THE MEMBERS OF LOHia SECURITIES LIMITED
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the standalone financial statements of Lohia SecuritiesLimited ("the Company") which comprise the balance sheet as at 31st March 2020and the statement of profit and loss statement of changes in equity and statement of cashflows for the year then ended and notes to the financial statements including a summaryof significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of aff^airs of the Company as at March 31 2020 and its profit changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Companyin accordance 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 sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.
|Key Audit Matter ||How our audit addressed the key audit matter |
|Investments and Inventories in Securities || |
|Investments and inventories of the company represent in various quoted and unquoted equity shares. ||We have verified these investments and inventories with reference to the provisions of Indian Accounting Standards and also internal policies and procedure of the Company as follows: |
|These constitute 21.40% of the Company's total assets. || carried out evaluation of the design and operating effectiveness of the internal controls and performed substantive audit procedures. |
|The valuation of each category of the aforesaid securities is to be done as per the provisions of Indian Accounting Standards which involves collection of data/information from various sources. Considering the complexities and extent of judgement involved in the valuation this has been determined as Key Audit Matter. || Assessed and evaluated the process adopted for collection of information from various sources for determining fair value of these investments and inventories. |
|Refer Note 11 and 14 to the standalone financial statements. || Verified compliance with the presentation and disclosure requirements as per Indian Accounting Standards and the Act. |
|Fixed Deposits || |
|Fixed Deposits are having original maturity for more than 12 months and constitute 54.73% of the Company's total assets. ||We have verified these fixed deposits with reference to the provisions of Indian Accounting Standards as follows: |
|These are pledged with various banks companies and stock exchange for availing overdraft facility and margin exposure facility. || Assessed and evaluated the process adopted for collection of information from various sources for verification of these fixed deposits pledged with various entities. |
|Refer Note 2.1 to the standalone financial statements || Verified compliance with the presentation and disclosure requirements as per Indian Accounting Standards and the Act. |
Information Other than the Financial Statements and Auditor's ReportThereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's report but does not include the financial statements andour auditor's report thereon.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information; we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's 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 changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating efl^ectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements the Board of Directors isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative 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 thefinancial 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 with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system in placeand the operating efi^ectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managementRs.s use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements 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 amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period 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 sub-section(11) of section 143 of the Companies Act 2013 we give in the Annexure "A" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss the Statementof Changes in Equity and the Cash Flow Statement dealt with by this Report are inagreement with the books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from thedirectors as on 31st March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2020 from being appointed as a director interms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating efi^ectiveness of such controlsrefer to our separate Report in Annexure "B".
(g) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i) The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements - Refer Note 47(ii) to the standalonefinancial statements.
ii) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii) There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.
Annexure "A" to the Independent Auditor's Report
The Annexure referred to in our report to the members of the Company onthe standalone financial statements for the year ended on March 31 2020. In term of theinformation and explanations given to us and books of account examined by us in the normalcourse of audit and to the best of our knowledge and belief we report that:
1) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets. A major portion of fixedassets has been physical verified by the management in accordance with a phased programmeof verification adopted by the company. In our opinion the frequency of verification isreasonable. To the best of our knowledge no material discrepancies have been noticed onsuch verification.
According to the information and explanations given to us and on thebasis of our examination of the records of the company the title deeds of immovableproperties are held in the name of the Company except an office situated at 6 LyonsRange 1st Floor Kolkata 700001 of which company has binding agreement with the vendorbut the property is yet to be conveyance.
2) The company does not have any inventories as defined in AS-2Valuation of Inventories and hence in our opinion Para 3(ii) of the Order does not applyto the company.
3) The company has not granted any loans or advances in the nature ofloans to parties covered in the registered maintained under section 189 of the CompaniesAct 2013. Hence the question of reporting whether the terms and conditions of loans areprejudicial to the interests of the company whether reasonable steps for recovery ofoverdues of such loans are taken does not arise.
4) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 185 and 186 of theAct with respect to the loans and investments made.
5) Based on our scrutiny of the company records and according to theinformation and explanations provided by the management in our opinion the company hasnot accepted any deposits so far upto 31st March 2020.
6) According to the information & explanations provided by themanagement the company is not engaged in production of any such goods or provisions ofany such services for which the central government has prescribed particulars relating toutilization of material or labour or other items of cost. Hence the provisions of section148(1) of the Act do not apply to the company. In our opinion no comment on maintenanceof cost records under section 148(1) of the Act is required.
7) According to the records of the company the company is regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees state insurance income tax sales tax service tax duty of custom dutyof excise value added tax cess and other statutory dues applicable to it.
According to the information and explanations given no undisputedamounts payable in respect of income tax sales tax service tax duty of customs duty ofexcise and value added tax were outstanding as at 31st March 2020 for a period of morethan six months from the date they became payable.
According to the records of the company there are no dues of incometax sales tax service tax duty of customs duty of excise and value added tax whichhave not been deposited on account of any dispute except as mentioned below:
Statement of Disputed Dues
|Name of the Statute ||Nature of the Dues ||Amount (Rs.) ||Period to which the amount relates ||Forum where dispute is pending ||Remarks if any |
|Income Tax Act 1961 ||Income Tax ||10535490/- ||A.Y. 2010-11 ||CIT (Appeals) Kolkata ||Refer Note 46(ii) of the standalone financial statements |
8) According to records of the company the company has not borrowedfrom financial institutions or government or debenture holders till 31st March 2020. Hencein our opinion the questions of reporting on defaults in repayment of loans or borrowingto a financial institution government or dues to debenture holders does not arise.
Based on our audit procedures and on the information and explanationsgiven by the management we are of the opinion that the company has not defaulted inrepayment of loans or borrowing to a bank.
9) According to the records of the company the company has not raisedany moneys by way of Initial Public Offer or Further Public Offer.
According to the information and explanations received by us moneysraised by way of Term Loan have been applied for the purpose for which they were raised.
10) Based upon the audit procedures performed and information andexplanations given by the management we report that neither fraud on the company by itsofficers or employees nor any fraud by the company has been noticed or reported during thecourse of our audit.
11) According to the information and explanations given to us and basedon our examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.
12) In our opinion and to the best of our information &explanations provided by the management the company is not a nidhi company. Accordinglythe requirement of clause 3(xii) of the order do not apply to the company.
13) According to the information and explanations given to us and basedon our examination of the records of the Company transactions with the related partiesare in compliance with sections 177 and 188 of the Act where applicable and details ofsuch transactions have been disclosed in the financial statements as required by theapplicable accounting standards.
14) According to the information and explanations give to us and basedon 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.
15) According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.
16) The Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934.
Annexure "B" to the Standalone Independent Auditor's Report
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of Lohia Securities Limited ("the Company") as of March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
ManagementRs.s Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating efi^ectively 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 internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. 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 efiectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating efi^ectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating efi^ectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assets thatcould have a material efi^ect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating efi^ectively as at March 31 2020 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
| ||For VASUDEO & ASSOCIATES |
| ||Chartered Accountants |
| ||(Firm Reg. 319299E) |
| ||Saurabh Modi |
|Place : Kolkata ||(Partner) |
|Dated: The 27th day of JulyRs. 2020 ||Membership 303815 |
| ||UDIN:20303815AAAABD5008 |