Report on the Audit of the Standalone Financial Statements
To the Members of RSD Finance Limited Opinion
We have audited the standalone financial statements of RSD Finance Limited ("theCompany") which comprise the balance sheet as at 31st March 2020 the statement ofprofit and loss (including other comprehensive income) Statement of Changes in Equity andstatement of cash flows for the year then ended and notes to the standalone financialstatements including a summary of significant accounting policies and other explanatoryinformation. In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2020 and its total comprehensiveincome (comprising of profit and comprehensive loss) change in equity its profiP/Lossand its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Companies Act 2013 and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Key audit matter ||How the matter was addressed in our audit |
|Transition date accounting policies || |
|Refer to the Note No. 37 to the Financial Statements: transition to Ind AS || |
|Adoption of new accounting framework (Ind AS) ||Our key audit procedures included: |
|Effective 1 April 2019 the Company adopted the Indian Accounting Standards (Ind AS') notified by the Ministry of Corporate Affairs with the transition date of 1st April 2018. || Evaluated management's transition date choices and exemptions for compliance/acceptability under Ind AS 101. |
| || Understood the methodology implemented by management to give impact on the transition. |
|The following are the major impact areas for the Company upon transition: || Assessed the accuracy of the computations related to significant Ind AS adjustments. |
|- Classification and measurement of financial instruments. || Tested the select system reports to check the completeness and accuracy of the data and reports used to perform computations for giving effect to Ind AS transition adjustments. |
|The migration to the new accounting framework (Ind AS) is a complicated process involving multiple decision points upon transition. Ind AS 101 First Time Adoption prescribes choices and exemptions for first time application of Ind AS principles at the transition date || Confirmed the approvals of Audit Committee for the choices and exemptions made by the Company for compliance/acceptability under Ind AS 101. |
| || Assessed areas of significant estimates and management judgment in line with principles under Ind AS. |
| || Assessed the appropriateness of the disclosures made in the financial statement. |
|Assessment of business model for classification and measurement of financial assets || |
|Classification and measurement of Financial assets Business model assessment ||Our key audit procedures included: |
| ||Design / controls |
|Ind AS 109 Financial Instruments contains three principal measurement categories for financial assets i.e.: || Assessed the design implementation and operating effectiveness of key internal controls over management's intent of purchasing a financial asset and the approval mechanism for such stated intent and classification of such financial assets on the basis of management's intent (business model). |
|- Amortised cost; || |
|- Fair Value through Other Comprehensive Income (FVOCI'); and || |
|- Fair Value through Profit and Loss (FVTPL'). || |
|A financial asset is classified into a measurement category at inception and is reclassified only in rare circumstances. The assessment as to how an asset should be classified is made on the basis of both the entity's business model for managing the financial asset and the contractual cash flow characteristics of the financial asset. || For financial assets classified at amortised cost we tested controls over the classification of such assets and subsequent measurement of assets at amortised cost. Further we tested key internal controls over monitoring of such financial assets. |
| ||Substantive tests |
|The term business model' refers to the way in which the Company manages its financial assets in order to generate cash flows. That is the Company's business model determines whether cash flows will result from collecting contractual cash flows selling the financial assets or both. ||- Test of details over of classification and measurement of financial assets in accordance with management's intent (business model) |
|Amortised cost classification and measurement category is met if the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows ||- We selected a sample of financial assets to test whether their classification as at the balance sheet date is in accordance with management's intent. |
| ||- We selected a sample (based on quantitative thresholds) of financial assets sold during the year to check whether there have been any sales of financial assets classified at amortised cost. |
|FVOCI classification and measurement category is met if the financial asset is held in a business model in which assets are managed both in order to collect contractual cash flows and for sale. Such financial assets are subsequently measured at fair value with changes in fair value recognized in other comprehensive income. ||- We have also checked that there have been no reclassifications of assets in the current period. |
|FVTPL classification and measurement category is met if the financial asset does not meet the criteria for classification and measurement at amortised cost or at FVOCI. Such financial assets are subsequently measured at fair value with changes in fair value recognized in profit or loss. || |
|We identified business model assessment as a key audit matter because of the management judgement involved in determining the intent for purchasing and holding a financial asset which could lead to different classification and measurement outcomes of the financial assets and its significance to the financial statements of the Company. || |
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 opinionon the standalone financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon. In connection with our audit of thestandalone financial statements our responsibility is to read the other information andin doing so consider whether the other information is materially inconsistent with thestandalone financial statements or our knowledge obtained during the course of our auditor otherwise appears to be materially misstated. If based on the work we have performedwe conclude that there is a material misstatement of this other information we arerequired to report that fact. We have nothing to report in this regard.
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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance change in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the accounting Standards (IND AS) 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. In preparing the standalone financial statements the Board of Directors isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so. Those Board ofDirectors are also responsible for overseeing the Company's financial reporting process.
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 weexercise professional judgment and maintain professional scepticism throughout the audit.We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation. Wecommunicate with those charged with governance regarding among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies in internal control that we identify during our audit. We also provide thosecharged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence and whereapplicable related safeguards. From the matters communicated with those charged withgovernance we determine those matters that were of most significance in the audit of thefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 section143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable. 2. Asrequired 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 Changes of Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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) Rules2014 in our opinionand to the best of our information and according to the explanations given to us:
(i). The Company does not have any pending litigations which would impact its financialposition.
(ii). The Company has made provision as required under the applicable law oraccounting standards (IND AS) for material foreseeable losses if any on long termcontracts including derivative contracts.
(iii). There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
For Prasad Kumar & Co.
Chartered Accountants (FRN 008816C)
Sd/- (Rajesh Prasad)
Partner M. No.: 075409
Date: The 31st day of July 2020
Annexure A' CARO 2016 Report on the standalone financial statement of RSD FinanceLimited for the year ended March 31 2020
To the Members of RSD Finance Limited
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' of our Report of even date to the members of RSD Finance Limited onthe accounts of the company for the year ended 31st March 2020]
On the basis of such checks as we considered appropriate and according to theinformation and Explanations given to us during the course of our audit we report that:
i. In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.
b) As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. No material discrepancies werenoticed 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 properties areheld in the name of the Company.
ii. In respect of its inventories:
The Company does not have any inventory during the year. Hence this point of report isnot applicable.
iii. The company has not granted unsecured loans to companies firms or other partiescovered in the register maintained under Section 189 of the Companies Act 2013.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto the loans and investments made.
v. According to the information and explanations given to us the Company has notaccepted any deposit from the public.
vi. According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records under Section 148(1) (d) of theCompanies Act 2013 in respect of any of the products dealt with by the company.
vii. In respect of statutory dues:
a) According to the records of the Company undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Goods and Service Tax Sales TaxWealth Tax Service Tax duty of Customs Duty of Excise Value Added Tax Cess and othermaterial statutory dues have been generally regularly deposited with the appropriateauthorities. According to the information and explanations given to us no undisputedamounts payable in respect of the aforesaid dues were outstanding as at March 31 2020 fora period of more than six months from the date of becoming payable.
b) According to the information and explanations provided to us by the managementthere are no disputed dues of sales tax income tax custom tax excise duty service taxand cess. viii. Based on our audit procedures and according to the information andexplanations given to us we are of the opinion that the Company has not defaulted inrepayment of dues to financial institutions banks and debenture holders.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer or loan.
x. In our opinion and according to the information and explanation given to us nomaterial fraud by the company and no material fraud on the company by its officers oremployees has been noticed or reported during the course of our audit.
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 for managerialremuneration in accordance with the provisions of Section 197 read with Schedule V to theAct.
xii. In our opinion and according to the information and explanation given to us theCompany is not a Nidhi company. Accordingly Paragraph 3(xii) of the Order is notapplicable.
xiii. According to the information and explanations provided to us and based on theexamination of the records of the Company transactions with the related parties are incompliance with Section 177 and 188 of the Act where applicable and details of suchtransaction have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations provided to us and based on theexamination 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.
xv. According to the information and explanations provided to us and based on theexamination of the records of the Company the company has not entered into any non-cashtransactions with directors or persons connected with him.
xvi. The Company is already a Non-Banking Financial Company and is registered underSection 45-IA of the Reserve Bank of India Act 1934.
For Prasad Kumar & Co.
Chartered Accountants (FRN 008816C)
Sd/- (Rajesh Prasad)
Partner M. No. 075409
Date: The 31st Day of July 2020
Annexure B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls over financial reporting of RSDFinance Limited (the Company') as of 31 March 2020 in conjunction with our auditof the standalone financial 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 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'). 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 the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
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 deemed to beprescribed under Section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 were established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Company's internal financial controls system over 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorizations of theManagement 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 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 31 March 2020 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 Institute of CharteredAccountants of India.
For Prasad Kumar & Co.
Chartered Accountants (FRN 008816C)
Sd/- (Rajesh Prasad)
Partner M. No. 075409
Date: The 31st Day of July 2020