The Members of KEMP & COMPANY LIMITED
Report on the Audit of the financial statements
We have audited the accompanying financial statements of KEMP & COMPANY LIMITED("the Company") which comprise the Balance Sheet as at March 31 2019 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity the Statement of Cash Flows for the year the ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements")In our opinion and to the best of our information and according to the explanations givento us the aforesaid 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 principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 the profit equity and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) 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 Code of Ethics. We believe that the audit evidence we haveobtained is sufficientand 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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
A. Valuation of Unquoted Investments
Description of Key Audit Matters
The Company's has made investments in financial instruments amounting to Rs. 111701thousand as of March 31 2019. Due to their unique structure and terms the valuations ofinvestments these unquoted are based on valuations. Therefore there is measurementuncertainty involved in this valuation and is based on assumptions. As a result thevaluation of these investments was significant to our audit.
Description of Auditors Response
Our procedures included discussion with the management on the reasonableness of theassumptions and our procedures included:
Reviewed the information supplies for valuation of unquoted investments.
Reviewing the Valuation reports issued by the independent valuation professionalfor valuation of the unquoted investments.
Reviewing the assumption made in the prior yearsandanysignificantchange inassumption during the year.
B. Valuation of Employee Benefits
Description of Key Audit Matters
The Company has recognised provision for Gratuity of Rs. 3898 thousand and provisionfor Leave Encashment of Rs. 520 thousand as of March 31 2019. The assumptions thatunderpin the valuation of the Gratuity and Leave Encashment are important and also basedon subjective judgements. Management has obtained advice from actuarial specialists inorder to calculate the amount of Gratuity and Leave Encashment to be recognised asuncertainty arises as a result of estimates made based on the Company's expectations aboutlong-term trends and market conditions. As a result the actual surplus or deficitrealised by the may be significantlydifferent to that recognised on the balance sheetsince small changes to the assumptions used in the calculation materially affect thevaluation.
Description of Auditors Response
Our procedures included discussion with the management on the control on the data andreasonableness of the assumptions
We reviewed the scheme rules to ensure our understanding is current. We testedthe input data used by the actuary to company records.
We evaluated the key actuarial assumptions with the assistance of ourspecialists to determine if these were within an acceptable range.
We compared with the actuarial gain/loss of earlier years to understand theimpact of the variation in the assumptions.
We read the disclosure in the financial statements in respect of employeebenefits to consider whether these are consistent with the conclusions of our audit workand meet the disclosure requirements of the relevant accounting standards.
Management's Responsibility for the financial statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of Companies Act 2013 ("the Act") with respect to the preparation andpresentation of these 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 includingAccounting 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 the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are 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 responsible for overseeing the Company's financial reportingprocess.
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 userstaken .statements onthe basis ofthese financial As part of an audit in accordance with SAs weexercise professional judgment and maintain 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 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 on the Company's ability to continue as agoing concern. If we conclude that a material castsignificant uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions 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 thefinancialstatements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
Report on Other Legal and Regulatory Requirements
1. 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" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. 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 including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the afore said financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
(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 B".
(g) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impactofpendinglitigations financialposition inits financial its statements Refer Note 26 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company by the Company during the year ended March31 2019.
(h) With respect to the matter to be included in the Auditor's Report under section 197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under section 197 (16) which arerequired to be commented upon by us.
For M L BHUWANIA AND CO LLP
Membership No. 109931
Date: 28th May 2019
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
Referred to in paragraph 2 of Report on other Legal and RegulatoryRequirements' in our Report of even date on the accounts of KEMP & COMPANY LIMITEDfor the year ended March 31 2019 i. (a) The Company is maintaining proper records showingfull particulars including quantitative details and situation of fixed assets.
(b) The fixedassets of the Company physically verified by the Management according to aphased programme designed to cover all the items over a period of three years which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and discrepancies noticed between the bookrecords and the physical inventories were not material and have been properly dealt within the accounts.
(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. During the year the inventories have been physically verified by the management.In our opinion the frequency of verification is reasonable. The discrepancies noticed onphysical verification of inventories as compared to the book records were not material andhave been properly dealt with in the books of account.
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 during the year. Accordingly clause 3 (iii) of theOrder is not applicable to the Company.
iv. The Company has complied with provisions of Section 186 of the Companies Act 2013in respect of investments made and Section 185 of the Companies Act 2013 is notapplicable as there were no loans securities and guarantees given during the year.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the rules framed there under to the extentnotified and therefore clause 3(v) is not applicable.
vi. The Central Government has not prescribed maintenance of cost records under subsection (1) of section 148 of the Companies Act 2013 for any of the products of thecompany.
vii. (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax duty of custom duty of excise duty value added tax cessGoods & Service Tax and any other material statutory dues applicable to it. Accordingto the information and explanations given to us no undisputed arrears of statutory dueswere outstanding as at March 31 2019 for a period of more than six months from the datethey became payable.
(b) According to the information and explanation given to us and the records of theCompany examined by us there are no dues of Sales Tax Service Tax Goods and ServiceTax Custom Duty Income Tax Excise Duty Value Added Tax and Cess which have not beendeposited on account of any dispute.
viii. The Company has not taken any loan or borrowing from bank government financialinstitution and has not issued debentures during the year. Accordingly clause 3 (viii) ofthe Order is not applicable to the Company.
ix. The Company has not taken any term loans and does not raised moneys by way ofInitial public offer/ further offer (including debt instruments) during the year.Accordingly clause 3 (ix) of the Order is not applicable to the Company.
x. Based upon the audit procedures and information and explanations given by themanagement we report that no fraud by the Company or no fraud on the Company by itsofficers or employees has been noticed or reported during the year.
xi. In our opinion and according to the information and explanations given to us themanagerial 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 2013.
xii. In our opinion and according to the information and explanations given to us thenature of the activities of the company does not attract any special statue applicable toNidhi Company. Accordingly clause 3(xii) of the order is not applicable to the company.
xiii. According to the information and explanation given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sec 177 and 188 of Companies Act 2013 where applicable and details ofsuch transactions have been disclosed in the financial required by the applicableaccounting standards.
xiv. In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly clause 3 (xiv) of the Order is not applicable tothe Company.
xv. In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the company has not entered intoany non-cash transactions with directors or persons connected with him. Accordinglyclause 3 (xv) of the Order is not applicable to the Company.
xvi. The company is not required to be registered under Sec 45-IA of the Reserve Bankof India Act 1934. Accordingly clause 3 (xvi) of the Order is not applicable to theCompany.
For M L BHUWANIA AND CO LLP
Membership No. 109931
Date: 28th May 2019
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 KEMP &COMPANY LIMITED ("the Company") as of 31 March 2019 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors are responsible for establishing and maintaininginternal financial controls established based on by the internal control overfinancial Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe 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.
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 applicable to an audit of InternalFinancial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 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
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 purposes in accordance with generally acceptedaccounting principles. A Company's internal financial control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of recordsthat transactions and dispositions of the assets of the Company; in reasonable detailaccurately and fairly reflect (2) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance with authorizations of management and directorsof the Company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the Company's assets thatcould have a material 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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For M L BHUWANIA AND CO LLP
Chartered Accountants FRN: 101484W/W100197
Membership No. 109931
Date: 28th May 2019