The Members of Libord Finance Limited
Report on the audit of the Standalone Financial Statements
We have audited the accompanying standalone Ind AS financial statements of LibordFinance Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2020 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and Statement of Cash Flows for the year thenended and notes to the Standalone Ind AS financial statements including a summary ofsignificant accounting policies and other explanatory information for the year ended onthat date.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and the other accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2020 the profit and total comprehensive income its cash flows and the changes inequity 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements' section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the Standalone financial statements under the provisions of the Companies Act 2013 andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence obtained by us is sufficient and appropriate to provide a basis for our opinionon the standalone financial statements.
Key Audit Matter
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements for the year ended March31 2020. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
We have determined the matters described below to be the key audit matters in our auditof the Company for the year ended March 31 2020.
A. Fair Value of Investment
The Company's investments (other than investment in Associates and Group Companies) aremeasured at fair value at each reporting date and these fair value measurementssignificantly impact the Company's results.
We have assessed the Company's process to compute the fair value of variousinvestments. For quoted instruments we have independently obtained market quotations andthe fair valuation thereof.
B. Impairment of loans to customers
Allowance for impairment losses on loans to customers involves significant judgement bymanagement to determine the timing and amount of the asset to be impaired.
Our audit approach consisted testing of the design and operating effectiveness of theinternal controls and substantive testing:
i. We evaluated and tested the design and operating effectiveness of the relevantcontrols over the impairment assessments and impairment allowance computations for loansand advances to customers.
ii. We tested the management assumptions estimates and judgements which could havegiven rise to material misstatement:
a. The completeness and timing of recognition of loss events;
b. We discussed with management and scrutinised the appropriateness of those keyassumptions applied in management's impairment assessment and compared them withavailable external evidence where necessary.
c. Assessed accuracy and completeness of disclosures made as required by relevantaccounting standards
C. Application of New Accounting Standards
The Company has adopted Indian Accounting Standards (Ind AS) with effect from April 12019 in terms of the Companies (Indian Accounting Standards) Rules 2015 as amended. Thetransition date balance sheet as on April 1 2018 and the comparative financial statementsfor the year ended March 31 2019 included in these standalone Ind AS financialstatements is based on the statutory financial statements prepared in accordance with theCompanies (Accounting Standard) Rules 2006 and have been restated to comply with Ind AS.The application of mandatory and optional transitional adjustment involves significantlevel of judgment by the management and there is a significant increase in the disclosurerequirements under Ind AS. Hence this has been identified as a key audit matter.
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 Director'sReport (including annexures) and Report on Corporate Governance 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 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 management & Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance (including other comprehensive income) changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder section 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 standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error. In preparing the financialstatements management are responsible for assessing the Company's ability to continue asa going concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so. Those Boardof Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these financial statements. As part of an audit in accordance withSAs we exercise professional judgement and maintain professional skepticism throughoutthe 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 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 audit evidence obtained up to the date of our auditor'sreport.
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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditors' report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
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" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable. Asrequired 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.
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 March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 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 the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 except as disclosed otherwise.
(ii) The Company does not have any long-term contracts including derivative contracts;as such the question of commenting on any material foreseeable losses thereon does notarise.
(iii) There has not been an occasion in case of the Company during the year underreport to transfer any sums to the Investor Education and Protection Fund. The question ofdelay in transferring such sums does not arise.
Annexure A referred to in paragraph 1 of the section on "Report on Other Legal andRegulatory Requirements" of our report of even date
TO THE MEMBERS OF LIBORD FINANCE LIMITED
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.
(b) As explained to us the fixed assets have been physically verified by themanagement at regular intervals during the year and no material discrepancies were noticedon verification.
(c) According to the records of the Company examined by us and as per information andexplanations given to us the Company does not have any immovable property. Thusparagraph 3(i)(c) of the Order is not applicable to the company.
(ii) The Company is a service company. Accordingly it does not hold anyphysical inventories. Thus paragraph 3(ii) of the Order is 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 covered inthe register 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 Companies Act 2013with respect to the loans and investments made.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public covered under section 73 to 76 of the Companies Act2013 and the rules framed thereunder. Therefore the provision of clause 3(v) of the Orderis not applicable to the Company.
(vi) To the best of our knowledge and as explained The Central Government has notprescribed the maintenance of cost records under sub-section (1) of Section 148 of theAct for the service of the Company. Therefore the provision of clause 3(vi) of the Orderis not applicable to the Company.
(vii) (a) According to the records of the Company and the information and explanationsgiven to us the Company has been generally regular in depositing with appropriateauthorities undisputed statutory dues including provident fund Employees' StateInsurance Income Tax Sales Tax Service Tax Customs Duty Excise Duty Value Added TaxGoods and Service Tax (GST) Cess and any other statutory dues to the extent applicable toit. According to the information and explanations given to us and based on the records ofthe Company examined by us no undisputed amounts payable in respect of Provident FundEmployees' State Insurance Income Tax Service Tax Sales Tax Customs Duty Excise DutyValue Added Tax Goods and Service Tax (GST) Cess and other material statutory dues wereoutstanding at the year end for a period of more than six months from the date theybecame payable.
(b) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Service Tax Customs Duty Excise Duty and Value Added Tax andGoods and Service Tax (GST) which have not been deposited on account of any dispute.
(viii) According to the information and explanations given by the management theCompany did not have any loans or borrowing from financial institution bank governmentor dues to any debenture holders during the year. Accordingly paragraph 3 (viii) of theOrder is not applicable to the Company.
(ix) According to the records of the Company examined by us and as per the informationand explanations given to us the Company did not raise any money by way of initial publicoffer or further public 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 year.
(xi) According to the information and explanations given 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 chit fund or a nidhi/mutual benefit fund/society. Accordingly paragraph3(xii) of the Order is not applicable.
(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 given to us and based on ourexamination of the records of the Company during the year the Company has made allotmentof 2050000 Equity Shares to Promoter Group in pursuance of conversion of 2050000Warrants issued on preferential basis in compliance with the applicable provisions of theCompanies Act 2013 and SEBI (ICDR) Regulations 2018.
(xv) According to the information and explanations given to us we report that theCompany has not entered into any non-cash transaction with directors or persons connectedwith him. Accordingly paragraph 3(xv) of the Order is not applicable.
(xvi) In our opinion and as per information and explanation given to us the Company isrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934 andthe same is registered.
Annexure B referred to in paragraph 2 (f) of the section on "Report on other legaland regulatory requirements" of our report 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")
To the Members of Libord Finance Limited
We have audited the internal financial controls over financial reporting of LibordFinance Limited ("the Company") as on March 31 2020 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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 (the "Guidance Note").These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information 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 and the Standards on Auditing as specified under section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of internal financialcontrols and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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 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 internal financial controls system overfinancial 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 thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could 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 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note.
| ||FOR MEHTA SINGHVI & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||Firm Registration No: 122217W |
|Place: Mumbai ||Rajendra C. Singhvi |
|Date: 29.06.2020 ||Partner |
|UDIN: 20016884AAAABI2930 ||Membership No: 016884 |