The Members Of
MADHUSUDAN SECURITIES LIMITED
Report on the Audit of the Financial Statements Qualified
We have audited the accompanying Financial statements of MADHUSUDAN SECURITIESLIMITED ("the Company") which comprise the Balance Sheet as at 31 March2020 the Statement of Profit and Loss (including other comprehensive income) the CashFlow Statement and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information (hereinafterreferred to as "the financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in the Basis for QualifiedOpinion section of our report the aforesaid Financial Statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedu/s 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the State of Affairs of the Company as at 31st March 2020 the Loss andtotal comprehensive income changes in equity and its cash flows for the year ended onthat date.
Basis for Qualified Opinion
Refer Note II
i. Due to non-performance of Business Transfer Agreement the 6142847 equity sharesallotted to Primus Retail (P) Ltd. of face value of Rs. 10/- each have been revokedforfeited and consequentially the securities premium have been reversed.
ii. The face value of such shares is accounted as Forfeited Shares to be re-issuedthrough Scheme of Arrangement pending statutory approval.
iii. The Company has not made any provision for advances of Rs. 12 Crores outstandingbeyond 3 years from Primus Retail (P) Ltd which is considered under liquidation by theauthorities.
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) together with theethical requirements that are relevant to our audit of the Financial Statements under theprovision of the Act and the rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our qualified opinion on the financial statements.
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:
|Key Audit Matter ||How the matter was addressed in our report |
|Note II 2. The Company has carried the investment in unquoted equity shares of Rs. 1.87 Lakhs at cost. The Management is under the process of getting valuation of the companies. Further no provision for diminution in value of investments is made for the same. ||The Management is taking efforts for getting the audited accounts of such Companies. As the said accounts were not made available to us for verification the investments were thereby carried at cost. Diminution in value of investment will be verified on review of such accounts and Management's valuation of such Companies. |
Information Other than the Financial Statements and Auditors Report thereon
The Company's Board of Directors is responsible for the other information. The Otherinformation comprises the information included in the Directors Report Managementdiscussion & Analysis and Business responsibility report but does not include thefinancial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover other information and we do notexpress 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 financial statements or ourknowledge obtained during the course of audit or otherwise appears to be materiallymisstated.
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 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 including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe Ind AS and accounting principles generally accepted in India. 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 statement that give a true and fair view andare 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 the Company's financialreporting process.
Auditor' s Responsibility 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 users taken on thebasis of these Financial Statements. As part of an audit in accordance with SA's weexercise professional judgement 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 onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness 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. However future events or conditions may cause the Company to cease to continue asa going concern.
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 standalone financial statementsthat individually 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 any identified misstatements in the financialstatements.
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 of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("The Order")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 4 of theOrder.
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 appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and the Statement of changes in Equity dealt with by thisReport are in agreement with the books of account;
d) In our opinion the aforesaid Financial Statements comply with the Ind AS specifiedunder Section 133 of the Act read with the relevant rule 7 of the Companies (Accounts)Rules 2014;
e) On the basis of written representations received from the directors as on 31 March2020 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
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) Rule 2014 as amended inour opinion and to the best of our information and according to the explanation given tous:
i. The Company does not have any pending litigations which shall impact its financialpositions.
ii. The Company does not have any long terms contracts for which provisions arerequired to be made.
iii. The Company is not liable to transfer any amount to the Investor Education andProtection Fund.
For S V BHAT & CO
(ICAI Firm Reg. No.: 101298W)
SADANAND V. BHAT
(Membership No. 037237)
DATED: June 29 2020
UDIN - 20037237AAAABG5480
Annexure A to the Auditors' Report
The Annexure referred to in paragraph 1 under "Report on Other legal andRegulatory Requirements" section of our Report to the members of the Company on theFinancial Statements for the year ended 31st March 2020.
(i) In respect of its Fixed Assets
The Company does not hold any fixed assets as on 31/03/2020. Accordingly sub-clause(a) (b) and (c) are not applicable.
(ii) In respect of inventories
During the year under review the Company does not have any inventory. Henceprovisions of clause 3 (ii) of the Order are not applicable to the Company.
(iii) In respect of loans granted secured or unsecured by the Company to firms orother parties covered in the register-maintained u/s 189 of the Companies Act 2013;
The Company has not granted any secured/unsecured loan to any of the parties covered inthe register maintained under section 189 of the Companies Act 2013. Accordinglysub-clauses (a) (b) and (c) are not applicable
(iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of section 185 and 186 of the Act in respect ofgranting of loans making investments providing guarantees and securities as applicable.
(v) The Company has not accepted any deposits within the meaning of Section 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3 (v) of the Order are not applicable.
(vi) The maintenance of cost records has not been specified by the Central Governmentunder Section 148 (1) of the Act for the business activities carried out by the Company.Thus reporting under clause 3 vi) of the Order is not applicable to the Company.
(vii) According to information and explanation given to us In respect to statutorydues
(a) The Company has generally been regular in depositing undisputed statutory duesunder Income tax and other Statutory Dues as applicable to it with the appropriateauthorities.
According to the information and explanations given to us no undisputed amountspayable in respect of the aforesaid dues were outstanding as at 31st March2020 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no dues inrespect of Income Tax and other Statutory Dues as applicable to it outstanding onaccount of any dispute.
(viii) The Company has not defaulted in repayment of dues to any bank or financialinstitution during the year under review.
(ix) The Company has not raised any moneys by way of Initial Public Offer or furtherpublic offer or obtained term loans during the year. Hence reporting under clause 3 (ix)of the Order is not applicable to the Company.
(x) To the best of our knowledge and according to the information and explanation givento us no fraud by the Company or no material fraud on the Company by its officers oremployees has been noticed or reported during this year.
(xi) According to the information and explanation given to us the Company has not paidany managerial remuneration to any key management personnel during the year under review.
(xii) The Company is not a Nidhi Company and hence reporting under clause 3 (xii) ofthe Order is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usthe transactions with related parties are in compliance with section 177 and section 188of the Act as applicable and the details have been disclosed in the Financial Statementsas required by the applicable accounting standard.
xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected with them and hence reporting under clause 3 (xv) of theOrder is not applicable to the Company.
(xvi) According to the information and explanations given to us the Company is notrequired to get registered under section 45-IA of the Reserve Bank of India Act 1934.
For S V BHAT & CO
(ICAI Firm Reg. No.: 101298W)
SADANAND V. BHAT
(Membership No. 037237)
DATED: 29h June 2020
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE IND AS FINANCIALSTATEMENTS OF MADHUSUDAN SECURITIES LIMITED
Independent Auditors Report on Internal Financial Control over Financial Reporting
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 MADHUSUDANSECURITIES LIMITED ("the Company") as of March 31 2020 in conjunction withour audit of the Ind AS 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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 Reportingthe Guidance Note) and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143 (10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both 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 Ind AS 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 authorisations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorised 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 March 31 2020 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.
For S V BHAT & CO
(ICAI Firm Reg. No.: 101298W)
SADANAND V. BHAT
(Membership No. 037237)
DATED: June 29 2020.