The Members of
PRIME SECURITIES LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of PRIME SECURITIESLIMITED ("the Company") which comprise the Balance Sheet as at March 312019 the Statement of Profit and Loss (including Other Comprehensive Income) thestatement of Changes in Equity and the statement of Cash Flow for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "standalone financial statements").
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 exceptfor the effects of the matters described in the Basis for Qualified Opinion section of ourreport give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019the total comprehensive income (comprising of profit and other comprehensive income) thechanges in equity and its cash flows and for the year ended on that date.
Basis for Qualified Opinion
As referred in Note 30 the Company has in earlier financial year re-instated advanceof Rs. 327.50 Lacs which was earlier written-off as not recoverable and which has not yetbeen realised. Accordingly the loss in Surplus (Profit & Loss) is lower and OtherNonCurrent Asset is higher by the said amount.
We conducted our audit of the standalone financial statements in accordance with theStandards on
Auditing ("SAs") specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India ("ICAI") together with theindependence requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our qualified opinion on the standalone financialstatements.
Emphasis of Matter
Our opinion is not modified in respect of the following matters:
a) As referred to in Note 29 the net worth of Company's subsidiary viz. PrimesecInvestments Limited has been eroded but having regard to the circumstances specified inthe said Note the subsidiary has prepared its accounts on a going concern basis. Relyingon the same the Company has not considered making any adjustments to its financialexposure in the subsidiary.
b) As referred to in Note 31 the Company has not received confirmation of account froma debtor whose outstanding balance at the year-end is Rs. 500.00 Lacs. No provision fordoubtful debt is considered necessary by the Company as in the opinion of its managementthe amount will be fully realized in ordinary course of business.
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 for the year. Thesematters were addressed in the context of our audit of the standalone financial statementsas a whole and in forming our opinion thereon and we do not provide a separate opinionon these matters. We have determined the matters described below to be the key auditmatters to be communicated in our report.
|No. Key Audit Matter ||Auditor's Response |
|1 Recoverability assessment of trade receivables ||We have performed the following procedures in relation to the recoverability of trade receivables: |
| Trade receivables of the Company comprise of receivables for services rendered. || Obtained a list of outstanding receivables and tested the accuracy of aging of each party at year end; |
| The recoverable amount was estimated by the management based on their specific recoverability assessment of individual debtor. || Tested subsequent settlement of trade receivables after the balance sheet date if any; |
| || For those outstanding balances letters were sent to each party seeking direct independent confirmation of balance from them. |
| The management would make specific provision against individual balance with reference to the recoverable amount. ||We found the key estimates used by management in the recoverability assessment of trade receivables to be supportable based on the obtained evidence except in case of disclosure made in Emphasis of Matter. |
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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 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 are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibility for the Audit of 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 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.
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 section 143 (11) of the Act we givein the Annexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder 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 (including Other ComprehensiveIncome) the statement of Cash Flow and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account.
d) In our opinion except for the effects of the matters described in paragraph ofthe Basis for Qualified Opinion paragraph the aforesaid standalone financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with relevant rules issued thereunder.
e) On the basis of the written representations received from the directors as on March31 2019 and 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 B".
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 28 to the standalonefinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
For GANDHI & ASSOCIATES LLP
Membership No. 043194
May 18 2019
ANNEXURE - A TO THE AUDITOR'S REPORT
The annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended March 31 2019 we report that:
1. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) As explained to us all the fixed assets were physically verified by the managementat reasonable intervals during the year. According to the information and explanationsgiven to us no discrepancies were noticed on such physical 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 property is yet tobe transferred in the name of the Company pending a legal dispute as disclosed in Note 1to the standalone financial statements.
2. The Company does not hold any inventories and therefore clause 3(ii) of the Orderis not applicable to the Company.
3. The Company has granted unsecured loans to wholly-owned subsidiary companies coveredin the register maintained undersection 189 of the Act. Considering that the loans are towholly-owned subsidiaries in our opinion the terms and conditions of the loans are notprejudicial to the Company's interest. The loans are repayable on demand and during theyear part of loan to a subsidiary was repaid as demanded. Interest is paid by thesubsidiary where applicable.
4. In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respect tothe loans and investments made.
5. The Company has not accepted any deposits within the meaning of the directivesissued by the Reserve Bank of India and the provisions of section 73 to 76 or any otherrelevant provisions of the Act and the rules framed thereunder and therefore clause 3(v)of the Order is not applicable to the Company.
6. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company and thereforeclause 3(vi) of the Order is not applicable to the Company.
7. a) According to the information and explanations given to us and the records of theCompany examined by us the Company is generally regular in depositing with theappropriate authorities undisputed statutory dues including provident fund income taxgoods and service tax and other statutory dues applicable to it though there has been fewinstances of minor delays in payment of goods and service tax. Further according to theinformation and explanations given to us there are no undisputed amounts payable inrespect of provident fund income tax goods and service tax and other statutory dues withthe appropriate authorities outstanding at the end of the year for a period of more thansix months from the date they became payable.
b) According to the information and explanations given to us the particulars ofstatutory dues outstanding at the end of the year on account of a dispute are as follows:
|Statue ||Assessment Year ||Nature Dues ||Forum before whom pending ||Rs. Lacs |
|Income Tax Act ||2006-2007 ||Income Tax ||Assessing Officer ||13.18 |
|1961 ||2009-2010 || ||(Rectification Proceedings) ||0.27 |
8. Based on our audit procedures and according to the information and explanationsgiven by the management the Company has not defaulted in repayment of its loans andborrowings to any financial institution and banks. The Company does not have any loan orborrowing from Government or debentureholders.
9. The Company did not raise any amount 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.
10. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us no fraud by the Company or nomaterial fraud on the Company by its officers or employees has been noticed or reportedduring the year.
11. The Company has paid/provided for managerial remuneration in accordance withprovisions of section 197 read with Schedule V of the Act.
12. In our opinion and according to the information and explanation given to us theCompany is not a nidhi company and therefore clause 3(xii) of the Order is notapplicable.
13. 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 the details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year and therefore clause 3(xiv) ofthe Order is not applicable.
15. On the basis of our examination and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with directors orpersons connected to its directors and therefore clause 3(xv) of the Order is notapplicable.
16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 and therefore clause 3(xvi) of the Order is not applicable.
For GANDHI & ASSOCIATES LLP
Membership No. 043194
May 18 2019
ANNEXURE - B TO THE AUDITOR'S 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 over financial reporting the Company asof March 31 2019 in conjunction with our audit of the standalone financial statements ofthe Company for the year 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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
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 on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 standalone Ind AS financial statements whether due to fraudor error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that:
1. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company; and
2. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorizations of management and directors of the Company; and
3. provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the ICAI.
For GANDHI & ASSOCIATES LLP
Membership No. 043194
May 18 2019