To the Members of Modex International Securities Limited
Report on the Audit of the Standalone Financial Statements
We have audited the Standalone Financial Statements of Modex InternationalSecurities Limited (the "Company") which comprise the Balance Sheet as at31 March 2019 and the Statement of Profit and Loss Statement of Changes In Equity andCash Flow Statement for the year then ended and notes to the Standalone FinancialStatements including a summary of significant accounting policies and other explanatoryinformation [in which are included the Returns for the year ended on that date](hereinafter referred to as the "Standalone 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 matter described in the Basis for QualifiedOpinion section of our report the aforesaid Standalone Financial Statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and profit/loss (changes in equity) and itscash flow for the year ended on that date.
Basis for Qualified Opinion
The Company's inventories are carried in the Standalone Balance Sheet at Rs.120247300/-. Management has not stated the inventories at the lower of cost and netrealizable value but has stated them solely at cost which constitutes a departure fromthe Indian Accounting Standards prescribed under Section 133 of the Companies Act 2013.The Company's records indicate that had management stated the inventories at the lower ofcost and net realizable value an amount of Rs. 28362913/- would have been required towrite the inventories down to their net realizable value. Accordingly Cost of sales wouldhave been increased by Rs. 28362913/- and Income Tax Net Income and shareholders' fundswould have been reduced by Rs.2147806/- Rs. 28362913/- and Rs. 26215107/-respectively.
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Companies Act 2013and the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ourqualified 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 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.
Management's Responsibility for the Standalone Financial Statements
The Company's 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 (changes in equity) and cash flow of the Company inaccordance with the accounting principles generally accepted in India including the IndAS specified under Section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; 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 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 theCompany's financial reporting 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 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 controls 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 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 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.
Report on Other Legal and Regulatory Requirements
1. 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 thebest of 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 including OtherComprehensive Income Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid Standalone Financial Statements comply with theInd AS 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 onMarch 31 2019 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.
h) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Financial Statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 (the"Order") issued by the Central Government in terms of Section 143(11) of theAct we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.
For PRAKASH & SANTOSH
(Firm Registration No. 000454C)
(Membership No. 087378)
Place: New Delhi
Date : 30.05.2019
"ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Modex International SecuritiesLimited of even date)
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 MODEXINTERNATIONAL SECURITIES LIMITED (the "Company") as of March 31 2019 inconjunction with our audit of the Standalone Financial Statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. 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 respective 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 internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. 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 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 internal financial controls system overfinancial reporting of the Company.
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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.
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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For PRAKASH & SANTOSH
(Firm Registration No. 000454C)
(Membership No. 087378)
"ANNEXURE B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report to the Members of Modex International Securities Limited of evendate)
i. In respect of the Company's Fixed Assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of 3 years. In accordancewith this program certain fixed assets were verified during the year. As informed to usthe discrepancies noticed on such verification were not material and have been properlydealt with in the books of accounts. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsfixed assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of the immovable properties areheld in the name of the Company.
ii. In respect of the Company's Inventory:
The management has conducted physical verification of inventory at reasonable intervalsduring the year. According to the information and explanations given to us the proceduresfor physical verification on inventory followed by management are reasonable and adequatein relation to the size of the Company and the nature of its business.
iii. In respect of loan given by the Company:
As per the information furnished the Company has not granted any loan secured orunsecured to/ companies firms or other parties covered in the register maintained u/s189 of the Companies Act 2013. Accordingly the provisions of paragraph 3 (iii) of theorder are not applicable to the Company for the current year.
Iv. In respect of loan to directors and investments by the Company:
In our opinion and according to the information and explanations given to us theCompany has not given any loans to any parties specified under Section 185 of theCompanies Act 2013. Further guarantees security provided and the investments made by theCompany are in compliance with Section 185 and 186 of the Companies Act 2013.
v. In respect of Deposits:
As per the information given to us the Company has not accepted any deposits asmentioned in the directives issued by Reserve Bank of India and the provisions of theSection 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rulesframed there under. Accordingly paragraph 3(v) of the order is not applicable.
vi. Cost Records:
The maintenance of cost records has not been specified by the Central Government underSection 148(1) of the Companies Act 2013 for the business activities carried out by theCompany. Thus reporting under clause 3(vi) of the order is not applicable to the Company.
vii. In respect of statutory dues:
According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax value added tax duty of customs service tax cess and other materialstatutory dues have generally been regularly deposited by the Company with the appropriateauthorities. As explained to us the Company did not have any dues on account ofemployee's state Insurance and duty of excise.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms service tax cess and other material statutory dues were in arrears as at March31 2019 for a period of more than six months from the date they became payable.
According to the information and explanation given to us there are no material dues ofincome tax sales tax duty of exercise service tax and value added tax have not beendeposited by the Company on account of disputes.
viii. In respect of repayment of loan:
The Company has not defaulted in repayment of any loans or borrowings from financialinstitutions banks and government or has not issued any debentures.
ix. In respect of utilization of IPO and further public offer:
The Company did not raise money by way of initial public offer or further public offer(including debt instruments) or term loans during the year. Accordingly reporting underclause 3 (ix) of the Order is not applicable to the Company.
x. Reporting of Fraud:
According to the information and explanations given to us there has been no fraud bythe Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit.
xi. Approval of Managerial Remuneration:
According to the information and explanations given to us and on the basis of ourexplanation of the records of the Company the managerial remuneration has been provided/paid by the Company in accordance with the provisions of Section 197 read with Schedule Vof the Companies Act 2013.
xii. Nidhi Company:
According to the information and explanations given to us the Company is not a NidhiCompany and hence reporting under clause 3 (xii) of the Order is not applicable to theCompany.
xiii. In respect of related party transactions:
According to the information and explanation given to us and on the basis of ourexamination of the records of the Company transactions with the related parties are incompliance with Section 177 and 188 of the Companies Act 2013 where applicable and thedetails of such transactions have been disclosed in the Standalone Financial Statements asrequired by the applicable Indian Accounting Standards.
xiv. In respect of private placement of preferential issues:
According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
xv. In respect of non cash transactions:
According to the information and explanations given to us the Company has not enteredinto any non cash transactions with the directors or persons connected with them coveredby the Section 192 of the Companies Act 2013. Accordingly the paragraph 3(xv) of theOrder is not applicable.
xvi. In respect of Register under RBI Act 1934:
The Company is not required to be registered under Section 45 IA of RBI Act 1934.
For PRAKASH & SANTOSH
(Firm Registration No. 000454C)
(Membership No. 087378)
Place: New Delhi
Date : 30.05.2019