To the Members of MT Educare Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of MT Educare Limited ("theCompany") which comprise the balance sheet as at 31st March 2019 and the statementof profit and loss statement of changes in equity and statement of cash flows for theyear then ended and notes to the standalone financial statements including a summary ofsignificant accounting 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 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2019 and profit changes in equityand 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 Standalone financialstatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India (ICAI) togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
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.
Recoverability of Loans:
Refer Notes 6 and Note 12 to the standalone financial statements
Certain loans aggregating Rs. 11534.32 lacs given to Sri Gayatri Education Society andAryan foundation and a deposit given to Interria Multibiz Private Limited amounting to Rs.6921.24 lacs (including interest receivable of Rs. 321.24 lacs)) as on March 31 2019constitutes 45% of the total financial assets. Out of the above provision recognisedamounted to Rs. 8627.55 lacs as at March 31 2019 which involves significantmanagement's estimate and judgment.
As the assessment of recoverability of loans and deposits requires management to makesignificant estimation exercise judgement on customer payment behaviour other relevantrisk characteristics we determined this to be a key audit matter.
Our audit procedures in respect of this area included:
.i. Obtaining an understanding of Company's processes and controls relating to themonitoring of loans given and review of credit risk of borrowers.
ii. Reviewing underlying documents and other supporting evidences.
iii. Obtaining Balance confirmations and evidence of receipts from the borrowersubsequent to the year end.
iv. Reviewing ageing report to identify collection risks assessing overdue receivablesand where applicable reviewing payment history and correspondence with the borrowers onexpected settlement dates.
v. Discussing with the management with respect to collectability of the amount lent andadequacy of provision for doubtful advance including whether any dispute or concerns havebeen noted by management.
vi. Evaluating management's assumptions and estimates used to determine the provisionfor doubtful advances.
vii. Assessing the adequacy of the disclosure on receivables and the related risks suchas credit risks and liquidity risks in the financial statements.
Recoverability and valuation of trade receivables:
Refer Note 9 to the standalone financial statements
Trade receivables (Net) amounting to Rs. 1976.09 lacs as of March 31 2019 arerecognised at their anticipated realisable value which is the original invoiced amountless an estimated allowance based on Expected Credit Loss model.
Valuation of trade receivables is considered as a key audit matter due to the magnitudeof the balance and the significant management judgement used in determining the impairmentprovision.
Our audit procedures in respect of this area included:
i. Reading through the agreements and correspondence with the Government authoritiesand understanding the key terms.
ii. Analysing the ageing of trade receivables.
iii. Analysing the list of outstanding receivables and assessing the recoverability ofthese through inquiry with management and verifying corroborative evidence to support theconclusions drawn.
iv. Assessing management's estimate and related policies with respect to provision onaccount of credit loss.
v. Verification of calculation of provisions for credit loss.
vi. Verifying the related disclosures provided in the financial statements.
Deferred Tax Assets:
Refer Note 33 to the Standalone financial statements Determination of recognitioncriteria as well as the probability of utilising the tax losses in the future involvessignificant assessment and judgement by the Management. Forecasts and estimates by themanagement in such estimations are dependent on various external factors. Inherentuncertainty is involved in forecasting future taxable profits and utilisation of deferredtax assets. Accordingly recognition of Deferred Tax Assets is considered as a Key AuditMatter.
Our audit procedures in respect of this area included:
i. Evaluating management's rationale for the forecast periods selected in determiningthe likelihood of the Group generating suitable future profits to support the recognitionof deferred tax assets.
ii. Evaluation of assessment of Future taxable income available considering anyrestrictions in the tax legislation impacting the utilisation.
iii. Verifying related disclosures on deferred tax assets in the financial statements.
Information Other than the Standalone financial statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises of information included in the Management report Chairman'sstatement and Director's report etc. The above reports are expected to be made availableto us after the date of this auditor's report. Our opinion on the standalone financialstatements does not cover the other information and we will not express any form ofassurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
Responsibilities of Management and Those Charged with Governance for the Standalonefinancial statements
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 standalone financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under section133 of the Act. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statement that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative 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 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 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.
We give in "Annexure A" a detailed description of Auditor's responsibilitiesfor Audit of the Standalone financial statements.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books
(c) The Balance Sheet the Statement of Profit and Loss the Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015.
(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 tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure C".
(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 has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note 31 to the standalone financialstatements;
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.
3. As required by The Companies (Amendment) Act 2017 in our opinion according toinformation explanations given to us the remuneration paid by the Company to itsdirectors is within the limits laid prescribed under Section 197 of the Act and the rulesthereunder.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT ON EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF MT EDUCARE LIMITED
Auditor's Responsibilities for the Audit of the Standalone 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 Act we are also responsible for expressing our opinion on whether the Group hasinternal financial controls with reference to financial statements in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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.
ANNEXURE B' TO INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF MT EDUCARE LIMITED FOR THE YEAR ENDED MARCH 31 2019
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report]
.i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.
(b) All the Property Plant and Equipment have not been physically verified by themanagement during the year. However there is a regular program of verification which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.
(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 immovable properties areheld in the name of the Company.
ii. The Company is involved in the business of rendering services. Accordingly theprovisions stated in paragraph 3(ii) of the Order are not applicable to the Company.
iii. The Company has granted unsecured loans to four companies covered in the registermaintained under Section 189 of the Act.
(a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the rate of interest and other terms andconditions on which the loans have been granted to the companies listed in the registermaintained under Section 189 of the Act are not prima facie prejudicial to the interestof the Company.
(b) In case of the loans granted to the companies listed in the register maintainedunder Section 189 of the Act we have been informed that repayment of principal andpayment of interest are on demand. In our opinion and based on the information andexplanation provided to us we did not notice any delay in repayment of principal andpayment of interest if demanded by the Company during the year.
(c) There are no amounts overdue for more than ninety days in respect of the loansgranted to companies listed 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 the Act in respect ofloans investments guarantees and security made except in the instance noted belowwherein the limits specified in sub section (3) of section 186 were exceeded at the pointof disbursal. However subsequently and before the year end the Company has enhanced thenecessary limits by way of a special resolution at a general meeting.
Non-compliance with section 186 of the Act: Loan and investment by the Company
|Sr. No. ||Particulars ||Name of Company ||Amount Rs. ||Amount as at March 31 2019 |
|1 ||Loan given or guarantee given or security provided or acquisition of securities exceeding the limits without prior approval by means of a special resolution ||Interria Mutlibiz Private Limited ||Rs. 6600 lacs ||Rs. 6600 lacs |
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of Sections 7374 75 and 76 of the Act and the rules framed there under.
vi. We have broadly reviewed the books of account relating to materials labour andother items of cost maintained by the Company as specified by the Central Government forthe maintenance of cost records under sub-section (1) of Section 148 of the Act and we areof the opinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed examination of the records with a viewto determine whether they are accurate or complete.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingwith appropriate authorities undisputed statutory dues including provident fundemployees' state insurance income-tax goods and service tax and any other statutory duesapplicable to it.
As explained to us the Company did not have any dues on account of duty of customsduty of excise and cess.
(b) According to the information and explanations given to us and the records of theCompany examined by us in our opinion no undisputed statutory dues were in arrears asat March 31 2019 for a period of more than six months from the date they became payable.
(c) According to the information and explanation given to us and examination of recordsof the Company there are no dues of income-tax goods and service tax which have not beendeposited on account of any dispute except for:
|Name of the statute ||Nature of dues ||Amount (Rs. in lakhs) ||Period to which the amount relates ||Forum where dispute is pending ||Remarks if any |
|Income Tax Act 1961 ||Income Tax ||48.37* ||A.Y. 2007-08 ||CIT Appeals ||- |
*No amount has been paid under protest.
As explained to us the Company did not have any dues on account of custom duty exciseduty and cess.
viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to the financial institutions or banks.
As explained to us there are no amounts due to government and debenture holders.
ix. In our opinion according to the information explanation provided to us moneyraised by way of term loans have been applied for the purpose for which they were raised.The Company has not raised any money by way of initial public offer or further publicoffer (including debt instruments) during the year.
x. During the course of our audit 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 have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employees.
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 to the Act. xii. In our opinion and according to theinformation and explanations given to us the Company is not a Nidhi Company. Accordinglythe provisions stated in paragraph 3(xii) of the Order are not applicable to the Company.
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 applicableIndian Accounting Standards.
xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has made preferential allotment orprivate placement of equity shares at end of the previous year and the requirements ofSection 42 of the Act had been complied with. In the current year the amount raised hasbeen used for the purposes for which they were raised.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly provisions statedin paragraph 3(xv) of the Order are not applicable to the Company.
xvi. In our opinion the Company is not required to be registered under Section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions stated in paragraph3(xvi) of the Order are not applicable to the Company.
ANNEXURE C TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF MT EDUCARE LIMTIED
[Referred to in paragraph (f) under Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report]
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to standalone financialstatements of MT Educare 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 Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to standalone financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI) (the"Guidance Note"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingissued by ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether internal financial controls with reference tostandalone financial statements was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the internalfinancial controls with reference to standalone financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to standalonefinancial statements included obtaining an understanding of internal financial controlswith reference to standalone financial statements assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thestandalone 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 withreference to standalone financial statements.
Meaning of Internal Financial Controls With Reference to Standalone financialstatements
A Company's internal financial control with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A Company's internalfinancial control with reference to standalone financial statements includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of standalone financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; 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 standalone financial statements.
Inherent Limitations of Internal Financial Controls With
Reference to Standalone financial statements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due tofterror or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an internal financialcontrols with reference to standalone financial statements and such internal financialcontrols with reference to standalone financial statements were operating effectively asat March 31 2019 based on the internal control with reference to standalone financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note.
For MSKA & Associates
ICAI Firm Registration No. 105047W
Membership No. 101739
Place : Mumbai
Date : May 13 2019