The Members of PNB Gilts Ltd
Report on the Audit of the Ind AS Financial Statements Opinion
We have audited the accompanying financial statements of PNB Gilts Ltd ("theCompany") which comprise the Balance Sheet as 31st March 2019 the Statement ofProfit and Loss the Statement of Changes in Equity and the Cash Flow Statement for theyear ended on that date and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements")
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principals generally accepted in India of thestate of affairs of the company as at 31st March 2019. its profit changes in equity andits cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the standards onAuditing as specified under section 143(10) of the Act (SAs). Our responsibilities underthose standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are Independent to the company inaccordance with the Code of Ethics Issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe standalone financial statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit Opinion onthe 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. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|Accuracy of classification ||Principal Audit Procedures |
|recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS. ||We assessed the Company's process to identify the impact of adoption of the IND AS. Our audit approach consisted testing of the design and operating effectiveness of the Internal controls and substantive testing as follows Evaluated the design of internal controls relating to implementation of the IND AS. |
|The application of the new revenue accounting standard involves certain key judgments relating to the appropriateness of the basis used to measure valuation and revenue recognized over a period. Refer Note 2 to the Financial Statements. || Selected a sample of continuing and new securities and tested the operating effectiveness of procedures and internal control relating to valuation of those securities. We carried out a combination of procedures involving observation and inspection of evidence in respect of operation of these controls. |
| || Tested the relevant information technology systems' access and change management controls |
| || Read analyzed and identified the distinct approaches for valuation of these securities arrived and recorded by the Company. |
| || Performed analytical procedures for reasonableness of revenues disclosed. |
Information other than the Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.
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 standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially 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 Management/Board of Directors is responsible for the matters stated inSection 134(5) of the Act with respect to preparation and presentation of these financialstatements that give a true and fair view of the financial position financialPerformance change in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding 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 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.
The Board of Directors is responsible for overseeing the Company's financial reportingprocess.
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 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 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 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 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.
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 Section 143(3) of the Act based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 ofthe Act read with Rule 7 ofthe Companies (Accounts) Rules2014.
e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31. 2019 from being appointed as a director in terms of Section 164 (2) oftheAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements ofsection 197(16) ofthe 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 ofthe 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 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 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.
3. As required by the Comptroller and Auditor General of India through directionsissued under section 143(5) of the Act we give a report in the attached Annexure"C".
| ||For Rasool Singhal & Co. |
| ||Chartered Accountants |
| ||(FRN:500015N) 1 1 |
| ||vt VwVL AJ |
|Date : May 27 2019 ||(CA Kanti Kumar Gupta) |
|Place :New Delhi ||Partner (M. No. 071615) |
"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 PNB Gilts Limited of even date)
Report on the Internal Financial Controls with reference to financial statements underClause (i) of Subsection 3 of Section 143 of the Companies Act 2013 ('the Act")
We have audited the internal financial controls over financial reporting ofPNB GiltsLtd. ("the Company") as of 31st March 2019 in conjunction with our audit ofthe financial statements of the Company for the year 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 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 systemoverfinancial 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 authorisations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorised 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 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 312019 based on the internal controlover financial reporting criteria approved by the Company's Board considering theessential components of internal control stated In the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For Rasool Singhal & Co. |
| ||Chartered Accountants |
|Date : May 27 2019 ||(FRN:500015N) |
|Place :New Delhi ||(CA Kanti Kumar Gupta) |
| ||Partner (M. No. 071615) |
"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 PNB Gilts Limited of even date).
Based upon the information and explanations furnished to us and the books and recordsexamined by us in the normal course of our audit we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details
and situation of fixed assets.
(b) As reported by the management of the company one of its staff member has conductedphysical verification of its fixed assets on quarterly basis for the head office andyearly for the branch offices. No discrepancies were reported during the physicalverification of assets.
(c) The Company owns 18 flats as immovable properties and 4 flats as InvestmentProperties. The title deeds of the fats are in the name of the company.
(ii) The company's inventory comprising of Treasury Bills and Dated GovernmentSecurities are held in the form of Subsidiary General Ledger (SGL) account maintained withthe Reserve Bank of India and the said stock is verified by the management with theconfirmation certificates received from Reserve Bank of India on a monthly basis. Thestock of other securities held by the Company in de-materialized form with NSDL/ SHCIL isverified by the management with the confirmation certificates received from them on amonthly basis. In our opinion the frequency of such verification is reasonable. Nodiscrepancies were observed during the physical verification of inventory as compared tobook records.
(iii) The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained u/s 189 of the Act. The company has nottaken any loans secured or unsecured from companies firms or other parties covered in theregister maintained u/s 189 of the Act.
(iv) According to the information and explanations given to us no loans Investmentsguarantees and securities have been given by the company to concerns which are coveredunder section 185 of the Companies Act 2013 and section 186 of the Companies Act 2013.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public within the meaning of Section 73 to 76 of theCompanies Act 2013 or any other relevant provisions of the Companies Act 2013 and rulesframed there under.
(vi) According to the information/explanations given to us maintenance of the costrecords for the products/ services/activities of the Company has not been prescribed bythe Central Government under Section 148 (1) of the Companies Act 2013.
(vii) (a) According to the information/explanations given to us the Company is regularin depositing
undisputed statutory dues including Provident fund Employees' State Insurance IncomeTax Sales Tax Service Tax Duty of Customs Duty of Excise Value Added Tax Cess andany other statutory dues to the appropriate authorities.
(b) According to the information/explanations given to us the Company has somedisputes which have resulted into demands under the Income Tax Act 1961 which have beennot deposited. The details of which are given below:
|Assessment Year ||Section under which demand raised ||Amount Provided in the books and not paid ||Amount not provided for and treated as contingent liability ||Forum where dispute |
|2006-07 ||220(2) ||11.44 ||- ||ITAT |
|2007-08 ||115WE (1) ||- ||1.33 ||Assessing officer |
|2008-09 ||115WE (1) ||- ||0.13 ||Assessing officer |
|2008-09 ||143(3) ||- ||1.78 ||Assessing officer |
|2010-11 ||143(3) ||5.14 ||- ||Assessing officer |
|2011-12 ||154 ||- ||3.21 ||Assessing officer |
|2012-13 ||143(3) ||13.78 ||342.80 ||ITAT |
|2013-14 ||250 ||14.74 ||- ||ITAT |
|2013-14 ||143(3) ||- ||190.51 ||ITAT |
|2014-15 ||250 ||9.02 ||- ||ITAT |
|2014-15 ||143(3) ||- ||268.70 ||ITAT |
|2016-17 ||143(3) ||7.97 ||123.83 ||CIT (Appeals) |
|2014-15 ||271(1)(C) ||- ||7.12 ||CIT (Appeals) |
| ||Total ||62.10 ||939.41 || |
(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of dues to a financial institution or bank as applicable.
(ix) According to the information and explanations given to us the Company has notraised any money out of initial public offer or further public offer (Including debtinstruments). Term loans raised by the company were applied for the purposes for whichthose are raised.
(x) According to the information and explanations given to us we have neither comeacross any instance of fraud on or by the company noticed or reported during the year norhave we been informed of such case by the management during the course of our audit.
(xi) According to the information and explanations given to us the managerialremuneration paid by the Company is in accordance with provisions of Section 197 read withSchedule V to the Companies Act 2013. The company has also taken requisite approvals asmandated by the provisions of section 197 in terms of managerial remuneration being paid.
(xii) According to the information and explanations given to us the Company is not aNidhi Company thus this pars does not apply to it.
(xiii) According to the information and explanations given to us the company hascomplied with requirements of section 177 of the Companies Act 2013 and Section 188 ofthe Companies Act 2013 in relation to the related parties. The company has also disclosedthe requirements as laid down in the accounting standards in the relation to the relatedparties in the financial statements in the note No. 36 Related Party Information.
(xiv) According to the information and explanations given to us the company has notmade any preferential allotment or private placement of shares or convertible debenturesduring the year under review.
(xv) According to the information and explanations given to us the company has notentered into any non-cash transactions with the Directors or persons connected with itduring the year under review.
(xvi) According to the information and explanations given to us the company is a NBFIalready registered under section 45 I-A of the Reserve Bank of India Act 1934.
| ||For Rasool Singhal & Co. |
| ||Chartered Accountants |
|Date : May 27 2019 ||(FRN:500015N) |
|Place :New Delhi ||(CA Kanti Kumar Gupta) |
| ||Partner (M. No. 071615) |