To the Members of LEAD FINANCIAL SERVICES LIMITED
Report on the audit of financial statements
We have audited the accompanying financial statements of LEAD FINANCIAL SERVICESLIMITED (the Company') which comprise the Balance Sheet as at 31st March 2021 theStatement of Profit and Loss including the Statement of Other Comprehensive Income theCash Flow Statement and the Statement of Changes in Equity for the year then ended andthe notes to the financial statements including a summary of the significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies 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 as at 31st March 2021 its loss including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
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 Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the financial statements.
Emphasis of matter
We draw your attention to Note 36 to the financial statements relating to carryingvalue of Loans and Investments as at March 312021. As described in the Note the carryingvalue of such Loans and Investments is subject to uncertainties related to the impact ofCovid-19 pandemic.
Our opinion is not modified in respect of the above matter.
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.
We have determined that there are no key audit matters to communicate in our report.
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Director's Report and ManagementDiscussion & Analysis but does not include the financial statements and our auditor'sreport thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact.
We have nothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accounting recordsrelevant to the preparation and presentation of the financial statements that give a trueand fair view and 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 also responsible for overseeing theCompany's financial reporting 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 withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain 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 for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
ii. Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3) (i) of the Act we are also responsible for explaining our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
iii. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting 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 uncertainty existsrelated to events or conditions that may cast significant doubt on the Company's abilityto continue as a going concern. If we conclude that a material 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.
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 statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified 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 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 for thefinancial year ended 31st March 2021 and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 Section 143(11) of the Act we givein the "Annexure A" a statement on the matters specified in paragraphs 3 and 4of the Order to the extent applicable.
2) As required by Section 197(16) of the Act we report that the Company has not paidany remuneration to its directors during the current year.
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 appears from our examination of those books;
(c) The Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Statement of Cash Flow and the Statement of Changes inEquity dealt with by this Report are in agreement with the relevant books of account;
(d) In our opinion the aforesaid financial statements comply with the accountingstandards specified under Section 133 of the Act read with Companies (Indian AccountingStandards) Rules 2015 as amended;
(e) On the basis of written representations received from the directors as on 31 March2021 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2021 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 included in the Auditor's Report and to the bestof our information and according to the explanations given to us:
a. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. - Refer Note 25 to the financial statements;
b. The Company did not have any long-term contracts including derivatives contracts forwhich there were any material foreseeable losses;
c. There are no amounts which are required to be transferred to the Investor Educationand Protection Fund by the Company;
d. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 312021.
Annexure "A" to Independent Auditor's Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of LEAD FINANCIAL SERVICES LIMITED("the Company") of even date)
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified during the year by the management.In our opinion the frequency of verification is reasonable having regard to the size ofthe Company and the nature of its assets. To the best of our knowledge no discrepancieshave been noticed on such verification.
(c) As per the records and according to information and explanations given to us titledeeds of immovable properties are held in the name of the Company.
ii. As explained to us inventories have been verified by the management at regularintervals during the year. No discrepancy has been noticed on verification between thestatements obtained from depository participants and the books records.
iii. According to the Information and explanation given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties covered inthe register maintained under section 189 of the Companies Act 2013. Accordingly Clauses(a) (b) and (c) of sub Para iii of paragraph 3 of the Order are not applicable.
iv. In our opinion and according to information and explanation given to us theCompany has not granted any loans or provided any guarantees or given any security or madeany investments to which the provision of section 185 and 186 of the Companies Act 2013.Accordingly paragraph 3 (iv) of the Order is not applicable.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from public to which the directives issued byReserve Bank of India and provisions of sections 73 to 76 of the Companies Act 2013including rules framed there under apply. Further no order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any othertribunal.
vi. The Company is a Non-Banking Finance Company. Hence clause (vi) of the Orderregarding compliance of maintenance of cost records under clause of sub section (1) ofsection 148 of the Companies Act 2013 is not applicable to the Company.
vii. (a) According to the books and records produced before us the Company is regularin depositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income-tax goods & services tax cess and any otherstatutory dues as applicable to it.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax sales- taxservice tax goods and service tax duty of customs duty of excise value added tax cessand other material statutory dues were in arrears as at 31 March 2021 for a period ofmore than six months from the date they became payable.
(b) According to the books and records produced before us there are no dues of incometax service tax goods & service tax and cess which have not been deposited onaccount of any dispute.
viii. In our opinion and according to the information and explanations given by theManagement the Company has not defaulted in repayment of loans or borrowings to afinancial institution or bank or dues to debenture holders as applicable.
ix. According to the information and explanations given to us and our examination ofthe records of the Company the Company has not raised any moneys by way of initial publicoffer or further public offer (including debt instruments) or by way of term loan duringthe current financial year.
x. Based on our audit procedures and on the basis of the information and explanationsgiven to us no fraud by the Company or by its officer or employees has been noticed orreported during the course of our audit.
xi. According to the books of accounts and records of the Company no managerialremuneration has been paid / provided by the Company during the year.
xii. According to the information and explanations given to us the Company is not aNidhi Company. Therefore the provisions of paragraph 3 (xii) of the Order are notapplicable to the Company.
xiii. According to the information and explanations given by the Managementtransactions with the related parties are in compliance with section 177 and 188 of theAct where applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.
xiv. Based on our audit procedures and on the basis of the information and explanationsgiven to us the Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under audit.
xv. According to the books of accounts and records of the Company the Company has notentered into any non-cash transactions with directors or persons connected with him incompliance with provisions of Section 192 of Companies Act 2013.
xvi. The Company is registered under section 45-IA of the Reserve Bank of India Act1934. A copy of such registration has been obtained.
Annexure "B" to the Independent Auditor's Report
(Referred to in paragraph 3 (f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of LEAD FINANCIAL SERVICES LIMITED("the Company") of even date)
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 LEADFINANCIAL SERVICES LIMITED ("the Company") as of 31st March 2021 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over 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.
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 judgement 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.
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 31 March 2021 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.
Additional Report as per Direction of RBI
As required by the Non-Banking Financial Companies Auditor's Report (Reserve Bank)Directions 2016 (the Directions) issued by the Reserve Bank of India in terms ofsub-section (1A) of section 45MA of the Reserve Bank of India Act 1934 we give thefollowing statements on the matters specified in paragraphs 3 and 4 of the Directions-
1. The Company is engaged in the business of Non - Banking Financial institution asdefined in section 45-I (a) of the RBI Act and meeting the Principal Business Criteria(Financial asset/ Income pattern) as laid down vide the Bank's press release dated April08 1999 and directions issued by DNBR. The Company has obtained a Certificate ofRegistration (CoR) from the Bank.
2. The Company is entitled to hold such CoR in terms of Principal Business Criteria(Financial asset/ Income pattern) as on March 312021.
3. The Company is meeting the required net owned fund requirement as laid down inMaster Direction - Non-Banking Financial Company - Non-Systemically Important Non-DepositTaking Company (Reserve Bank) Directions 2016.
4. The Board of Directors has passed a resolution for non - acceptance of any publicdeposits.
5. The Company has not received any public deposits during the financial year 2020-21.
6. The Company has duly complied with the prudential norms relating to incomerecognition accounting standards asset classification and provisioning for bad anddoubtful debts as applicable to it in terms of Non-Banking Financial Company -Non-Systemically Important Non-Deposit Taking Company (Reserve Bank) Directions 2016.
| ||For B G G & ASSOCIATES |
| ||Chartered Accountants |
| ||F R N. 016874N |
| ||CA. Alok Kumar Bansal |
|Place of Signature: New Delhi ||Partner |
|Date: June 22 2021 ||M. No. 092854 |