To the Members of
MULTI COMMODITY EXCHANGE OF INDIA LIMITED
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statements of MULTICOMMODITY EXCHANGE OF INDIA LIMITED ("the Company") which comprise the BalanceSheet as at March 31 2021 the Statement of Profit and Los: (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the yea then ended and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "Standalone FinancialStatements").
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 anc give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principle: generally accepted in Indiaof the state of affairs of the Company as at March 312021 its profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing as specified undersection 143(10) of the Companies Act 2013. Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the audit o the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements tha are relevant to our audit of theStandalone Financial Statements under the provisions of the Companies Act 2013 and theRules there under and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the ICAI's Code of Ethics. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basic for our audit opinion onthe 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.
|Sr. No. Key Audit Matter ||Auditor's Response |
|1. Legal Regulatory and Taxation Matters : Refer note 2.3 note 2.2.O. and note 32 of Standalone Financial Statements. ||Principal Audit Procedures:: |
|There are a number of legal regulatory and tax cases against the Company and demand is raised against the Company. || |
|The Company has disputed such demands by litigating at relevant statutory forum. || |
|For various pending litigations against the Company high level of management judgement is required to determine whether an obligation exists and a provision is required or disclosures if any. The measurement of the provision is based on the best estimate of the expenditure required to settle the present obligation. || |
|Considering the judgement and estimate involved matter is considered as a key audit matter. || |
| ||We used our specialists to gain an understanding of the current status of the cases and monitored changes in the disputes by reading external advice received by the Company where relevant to establish that the provisions has been appropriately adjusted to reflect the latest external developments. For legal regulatory and tax matters our procedures included the following |
| || obtain list of legal regulatory and tax cases against the Company and gained understanding thereof. |
| || testing key controls surrounding litigation regulatory and tax procedures; |
| || performing substantive procedures on the underlying calculations supporting the provisions recorded; |
| || wherever relevant considering external legal opinions obtained by the management on possible outcome of litigation; |
| || meeting with the management and reading subsequent Companies correspondence; |
| || discussing open matters with the Companies litigation regulatory general counsel and tax teams; |
| || assessing the Management's conclusions through understanding precedents set in similar cases; and |
| || circularization where appropriate of relevant third-party legal representatives and direct discussion with them regarding certain material cases. |
| ||Based on the evidence obtained while noting the inherent uncertainty with such legal regulatory and tax matters we determined the level of provisioning at March 31 2021 to be appropriate. We validated the completeness and appropriateness of the related disclosures through assessing that the disclosure of the uncertainties in note 32 of the standalone financial statements was sufficient. |
|2. Valuation of Investments and its impairment: Quoted investments and unquoted investments represent the most significant amount on the balance sheet. ||Principal Audit Procedures: |
|The total of these investments aggregating to ' 144464 lakh represented 81% of total assets of the Company as at March 312021 || |
| || We assessed the design and implementation of controls over valuation and existence of investments. |
| || For the fair valuation models we understood and assessed the methodology used. We tested the underlying data and assumptions used in the determination of the fair value. |
| || We traced the quantity held from the independent confirmation provided by the Custodian and Fund houses. |
| || We tested the valuation of the quoted and unquoted investments to independent pricing sources. We assessed and tested the management procedures for performing impairment analysis of investments including likely impact of Covid-19 on value of investments. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe financial statements and our auditor's report thereon. The Annual report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
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 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 statement of changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the 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 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.
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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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 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 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 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 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 the 'ANNEXURE A' a statement on the matters specified in paragraphs 3and 4 of the Order.
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 Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flows and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;
(d) In our opinion the aforesaid Standalone Financial Statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March31 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312021 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 with reference to these Standalone Financial Statements and theoperating effectiveness of such controls refer to our separate report in "ANNEXUREB"; Our report expresses an unmodified opinion on adequacy and operativeeffectiveness of the Company's internal financial controls 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 / provided by the Company to its directors during theyear is in accordance with the provisions of section 197 read with Schedule V 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 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 32 to the StandaloneFinancial Statements.
ii. The Company did not have any long-term contracts including derivative contracts onwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in paragraph 1 under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date
i. 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 three years. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets. In accordance with this programme certainfixed assets were verified during the year by the Management. According to the informationand explanations given to us no material discrepancies were noticed on such verification.
c. According to the information and explanations given to us and on the basis of anexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company as at the balance sheet date.
ii. The Company's nature of business does not require holding of any inventories.Accordingly the Clause 3(ii) of the Order is not applicable to the Company.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited Liability Partnershipand other parties covered in the register maintained under Section 189 of the Act.Accordingly sub clause (a) (b) & (c) of the Clause 3(iii) are not applicable to theCompany.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 186 of the Companies Act 2013 inrespect of the investments made by it.
The Company has not granted any loans provided any guarantee or security to theparties covered under section 185 and has not granted any loans provided any security orguarantee under section 186 of the Companies Act 2013.
v. According to the information and explanations given to us the Company has notaccepted any deposit from the public and hence the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the rules framed there under. Accordingly clause 3 (v) of the Order is notapplicable to the Company.
vi. To the best of our knowledge and as explained the Central Government has notprescribed maintenance of cost records under sub-section (1) of Section 148 of the Actfor the services rendered by the Company.
vii. a. According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company has generally been regular indepositing undisputed statutory dues including provident fund Income-Tax Cess Goods andService Tax and other material statutory dues applicable to it to the appropriateauthorities.
b. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company no amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund Income-TaxCess Goods and Service Tax and other material statutory dues in arrears as at March312021 for a period of more than six months from the date they became payable.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are dues of Income tax which have notbeen deposited as at March 312021 on account of any disputes are as follows:
|Name of the statute ||Nature of Dues ||Amount (Rs. in lakh) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Tax ||5160 ||A.Y. 2010-2011 ||CIT (Appeals) |
|Income Tax Act 1961 ||Tax ||2258# ||A.Y. 2013-2014 ||CIT (Appeals) |
|Income Tax Act 1961 ||Tax ||2573## ||A.Y. 2014-2015 ||CIT (Appeals) |
|Income Tax Act 1961 ||Tax ||644 ||A.Y. 2015-2016 ||CIT (Appeals) |
|Income Tax Act 1961 ||Tax ||105 ||A.Y. 2016-2017 ||CIT (Appeals) |
|Income Tax Act 1961 ||Tax ||1065 ||A.Y. 2018-2019 ||CIT (Appeals) |
|Income Tax Act 1961 ||DDT ||2211 ||A.Y. 2018-2019 ||CIT (Appeals) |
viii. According to the information and explanations give to us the Company does nothave any loans or borrowings from any financial institution banks and government ordebenture holders during the year. Accordingly Clause 3(viii) of the Order is notapplicable to the Company.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. AccordinglyClause 3(ix) of the Order is not applicable to the Company.
x. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employee has been noticed or reported duringthe year.
xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. According to the information and explanations given to us the Company is not aNidhi Company. Accordingly Clause 3 (xii) of the Order is 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 Standalone Financial Statements as required by theapplicable accounting standards.
xiv. According to the information and explanations give to us and based on 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. Therefore Clause 3(xiv) of the Order is not applicable to the Company.
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 them and hence provisions of section192 of the Act are not applicable. Accordingly clause 3(xv) of the Order is notapplicable to the Company.
xvi. According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE B TO 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")
The Annexure referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date
We have audited the internal financial controls over financial reporting of MULTICOMMODITY EXCHANGE OF INDIA LIMITED ("the Company") as of March 312021 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 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 ("theAct").
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. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting with reference toStandalone Financial Statements and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting with reference to StandaloneFinancial Statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditors' judgment including theassessment of the risks of material misstatement of the financial statements whether dueto 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 with reference to Standalone Financial Statements.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting with reference toStandalone Financial Statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control over financial reporting with referenceto these Standalone Financial Statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting with reference to these Standalone Financial Statements including thepossibility of collusion or improper Management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto Standalone Financial Statements to future periods are subject to the risk that theinternal financial control over financial reporting 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 to the best our information and according to the explanations given tous 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 312021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by the Institute ofChartered Accountants of India.
|For SHAH GUPTA & Co. |
|Chartered Accountants |
|Firm Registration No.: 109574W |
|Vedula Prabhakar Sharma |
|Membership No.: 123088 |
|UDIN: 21123088AAAACQ1400 |
|Place: Mumbai |
|Date: May 22 2021 |