To the members of M/s. Mangalam Industrial Finance Limited
Report on the Audit of Financial Statements Opinion
We have audited the accompanying financial statements of Mangalam Industrial FinanceLimited("the Company"') which comprises the Balance Sheet as at March31 2019 the Statement of Profit and Loss and statement of cash flows for the year thenended and notes to the financial statements including a summary of significantaccounting policies 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 (financial position) of the Company as at March 31 2019 and profit/loss(financial performance) 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) 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 together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Financial Statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole andinforming our opinion thereon and we do not provide a separate opinion on these matters.
|SN ||Key Audit Matter ||Auditor's Response |
|1 ||Revenue Recognition and NPA ||Our procedures included but were not limited to the following: |
| ||The Company has to comply with prudential norms relating to income recognition accounting standards asset classification and provisioning for bad and doubtful debts as applicable to it in the terms of NBFC - Non Systemically Important Non Deposit taking company (Reserve Bank) Directions 2016. || Obtained an understanding of management's process and evaluated design and tested operating effectiveness of controls around compliance with prudential norms encompassing income recognition income from investments accounting standards accounting for investments asset classification provisioning for bad and doubtful debts in the terms of Directions. |
| || || Examination of whether the management has framed and implemented policy for grant and demand of loans and other credit facilities. |
| || || Examination of whether advances and other credit facilities have been properly classified as standard/sub standard/doubtful/loss and that proper provision has been made in accordance with the Directions. |
| || || Examination in respect of a NonPerforming Assets whether the unrealised income in respect of such assets has not been taken to the Profit & Loss Account on accrual basis. |
| || || Examination of whether all accounts which have been classified as NPAs in the previous year also continue to be shown as such in the current year also. If the same is not treated as a NPA in the current year specific examination of such accounts to ascertain whether the account has become regular and the same can be treated as performing as per the Directions. |
Information Other than the 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 Board'sReport including Annexures to Board's Report but does not include the financial statementsand our auditor's report 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 during thecourse 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.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with the accounting principles generally accepted in India. 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 accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
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.
Those Board of Directors are also responsible for overseeing the company's financialreporting 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 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 SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls with reference to financialstatements in place and the operating 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 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 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
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure-A a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
d. In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.
f. With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure-B". Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the company's internalfinancial controls over financial 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) 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 impacts its financialposition in its financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
For R. K. KANKARIA & CO.
Firm Reg. No. : 321093E
(R. K. KANKARIA)
M. No. : 082796
Annexure - A to the Independent Auditors' Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
I. In respect of its fixed assets:
(a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets of the Company are physically verified by the management atreasonable intervals and no material discrepancies were noticed on such verification. Inour opinion the periodicity of the physical verification is reasonable having regard tothe size of the Company and the nature of its assets.
(c) According to the information and explanations given to us the Company does nothave immovable property. Thus paragraph 3(i) (c) of the Order is not applicable to theCompany.
II. In respect of its Inventories:
The Company does not hold any inventory within the meaning of inventories as definedin Accounting Standard -2. So in our opinion Paragraph 3 (ii) of the order is notapplicable to the Company.
III. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnership or other parties covered in the Register maintained underSection 189 of the Act. So in our opinion the provisions of paragraph 3(iii) (a) 3(iii)(b) and 3 (iii) (c) of the Order are not applicable.
IV. The Company is a Non-Banking Financial Company and it has complied with theprovisions of section 185 & 186 of the Act to the extent applicable to the Company.
V. The Company has not accepted any deposits from the public.
VI. The Central Government has not specified maintenance of cost records under section148 (1) of the Act for any of the services rendered by the Company.
VII. In respect of statutory dues:
(a) According to the records of the Company undisputed statutory dues includingprovident fund employees' state insurance income-tax sales tax service Tax duty ofcustoms duty of excise value added tax cess and other material statutory dues have beengenerally regularly deposited to the appropriate authorities. According to the informationand explanations given to us no undisputed amounts payable in respect of the aforesaiddues were outstanding as on last day of the financial year concerned for a period of morethan six months from the date they became payable.
(b) There are no dues in respect of income-tax sales-tax service tax or duty ofcustoms or duty of excise or value added tax or GST that have not been deposited with theappropriate authorities on account of any dispute.
VIII. The Company has no dues payable to a financial institution Bank Government orto debenture- holders during the year. Accordingly the provision of paragraph 3 (viii) ofthe Order is not applicable.
IX. The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loan during the year. Accordingly theprovision of paragraph 3(ix) of the Order is not applicable.
X. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company or any material fraud on the Company by its officers oremployees has been noticed or reported during the course of our audit.
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 of the Act.
XII. In our opinion and according to the information and explanations given to us thecompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.
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 the provision of section 177 & 188 of the Act where applicable anddetails of such transactions have been disclosed in the notes to financial statements asrequired by the applicable accounting standards.
XIII. The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.
XIV. The company has not entered into any non-cash transactions with its directors orpersons connected with him so the provisions of section 192 of the Act is not required tobe complied with.
XVI. The company is Non-Banking Financial Company and is duly registered under section45-IA of the Reserve Bank of India Act 1934.
For R. K. KANKARIA & CO.
Firm Reg. No. : 321093E
(R. K. KANKARIA)
M. No. : 082796
Annexure - B to the Independent Auditors' Report on the Financial Statements ofMangalam Industrial Finance Limited
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 M/s. Mangalam Industrial Finance Limited
We have audited the internal financial controls over financial reporting of M/s.Mangalam Industrial Finance Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the financial statements of the Company for the year endedon 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 auditors' judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial 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 31 March 2019 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 R. K. KANKARIA & CO.
Chartered Accountants Firm Reg. No. : 321093E
(R. K. KANKARIA)
M. No. : 082796
Place : Kolkata
Date : 21.05.2019