TO THE MEMBERS OF MEGA CORPORATION LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Mega CorporationLimited (the Company) which comprise the Balance Sheet as at March 312019 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and notes to the financial statements including summary of the 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 Standalone financial statements give the information requiredby the Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 312019 its profit and itscash flows for the year ended on that date.
BASIS OF OPINION
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the AuditorsResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the Standalone Financial Statements underthe provisions of the Act and the Rules made there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAIs Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Standalone Financial Statements.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
a) The Company has open legal proceeding before Honble Supreme Court of Indiarelating to demand of income tax by Income Tax Department relating to AY 2006-07.
b) The Company has disputed demand of Customs Duty in respect of passenger aircraftowned by it by Customs Department. Though the Company had deposited demanded Custom Dutyunder protest during previous years but it has contested the levy of same beforeappropriate appellate authorities which is pending for final adjudication.
As the outcome of above legal proceedings is uncertain and management judgementregarding recognition and measurement of required provision might change over time as theoutcome of these proceedings determined.
Our Audit procedures included and were not limited to the following:
Assessing managements position through discussions with the concernedofficials of the Company and external legal experts hired by the Company (where considerednecessary) on both the probability of success in the aforesaid cases and the magnitudeof any potential loss.
Discussion with the management on the development in these litigations duringthe year ended March 312019.
Review of the disclosures made by the Company in the financial statements inthis regard.
Obtained representation letter from the management on the assessment of thesematters.
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS REPORT THEREON
The Companys Board of Directors is responsible for the other information. Theother information comprises the information included in the Annual report but does notinclude the Standalone Financial Statements and our auditors 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 such other informationis materially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
MANAGEMENTS RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Companys Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Standalone Financial Statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate implementation and maintenance ofaccounting 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 Standalone FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Standalone Financial Statements management is responsible forassessing the Companys ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Those Board of Directors arealso responsible for overseeing the Companys financial reporting process.
AUDITORS RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE 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 auditors 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 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 the basis of theseStandalone 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 StandaloneFinancial 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 the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompanys ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditors report. However future events or conditions may cause theCompany to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 Standalone Financial Statementsfor the financial year ended March 312019 and are therefore the key audit matters. Wedescribe these matters in our auditors report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in the "Annexure A" a statementon the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act based on our audit 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 Statement of Cash FlowStatement dealt with by this Report are in agreement with the relevant 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 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 termsof Section 164 (2) of the Act.
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 A".
g) With respect to the other matters to be included in the Auditors 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 has disclosed the impact of pending litigation on its financial positionin its Standalone Financial Statements. (refer to Note 24 to the 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 VIRENDRA PRADEEP & CO
Firms Registration No. 007409N
(Pradeep Kumar Agarwal)
ANNEXURE A TO INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" section of our report of even date to the members of MegaCorporation Limited)
We report that:
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has a program of verification of its fixed assets by which fixed assetshave been verified during the year and no material discrepancies were noticed on suchverification. In our opinion periodicity of physical verification is reasonable havingregard to the size of the company and the nature of its assets.
c) According to the Information and explanations given to us and on the basis of ourexamination of the records of the company the Company does not own any immovableproperty. Other fixed assets are held in the name of the company.
ii) The company is a service company primarily rendering financing services and AirCharter Services. Accordingly it does not hold any physical inventories. Accordingly theprovisions of paragraph 3(ii) of the Order are not applicable to the company.
iii) The company has granted loans to four companies & one LLP covered in theregister maintained under section 189 of the Companies Act 2013 (the Act).
a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the companies & LLP listed in the register maintained undersection 189 of the act were not prima facie prejudicial to the interest of the company.
b) In the case of the loans granted to the companies & LLP listed in the registermaintained under section 189 of the Act the borrowers have been regular in the payment ofthe principal and interest stipulated.
c) There are no overdue amounts in respect of the loan granted to a body corporatelisted in the register maintained under section 189 of the Act.
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 act with respect tothe loans and investments made.
v) According to the information and explanations given to us the Company has notaccepted any deposits within the meaning of section 73 to 76 of the Act and the rulesframed there under during the year Accordingly the provisions of paragraph 3(v) of theOrder are not applicable to the company.
vi) The Central Government has not prescribed the maintenance of cost records underSection 148(1) of the Act for any of the services rendered by the Company.
vii) a) According to the information and explanations given to us the Company isgenerally regular in depositing the undisputed statutory dues including provident fundemployees' state insurance income-tax sales-tax value added tax service tax duty ofcustoms duty of excise and any other material statutory dues with the appropriateauthorities.
According to information and explanations given to us no undisputed amount payable inrespect of provident fund income tax sales tax value added tax duty of customsservice tax and other material statutory dues were in arrears as at 31 March 2019 for aperiod of more than six months from the date they become payable.
b) According to information and explanations given to us and the records of the companyexamined by us there are no statutory dues of sales tax duty of excise service taxvalue added tax and duty of customs which have not been deposited with the appropriateauthority on account of any dispute.
The following dues of income tax have not been deposited by the company on account ofdispute:
|Name of Statute ||Nature of Dues ||Amount Rs. in Lacs ||Forum where dispute is pending |
|Income Tax Act ||Demand for AY 2006-07 ||396.57 ||Matter is pending for adjudication before Supreme Court |
viii) Based upon the audit procedure performed and information and explanations givento us we are of the opinion that the Company has not defaulted in repayment of dues toany financial institution or bank.
ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instrument) or term loan during the year. Accordinglyparagraph 3(ix) of the order is not applicable.
x) Based upon the audit procedure performed and information and explanations given bythe management we report that no fraud by the Company or any fraud on the Company by itsofficers or employees has been noticed or reported during the course of our audit.
xi) According to information and explanations given to us and based on our examinationof the records of the company the company has paid / provided for managerial remunerationin accordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the act wherever required.
xii) To the best of our knowledge and according to the information and explanationsgiven to us The Company is not a Nidhi Company. Therefore the provisions of clause3(xii) of the Order are not applicable to the Company.
xiii) To the best of our knowledge and according to the information and explanationsgiven to us all transactions with the related parties are in compliance with section 177and 188 of the Act where applicable and the details of such transactions have beendisclosed in the standalone financial statements as required by the applicable accountingstandards.
xiv) The Company has not made any preferential allotment or private placement of shareor fully or partly convertible debenture during the year. Therefore the provisions ofclause 3(xiv) of the Order are not applicable to the Company.
xv) According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransaction with directors or persons connected with them. Therefore the provisions ofclause 3(xv) of the Order are not applicable to the Company.
xvi) The Company is duly registered with Reserve Bank of India as NBFC under section45-IA of the Reserve Bank of India Act 1934.
For VIRENDRA PRADEEP & CO
Firms Registration No. 007409N
(PRADEEP KUMAR AGARWAL)
Annexure B referred to in Independent Auditors Report of even date tothe members of Mega Corporation Limited ("the Company") on the StandaloneFinancial Statements or the year ended March 312019
REPORT ON THE INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING UNDER CLAUSE (I) OFSUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 ("THE ACT")
We have audited the internal financial controls over financial reporting of MegaCorporation Limited ("the Company") as of March 312019 in conjunction with ouraudit of the Standalone Financial Statements of the Company for the year ended on thatdate.
MANAGEMENTS RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Companys 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). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to companys policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys 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 ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofinternal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditors judgement including the assessment of the risks of materialmisstatement 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 Companys internal financial controlssystem over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 unauthorized acquisition use or disposition of thecompanys 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 the Company has in all material respects an adequate internalfinancial controls systems over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312019 based on internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the ICAI.
For VIRENDRA PRADEEP & CO
Firms Registration No. 007409N
(PRADEEP KUMAR AGARWAL)
M. No. 085534