The Members of
Mid East Portfolio Management Limited.
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of MID EASTPORTFOLIO MANAGEMENT LIMITED ("the Company") which comprise the StandaloneBalance Sheet as at March 31 2020 the Standalone Statement of Profit and Loss (includingother comprehensive income) The Standalone Cash Flows statement and Standalone statementof changes in Equity year then ended and a summary of the significant accounting policiesand 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("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standard prescribed under section133 of the act read with Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the company as at 31 March 2020 and its profits total comprehensiveincome its cash flows and the changes in equity for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the Standalone financial statements in accordance with theStandard on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those standards are further described in the auditor'sResponsibility for the audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made 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 obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.
EMPHASIS OF MATTERS
The reports should be read together with the Notes to the financial statements andattention to following matters be given:
(a) The Company has received Assessment Order from Income Tax Department for Ass. Year1995-96 raising a demand of Rs.9382760/- on account of various disallowances andadditions. The company has preferred an appeal against the said Assessment Order in theHigh Court Bombay and no provision has been made for the net liability of Rs.4559122/-and interest payable thereon if any.
(b) The company has not provided for arrears of fixed cumulative dividend payable on11% Cumulative Preference Shares of Rs.20000000/-since its allotment on 31.03.1998.Total arrears of dividend as at 31st March 2020 is Rs.48950000 (Previous Year Rs.46750000).
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 Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
We have determined the matters described below the key audit matter to be communicatedin our report. We have fulfilled the responsibilities described in auditor'sresponsibilities for the audit of Ind AS section of our report including relation tothese matters.
|Key Audit Matters ||How our audit addressed the key audit matters |
|1. Accuracy of recognition measurement presentation and disclosure of revenue and other related balances. ||We assessed the Company's process to identify the impact of adoption of the new revenue accounting standards. |
|The company has mainly earned income from the Interest charged from its customer hence there is need to give more emphasis on the recognition Measurement and disclosure of Interest income as revenue. ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||i) Evaluated the design of internal controls relating to implementation of the new revenue accounting standards. |
| ||ii) Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation re-performance and inspection of evidence in respect of operation of these controls. |
| ||iii) Tested the relevant information technology systems access and changes management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard. Our procedures did not identify any materials exceptions |
| ||We have accessed the agreement and arrangement between the parties and its terms & Condition relating to rate of interest charged by the company and repayment terms. |
| ||Assessed whether company has recognized its interest income on accrual basis or not. |
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the preparation of otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report Business Responsibility Report and CorporateGovernance Report but does not include the standalone financial statements consolidatedfinancial statements and our auditor's reports thereon.
Our opinion on the standalone 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 standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 ("the Act") with respect to the preparation andpresentation of these financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the Ind AS and other AccountingPrinciples generally accepted in India 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 accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism 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 financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue 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.
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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a state statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence 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 statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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 REGULATOY REQUIREMENTS
(i) 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 Act we give in the "Annexure A" a statement on the matters specifiedin the paragraph 3 and 4 of the Order.
(ii) 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) Except for the matter prescribed in para 4 above in our opinion the aforesaidfinancial statements comply with the Accounting Standards specified under Section 133 ofthe 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 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act; and
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operative effectiveness of such controls refer to ourseparate report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting; and
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 impact its financialposition as of March 31 2020
ii) The Company does not have any long-term contracts including derivative contractsfor which 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.
Agrawal Jain and Gupta
Firm Registration No.: 013538C
Partner M.NO: 409759
Date: 30th June 2020
Annexure A to the Independent Auditors' Report
[Referred to in paragraph 6 (i) of our report of even date]
i. (a) The Company is maintaining proper record showing full particulars includingquantitative details situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assetsand no material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment's / investmentproperties are held in the name of the company.
ii. As explained to us physical verification of inventory has been conducted atreasonable intervals by the management in our opinion the frequency of such verificationis reasonable.
(a) As per the information given to us the procedures of physical verification ofinventory followed by the management are in our opinion reasonable and adequate inrelation to the size of the company and the nature of its business;
(b) The company is maintaining proper records of inventory and in our opiniondiscrepancies noticed on physical verification of inventory were not material in relationto the operations of the Company and the same have been properly dealt with in the booksof account.
iii. In our opinion and according to information and explanation given to us TheCompany has not granted any secured/ unsecured loans to Companies firms or other partiescovered in the register maintained under Section 189 of the Act.
iv. In our opinion and according to the information and explanations given to usprovisions of section 186 of the Act in respect of loans and advances given investmentsmade and guarantees given has been complied with by the Company. The provisions ofsection 185 in respect of loans to directors including entities in which they areinterested and provisions of section 186 with respect to securities given are notapplicable to the Company and hence not commented upon.
v. According to Information and explanation given to us the Company has not acceptedany deposits within the meaning of Sections 73 to 76 of the Act and the Companies(Acceptance of Deposits) Rules 2014 (as amended). Accordingly the provisions of clause3(v) of the Order are not applicable.
vi. The company does not qualify the prescribed criteria as specified in Companies(Cost Records and Audit) Rules 2014 and therefore is not required to maintain the costrecords as prescribed under Section 148 (1) of the Act. Hence paragraph 3 (vi) of theorder is not applicable.
vii. In respect of statutory dues:
(a) According to the information and explanation given to us and records examinedby us the company is regular in depositing undisputed statutory dues including providentfund employees' state insurance income-tax sales-tax service tax duty of customsduty of excise value added tax Cess and any other statutory dues to the appropriateauthorities. According to the information and explanation given to us there were noundisputed amounts payable in respect of Income Tax and any other statutory duesoutstanding as on 31st March 2020 for a period more than six months from the date theybecame payable.
(b) According to the information and explanations given to us the dues in respectof Income Tax Sales Tax wealth Tax Value Added Tax Service tax customs duty have notbeen deposited with the appropriate authorities on account of dispute and the forum wherethe disputes are pending are as given below:
|Nature of Statues ||Nature of Dues ||Amount ||Period for which amount related ||Forum where dispute is pending |
|Order of I.T.A.T. Mumbai ||Income Tax ||Rs. 9382760.00 ||A.Y.1995-96 ||High Court Bombay |
viii. According to records of the company examined by us and the information andexplanations given to us the company does not have any loan from any financialinstitution banks government or debenture holders during the year. accordinglyparagraph 3(viii) of the order is not applicable.
ix. According to records of the company examined by us and the information andexplanations given to us the Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments) or by way term loan and henceparagraph 3(ix) of the order is not applicable.
x. During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we neither come across anyinstances of material fraud by the company or on the company by its officers or employeesnoticed or reported during the year nor have been informed of any of such case by themanagement.
xi. According to the information and explanation given to us and based on ourexamination of the records of the company the company has paid for managerialremuneration in accordance with the requisite approvals as mandated by the provisions ofsection 197 read with Schedule V to the Companies Act 2013.
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 sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations give to us and based on ourexamination of the records during the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures.Accordingly paragraph 3 (xiv) of the order is not applicable.
xv. According to the information and explanations given to us and based on ourexamination of the records during the year the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. To the best of our knowledge and according to the information and explanationsgiven to us the company has not required to be registered under section 45-IA of theReserve Bank of India Act 1934
For Agrawal Jain and Gupta
Firm Registration No.: 013538C
Date: 30th June 2020
Annexure - B to the Independent Auditors' Report
[Referred to in paragraph 6 (ii) (f) of our report of even date]
Report on the Internal Financial Controls Over Financials Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act") of MID EASTPORTFOLIO MANAGEMENT LIMITED
We have audited the internal financial controls over financial reporting of MID EASTPORTFOLIO MANAGEMENT LIMITED ("the Company") as of March 31 2020 inconjunction it's our audit of the financial statements of the Company for the year endedand as at on 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 (the Guidance Note').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing prescribed under section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of internal financialcontrols. The Guidance Note and those Standards 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 auditor's 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 authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized 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.
Agrawal Jain and Gupta
Firm Registration No.: 013538C
Sd/- (Narayan Swami)
Date: 30th June 2020