepted any public deposits during the relevant year.
c) The Company has complied with the prudential norms relating to income recognitionaccounting standards assets classification and previously for bad and doubtful debts asapplicable to it.
3. 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 theCompany 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;
In our opinion the aforesaid financial statements comply with the accounting standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014;
d. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.
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 B. Our report expresses an unmodified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
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 if any of pending litigations on its financialposition in its standalone financial statements (Refer to note no. 31 of the standalonefinancial statement).
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. The Company is not required to transfer any amount to the Investor Education andProtection Fund.
FOR V.N. PUROHIT & CO.
Firm Regn. No. 304040E
Membership No. 014238
New Delhi the 30th day of May 2019
ANNEXURE - A TO THE AUDITOR'S REPORT
The Annexure referred to in Paragraph 1 under the heading of "Report on otherLegal and Regulatory Requirements" of our report of even date to the members of INDIAFINSEC LIMITED for the year ended on 31st March 2019.
(i) (a) As per information and explanation given to us the company is maintainingproper records showing full disclosures of fixed assets.
(b) As per information and explanation given to us physical verification of fixedassets has been conducted once in a year by the management and no material discrepancieswere noticed during the course of verification.
(c) According to information and explanation given to us the company does not hold anyimmovable property during the year dealt with by this report;
(ii) As per information and explanation given to us physical verification of inventoryhas been conducted once in a year by the management and no material discrepancies werenoticed during the course of physical verification;
(iii) According to information and explanation given to us the Company grantedunsecured loans to parties covered in register maintained under section 189 of theCompanies Act 2013 and;
(a) The unsecured loans have been granted to its subsidiary for carrying on theirrespective business objects. The terms and conditions of the grant of such loans are notprejudicial to the Company's interests;
(b) According to the information and explanation given to us the unsecured loans arerepayable on demand and no schedule of repayment and payment of interest has beenstipulated and thus there arises no question of regularity in repayment;
(c) No amount is overdue in respect of unsecured loans granted as per stipulation.
(iv) According to information and explanations given to us the Company has compliedwith the provisions of section 185 and section 186 of the Companies Act 2013 to theextent applicable in respect of loans advances guarantees and securities so given;
(v) According to information and explanations given to us the Company has not acceptedpublic deposits and the provision of section 73 to 76 or other relevant provisions of theCompanies Act 2013 and rules framed there under are not applicable to the Company;
(vi) According to information and explanations given to us the Company is not liableto maintain cost records as prescribed under section 148(1) of the Companies Act 2013;
(vii) (a) According to information and explanations given to us the company isgenerally regular in depositing undisputed statutory dues including income-tax and anyother applicable statutory dues to the appropriate authorities and there are nooutstanding statutory dues as on the last day of the financial year concerned for a periodof more than six months from the date they became payable;
(b) According to information and explanation given to us there are no outstandingstatutory dues on the part of the Company which is not deposited on account of dispute.
(viii) According to information and explanations given to us the company has notdefaulted in repayment of loans and borrowings from any financial institution bankgovernment or dues to debenture holders;
(ix) According to information and explanations given to us the Company has not raisedmoney by way of initial public offer or further public offer. The Company has not takenany term loans from any bank or financial institution;
(x) According to information and explanations given to us there is no noticed orunreported fraud on or by the Company during the year under audit;
(xi)According to information and explanations given to us the Company has paidmanagerial remuneration is accordance with applicable provisions of the Companies Act2013;
(xii) As per information the Company is not a Nidhi Company hence provisions of sub-clause (xii) of the Paragraph 3 of the Order are not applicable;
(xiii) According to information and explanations given to us all transactions with therelated parties are in compliance with sections 177 and 188 of Companies Act 2013wherever applicable and the details have been disclosed in the financial statements etc.as required by the applicable accounting standards;
(xiv) According to information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year;
(xv) According to information and explanations given to us the Company has not enteredinto non- cash transactions with directors or persons connected with him;
(xvi) According to information and explanations given to us the Company is a Non-Banking Financial Company and registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
Signed for the purpose of identification
FOR V.N. PUROHIT & CO.
Firm Regn. No. 304040E
Membership No. 014238
New Delhi the 30th day of May 2019