Religare Enterprises Ltd.
|BSE: 532915||Sector: Financials|
|NSE: RELIGARE||ISIN Code: INE621H01010|
|BSE 00:00 | 27 Jan||120.80||
|NSE 00:00 | 27 Jan||121.15||
|Mkt Cap.(Rs cr)||3,846|
|Mkt Cap.(Rs cr)||3846.15|
Religare Enterprises Ltd. (RELIGARE) - Auditors Report
Company auditors report
TO THE MEMBERS OF RELIGARE ENTERPRISES LIMITED
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements ofReligare Enterprises Limited (the Company) which comprise the Balance Sheetas at March 312020 the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and the Statement of Cash Flow for the yearthen ended and notes to the financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to asthe standalone financial statements).
2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (the Act) in the manner so requiredand give a true and fair view in conformity with Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended (IND AS) and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 312020 the loss and totalcomprehensive income changes in equity and its cash flow for the year ended on thatdate.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the Standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our opinion on thestandalone financial statements.
Emphasis of Matter
4. Attention is invited to note no. 47(d) of the standalone financialstatement of the company relating to pending REL's application with Hon'ble HighCourt of Delhi for staying the redemption of 1500000 non-convertible preference sharesof the Company held by Oscar Investments Limited Promoter's Group Company and due on31st Oct. 2018 with an approx redemption value of Rs. 4190.28 lakhs. Pending the outcomeof the application we are unable to comment the likely implication on the standalonefinancial statements.
5. We draw attention to note no. 2.3 of the standalone financialstatement which states the management's evaluation of COVID-19 impact on theoperations of the company.
Our report is not modified in respect of this matters.
Key Audit Matters
6. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the Standalone Financial Statements ofthe current period. These matters were addressed in the context of our audit of theStandalone Financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
7. The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Company's annual report particularly with respect to the ManagementDiscussion and Analysis Board's Report including Annexures to Board's ReportBusiness responsibility report and Corporate Governance report but does not include thestandalone financial statements and our auditor's report thereon. The otherinformation is expected to be made available to us after the date of this auditor'sreport.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
When we read the other information identified above if we concludethat there is a material misstatement therein we are required to communicate the matterto those charged with governance.
Responsibilities of Management and Those Charged With Governance forthe Standalone Financial Statements
8. The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with IND AS and the 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 the Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone FinancialStatements
9. Our objectives are to obtain reasonable assurance about whetherthe Standalone Financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis ofthese standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
A) 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 of the companies Act 2013 we give in the Annexure A astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
B) As required by Section 143(3)of the Act based on our audit wereport that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Standalone Balance Sheet the Statement of Profit and Lossincluding other Comprehensive Income Statement of Changes in Equity and the Statement ofCash Flow dealt with by this Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act read with relevant rules issuedthereunder.
e) On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 312020 from being appointed as a director in termsof Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls withreference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in Annexure B.Our report expresses an unmodified opinion on the adequacy and operating effectiveness ofthe Company's internal financial controls with reference to the standalone financialstatements.
g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Act asamended:
In our opinion and to the best of our information and according to theexplanations given to us remuneration paid by the Company to its whole-time directorduring the year is in accordance with the provisions ofsection 197 of the Act.
h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:
(i) The Company has disclosed the impact of pending litigations as on31 Mar 2020 on its financial position in its standalone financial statements (refer noteno. 32 of the standalone financial statements)
(ii) The Company has made provision as required under the applicablelaw or Indian accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.
(iii) There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund bythe Company.
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under Report on Other Legal andRegulatory Requirements' section of our report to the
Members of Religare Enterprises Limited of even date)
i. In respect of the Company's fixed assets:
a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
b) According to the information and explanation provided to us theproperty plant and equipment are physically verified by the management according todesigned process to cover all the items once in three years. In our opinion thisfrequency is reasonable having regard to the size of the company and the nature of itsassets. Pursuant to this program no physical verification exercise was due duringprevious financial year. Accordingly question of discrepancies does not arise.
c) According to the information and explanations given to us and on thebasis of our examination of records of the company the title deeds of immovableproperties are held in the name of the Company.
ii. The Company is engaged in the business of rendering services andinvestment activity consequently does not hold any inventory. Accordingly Clause (ii)of Para 3 of the order is not applicable to the Company.
iii. According to the information and explanation given to us and onthe basis of our examination of the records the Company has granted a loan to its whollyowned subsidiary company during the year covered in the register maintained under section189 ofthe Companies Act 2013 in respect of which
a. The terms and conditions of the grant of loan given during the yearare in our opinion prima facie not prejudicial to the company's interest.
b. Receipt / Repayment of principal amount and Interest have beenregular as stipulated in loan agreement.
c. There is no amount outstanding as at the year-end with respect toloan given during the year.
iv. As per the information and explanation given to us and based onSection 186 read with applicable Rules the requirement of reporting under this clause ofthe order is not applicable.
v. In our opinion and as per the information and explanation providedto us the Company has not accepted any deposits from the public within the meaning ofdirectives issued by the Reserve Bank of India and provisions of sections 73 to 76 or anyother relevant provisions of the Companies Act 2013 and the rules framed thereunder tothe extent notified.
vi. As per the requirement under section 148(1) of Companies Act 2013the Central government has not prescribed for maintenances of the cost records for any ofthe products of the company. Accordingly Clause (vi) of Para 3 of the order is notapplicable to the Company.
vii. According to the information and explanations given to us inrespect of statutory dues:
a) According to the information and explanations given to us and therecords of the Company examined by us in our opinion the Company is generally regular indepositing undisputed statutory dues in respect of provident fund employees' stateinsurance income tax Goods and Services Tax cess and other material statutory dues asapplicable with the appropriate authorities. Further there were no undisputed amountsoutstanding at the year-end for a period of more than six months from the date they becamepayable.
b) According to the information and explanations given to us and therecords of the Company examined by us there are no dues of income tax service tax andGoods and Services Tax which have not been deposited on account of any dispute exceptforthe following:
* Amount is net ofdeposit paid under protest ** Inclusive of Penalty ofRs. 1058180
viii. In our opinion and according to the information &explanations given to us the company has defaulted in repayment of loan or borrowing tofinancial institution i.e. Religare Finvest Limited its wholly owned subsidiary which isnon-banking financial company as per section 45I of RBI Act 1934. However company has nottaken any loans or borrowings from any bank and government.
Details of borrowing and its default is as follows : -
However subsequent to balance sheet date based on the request of thecompany to the lender i.e Religare Finvest Limited (RFL) this loan was rescheduled byproviding an extension of two years ( i. e on or before April 30 2022) from date ofrequest letter for repayment of principal and waiver of current and future interestcomponent and all other charges .
ix. As per the information and explanation given to us and on the basisof our examination of the records the company has not raised moneys by way of initialpublic offer or further public offer (including debt instruments or term loans). Hencereporting under clause (ix) of para 3 of the order is not applicable to the company.
x. As per the information and explanation given to us and on the basisof our examination of the records we have neither come across any instance of materialfraud by the company or on the company by its employees noticed or reported during theyear nor have been informed of such case by the management.
xi. As per the information and explanation given to us and on the basisof our examination of the records the Company has paid /provided managerial remunerationin accordance with the requisite approvals mandated by provisions of section 197 of theAct read with schedule V of the Act.
xii. The company is not Nidhi Company. Accordingly Clause (xii) ofPara 3 of the order is not applicable to the Company.
xiii. As per the information and explanation given to us and on thebasis of our examination of the records Company has transacted with the related partieswhich are in compliance with section 177 and 188 of the Act and the details have beendisclosed in the financial statements as required by Ind AS 24.
xiv. According to the information and explanations give to us and basedon our examination of the records of the Company the Company has made allotment of equityshares against warrants as per Section 42 of the Companies Act 2013. The company had dulyutilised the funds received from the warrant holders forthe purposes forwhich it has beenraised.
xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.
xvi. The Company is required to and has been registered under section45-IA of the Reserve Bank of India Act 1934 as a Core Investment Company (CIC).
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Controls with reference to thestandalone financial statements under Clause (i) of Subsection 3 of Section 143 of theCompanies Act 2013 (the Act).
We have audited the internal financial controls with reference to thestandalone financial statements of Religare Enterprises Limited (theCompany) as at March 31 2020 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control with referenceto the standalone financial statements criteria established by the Company 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. 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 offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required underthe Act.
Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to the standalone financial statements based onour audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the Guidance Note) andthe Standards on Auditing issued by ICAI and deemed to be prescribed under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tothe standalone financial statements was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to the standalone financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to the standalone financial statements included obtaining an understandingof internal financial controls with reference to the standalone financial statementsassessing 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 andappropriate to provide a basis for our audit opinion on the company's internalcontrols with reference to the standalone financial statements.
Meaning of Internal Financial Controls with reference to the standalonefinancial statements
A company's internal financial control with reference to thestandalone 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 with reference to the standalonefinancial statements includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference tothe standalone financial statements
Because of the inherent limitations of internal financial controls withreference to the standalone financial statements including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls with reference to the standalone financial statements to future periodsare subject to the risk that the internal financial control with reference to thestandalone financial statements may become inadequate because of changes in conditions orthat the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us the company has in all material aspect an adequate internalfinancial controls with reference to the standalone financial statements and such internalfinancial control with reference to the standalone financial statements were operatingeffectively as at 31st March 2020 based on the criteria for internalfinancial controls with reference to the standalone financial statements established bythe company considering the essential components of internal controls stated in guidancenote on audit of internal financial controls over financial reporting issued by theInstitute of Chartered Accountants of India.