S Chand & Company Ltd.
|BSE: 540497||Sector: Services|
|NSE: SCHAND||ISIN Code: INE807K01035|
|BSE 16:01 | 06 Dec||196.00||
|NSE 15:56 | 06 Dec||196.40||
|Mkt Cap.(Rs cr)||687|
|Mkt Cap.(Rs cr)||686.78|
S Chand & Company Ltd. (SCHAND) - Auditors Report
Company auditors report
To the Members of S Chand And Company Limited
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements ofS Chand And Company Limited (the Company') which comprise the Balance Sheet asat 31 March 2022 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Cash Flow and the Statement of Changes in Equity for the year then endedand a summary of the significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according tothe explanations given to us except for the possible effects of the matter described inthe Basis for Qualified Opinion section of our report the aforesaid standalone financialstatements give the information required by the Companies Act 2013 (the Act')in the manner so required and give a true and fair view in conformity with the IndianAccounting Standards (Ind AS') specified under section 133 of the Act read withthe Companies (Indian Accounting Standards) Rules 2015 and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2022and its profit (including other comprehensive income) its cash flows and the changes inequity for the year ended on that date.
Basis for Qualified Opinion
3. As stated in note 62 of the standalone financial statements theCompany has a non-current investment in DS Digital Private Limited (DSDigital') a subsidiary of the Company amounting to Rs 247.78 million (net ofimpairment of Rs 55.00 million) and has loans and trade/ other receivables recoverablefrom such subsidiary company amounting to Rs 149.56 million and Rs 48.65 millionrespectively as at 31 March 2022. DS Digital has been incurring operational losses sinceearlier years as a result of which the net worth of such subsidiary company has beencompletely eroded. Management based on their internal assessment has assessed that theaforesaid recoverable balances are fully recoverable as at 31 March 2022 and hence noadjustments are required to be made to the accompanying standalone financial statements.However in absence of sufficient and appropriate evidence to support management'sassessment as above we are unable to comment on the appropriateness of the carrying valueof the aforesaid recoverable balances as at 31 March 2022 and the consequential impactthereof on the accompanying standalone financial statements for the year ended 31 March2022.
4. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI') together with the ethical requirements that are relevant to ouraudit of the 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 Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our qualified opinion.
Emphasis of Matter Impact of Covid-19
5. We draw attention to note 61 of the standalone financial statementswhich describes the effects of uncertainties relating to the outbreak of Covid-19 pandemicand management's evaluation of its impact on the Company's operations and theaccompanying standalone financial statements of the Company as at the balance sheet datethe extent of which is significantly dependent on future developments. Our opinion is notmodified in respect of this matter.
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 thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
7. In addition to the matters described in the Basis for QualifiedOpinion section we have determined the matters described below to be the key auditmatters to be communicated in our report.
Information other than the Financial Statements and Auditor'sReport thereon
8. The Company's Board of Directors are responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the standalone financial statements and our auditor'sreport thereon. The Annual Report is expected to be made available to us after the date ofthis auditor's report.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon. Inconnection with our audit of the standalone financial statements our responsibility is toread the other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
9. The accompanying standalone financial statements have been approvedby the Company's Board of Directors. The Company's Board of Directors areresponsible for the matters stated in section 134(5) of the Act with respect to thepreparation and presentation of these standalone financial statements that give a true andfair view of the financial position financial performance including other comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind ASspecified under section 133 of the Act and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
10. 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 intend to liquidate theCompany or to cease operations or has no realistic alternative but to do so.
11. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process. Auditor's Responsibilities for the Auditof the Standalone Financial Statements
12. Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with Standards on Auditing 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 of these financial statements.
13. As part of an audit in accordance with Standards on Auditingspecified under section 143(10) of the Act we exercise professional judgment and maintainprofessional 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 control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances.
Under section 143(3)(i) of the Act we are also responsible forexpressing our opinion on whether the Company has adequate internal financial controlssystem with reference to financial statements in place and the operating effectiveness ofsuch controls;
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management;
Conclude on the appropriateness of Board of Directors' 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 financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern;
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation;
14. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant de_ciencies in internal control that we identify during ouraudit.
15. We also provide those charged with governance with a statement thatwe have 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.
16. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese 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
17. As required by section 197(16) of the Act based on our audit wereport that the Company has paid remuneration to its directors during the year inaccordance with the provisions of and limits laid down under section 197 read withSchedule V to the Act.
18. As required by the Companies (Auditor's Report) Order 2020(the Order') issued by the Central Government of India in terms of section143(11) of the Act we give in the Annexure A a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable. 19. Further to our comments inAnnexure A as required by section 143(3) of the Act based on our audit we report to theextent applicable that: a) We have sought and except for the matter described in theBasis for Qualified Opinion section obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purpose of our audit of theaccompanying standalone financial statements; b) Except for the possible effects of thematter described in the Basis for Qualified Opinion section in our opinion proper booksof account as required by law have been kept by the Company so far as it appears from ourexamination of those books; c) The standalone financial statements dealt with by thisreport are in agreement with the books of account; d) Except for the possible effects ofthe matter described in the Basis for Qualified Opinion section in our opinion theaforesaid standalone financial statements comply with Ind AS specified under section 133of the Act;
e) The matter described in paragraph 3 under the Basis for QualifiedOpinion section in our opinion may have an adverse effect on the functioning of theCompany; f) On the basis of the written representations received from the directors andtaken on record by the Board of Directors none of the directors is disqualified as on 31March 2022 from being appointed as a director in terms of section 164(2) of the Act; g)The qualification relating to the maintenance of accounts and other matters connectedtherewith are as stated in the Basis for Qualified Opinion section;
h) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company as on 31 March 2022 and the operatingeffectiveness of such controls refer to our separate Report in Annexure B wherein we haveexpressed an unmodified opinion; and i) With respect to the other matters to be includedin the Auditor's Report in accordance with rule 11 of the Companies (Audit andAuditors) Rules 2014 (as amended) in our opinion and to the best of our information andaccording to the explanations given to us: i. The Company as detailed in note 54 to thestandalone financial statements has disclosed the impact of pending litigations on itsfinancial position as at 31 March 2022; ii. The Company did not have any long-termcontracts including derivative contracts for which there were any material foreseeablelosses as at 31 March 2022; iii. There were no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company during the yearended 31 March 2022;
iv. a. The management has represented that to the best of itsknowledge and belief as disclosed in note 59(v) to the standalone financial statementsno funds have been advanced or loaned or invested (either from borrowed funds orsecurities premium or any other sources or kind of funds) by the Company to or in anypersons or entities including foreign entities (the intermediaries') with theunderstanding whether recorded in writing or otherwise that the intermediary shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the Company (the UltimateBeneficiaries') or provide any guarantee security or the like on behalf the UltimateBeneficiaries; b. The management has represented that to the best of its knowledge andbelief as disclosed in note 59(vi) to the standalone financial statements no funds havebeen received by the Company from any persons or entities including foreign entities(the Funding Parties') with the understanding whether recorded in writing orotherwise that the Company shall whether directly or indirectly lend or invest in otherpersons or entities identified in any manner whatsoever by or on behalf of the FundingParty (Ultimate Beneficiaries') or provide any guarantee security or the likeon behalf of the Ultimate Beneficiaries; and c. Based on such audit procedures performedas considered reasonable and appropriate in the circumstances nothing has come to ournotice that has caused us to believe that the management representations under sub-clauses(a) and (b) above contain any material misstatement. v. The Company has not declared orpaid any dividend during the year ended 31 March 2022.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Membership No.: 507892 UDIN: 22507892AJNGRS1573 Place: New Delhi Date:24 May 2022
Annexure A referred to in Paragraph 18 of the IndependentAuditor's Report of even date to the members of S Chand And Company Limited on thestandalone financial statements for the year ended 31 March 2022
In terms of the information and explanations sought by us and given bythe Company and the books of account and records examined by us in the normal course ofaudit and to the best of our knowledge and belief we report that: (i) (a) (A) TheCompany has maintained proper records showing full particulars including quantitativedetails and situation of property plant and equipment and right of use assets.
(B) The Company has maintained proper records showing full particularsof intangible assets.
(b) The Company has a regular program of physical verification of itsproperty plant and equipment and right of use assets under which the assets arephysically verified in a phased manner over a period of three years which in our opinionis reasonable having regard to the size of the Company and the nature of its assets. Inaccordance with this program certain property plant and equipment and right of useassets were verified during the year and no material discrepancies were noticed on suchverification.
(c) The title deeds of all the immovable properties held by the Company(other than properties where the Company is the lessee and the lease agreements are dulyexecuted in favour of the lessee) are held in the name of the Company.
(d) The Company has not revalued its Property Plant and Equipment andRight of Use assets or Intangible assets during the year.
(e) No proceedings have been initiated or are pending against theCompany for holding any benami property under the Benami Transactions (Prohibition) Act1988 (45 of 1988) and rules made thereunder. Accordingly reporting under clause 3(i)(e)of the Order is not applicable to the Company.
(ii) (a) The management has conducted physical verification ofinventory at reasonable intervals during the year. In our opinion the coverage andprocedure of such verification by the management is appropriate and no discrepancies of10% or more in the aggregate for each class of inventory were noticed.
(b) The Company has working capital limits in excess of Rs 50.00million sanctioned by banks based on the security of current assets. The quarterlyreturns/ statements in respect of the working capital limits have been filed by theCompany with such banks and such returns/ statements are in agreement with the books ofaccounts of the Company for the respective periods which were subject to audit/reviewexcept for the following:
Note: Following are the nature of reconciling items between amountsreported as per quarterly returns/ statements and amounts as per books of accounts:
Inventories - adjustments on account of sales returns andprovision for slow moving/ non-moving items (finalised at the time of audit/ reviewcompletion);
Trade receivables - on account of exclusion of related partybalances and adjustments related to provision for sales returns/ discounts (finalised atthe time of audit/ review completion); and
Trade payables - on account of exclusion of payables towardsroyalty and expenses accrual other than creditors for printing and purchase of books.
(iii) (a) The Company has provided loans and guarantee to Subsidiariesduring the year as per details given below:
(b) In our opinion and according to the information and explanationsgiven to us the investments made and guarantee provided during the year by the Companyare not prejudicial to the Company's interest. However according to the informationand explanations given to us and based on the audit procedures performed by us we are ofthe opinion that the terms and conditions of loans granted by the Company to its onesubsidiary (total loan amount granted Rs 16.5 million and balance outstanding as atbalance sheet date Rs 149.56 million) are prima facie prejudicial to the Company'sinterest considering the financial standing of the borrower. Further the Company has notgiven any security during the year.
(c) In respect of loans and advances in the nature of loans granted bythe Company the schedule of repayment of principal and payment of interest has beenstipulated and the repayments/receipts of principal and interest are regular.
(d) There is no amount which is overdue for more than 90 days inrespect of loans or advances in the nature of loans granted to such_companies.
(e) The Company has granted loans which had fallen due during the yearand such loans were extended during the year. The details of the same has been givenbelow:
(f) The Company has not granted any loan or advance in the nature ofloan which is repayable on demand or without specifying any terms or period of repayment.
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 186 of the Act inrespect of loans investments guarantees and security as applicable. Further theCompany has not entered into any transaction covered under section 185.
(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits or there is no amount which hasbeen considered as deemed deposit within the meaning of sections 73 to 76 of the Act andthe Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordingly reportingunder clause 3(v) of the Order is not applicable to the Company.
(vi) The Central Government has not specified maintenance of costrecords under sub-section (1) of section 148 of the Act in respect of Company'sproducts/business activity. Accordingly reporting under clause 3(vi) of the Order is notapplicable.
(vii) (a) In our opinion and according to the information andexplanations given to us undisputed statutory dues including goods and services taxprovident fund employees' state insurance income-tax sales-tax service tax dutyof customs duty of excise value added tax cess and other material statutory dues asapplicable have generally been regularly deposited with the appropriate authorities bythe Company though there have been slight delays in a few cases. Further no undisputedamounts payable in respect thereof were outstanding at the year-end for a period of morethan six months from the date they became payable.
(b) According to the information and explanations given to us thereare no statutory dues referred in sub-clause (a) which have not been deposited with theappropriate authorities on account of any dispute except for the following:
Statement of Disputed Dues
(viii) According to the information and explanations given to us notransactions were surrendered or disclosed as income during the year in the taxassessments under the Income Tax Act 1961 (43 of 1961) which have not been recorded inthe books of accounts.
(ix) (a) According to the information and explanations given to us theCompany has not defaulted in repayment of its loans or borrowings or in the payment ofinterest thereon to any lender.
(b) According to the information and explanations given to us includingrepresentation received from the management of the Company and on the basis of our auditprocedures we report that the Company has not been declared a willful defaulter by anybank or financial institution or other lender.
(c) In our opinion and according to the information and explanationsgiven to us money raised by way of term loans were applied for the purposes for whichthese were obtained.
(d) In our opinion and according to the information and explanationsgiven to us and on an overall examination of the financial statements of the Companyfunds raised by the Company on short term basis have not been utilised for long termpurposes.
(e) According to the information and explanations given to us and on anoverall examination of the financial statements of the Company the Company has not takenany funds from any entity or person on account of or to meet the obligations of itssubsidiaries or associate. (f) According to the information and explanations given to usthe Company has raised loans during the year on the pledge of securities held in itssubsidiary as per details below. Further the Company has not defaulted in repayment ofsuch loans raised.
(x) (a) The Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments) during the year. Accordinglyreporting under clause 3(x)(a) of the Order is not applicable to the Company.
(b) According to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or (fullypartially or optionally) convertible debentures during the year. Accordingly reportingunder clause 3(x)(b) of the Order is not applicable to the Company.
(xi) (a) To the best of our knowledge and according to the informationand explanations given to us no fraud by the Company or on the Company has been noticedor reported during the period covered by our audit.
(b) No report under section 143(12) of the Act has been filed with theCentral Government for the period covered by our audit.
(c) According to the information and explanations given to us includingthe representation made to us by the management of the Company there are nowhistle-blower complaints received by the Company during the year.
(xii) The Company is not a Nidhi Company and the Nidhi Rules 2014 arenot applicable to it. Accordingly reporting under clause 3(xii) of the Order is notapplicable to the Company.
(xiii) In our opinion and according to the information and explanationsgiven to us all transactions entered into by the Company with the related parties are incompliance with sections 177 and 188 of the Act where applicable. Further the details ofsuch related party transactions have been disclosed in the standalone financialstatements as required under Indian Accounting Standard (Ind AS) 24 Related PartyDisclosures specified in Companies (Indian Accounting Standards) Rules 2015 as prescribedunder section 133 of the Act.
(xiv) (a) In our opinion and according to the information andexplanations given to us the Company has an internal audit system as required undersection 138 of the Act which is commensurate with the size and nature of its business.
(b) We have considered the reports issued by the Internal Auditors ofthe Company till date for the period under audit.
(xv) According to the information and explanation given to us theCompany has not entered into any non-cash transactions with its directors or personsconnected with them and accordingly provisions of section 192 of the Act are notapplicable to the Company.
(xvi) (a) The Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934. Accordingly reporting under clauses3(xvi)(a) (b) and (c) of the Order are not applicable to the Company.
(b) Based on the information and explanations given to us and asrepresented by the management of the Company the Group (as defined in Core InvestmentCompanies (Reserve Bank) Directions 2016) does not have any Core Investment Company.
(xvii) The Company has not incurred any cash loss in the current aswell as the immediately preceding financial year.
(xviii) There has been no resignation of the statutory auditors duringthe year. Accordingly reporting under clause 3(xviii) of the Order is not applicable tothe Company.
(xix) According to the information and explanations given to us and onthe basis of the financial ratios ageing and expected dates of realisation of financialassets and payment of financial liabilities other information accompanying the standalonefinancial statements our knowledge of the plans of the Board of Directors and managementand based on our examination of the evidence supporting the assumptions nothing has cometo our attention which causes us to believe that any material uncertainty exists as onthe date of the audit report that Company is not capable of meeting its liabilitiesexisting at the date of balance sheet as and when they fall due within a period of oneyear from the balance sheet date. We however state that this is not an assurance as tothe future viability of the Company. We further state that our reporting is based on thefacts up to the date of the audit report and we neither give any guarantee nor anyassurance that all liabilities falling due within a period of one year from the balancesheet date will get discharged by the Company as and when they fall due.
(xx) According to the information and explanations given to usalthough the Company fulfilled the criteria as specified under section 135(1) of the Actread with the Companies (Corporate Social Responsibility Policy) Rules 2014 however inthe absence of average net profits in the immediately three preceding years there is norequirement for the Company to spend any amount under sub-section (5) of section 135 ofthe Act. Accordingly reporting under clause 3(xx) of the Order is not applicable to theCompany.
(xxi) The reporting under clause 3(xxi) of the Order is not applicablein respect of audit of standalone financial statements of the Company. Accordingly nocomment has been included in respect of said clause under this report.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Membership No.: 507892 UDIN: 22507892AJNGRS1573 Place: New Delhi Date:24 May 2022
Independent Auditor's Report on the internal financial controlswith reference to the standalone financial statements under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 (the Act')
1. In conjunction with our audit of the standalone financial statementsof S Chand And Company Limited (the Company') as at and for the year ended 31March 2022 we have audited the internal financial controls with reference to financialstatements of the Company as at that date.
Responsibilities of Management and Those Charged with Governance forInternal Financial Controls
2. The Company's Board of Directors is responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting (the GuidanceNote') issued by the Institute of Chartered Accountants of India (ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of the Company's business including adherence to theCompany'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 under the Act.
Auditor's Responsibility for the Audit of the Internal FinancialControls with Reference to Financial Statements
3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the ICAIprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements and the Guidance Noteissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wereestablished and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements includes obtaining an understanding of suchinternal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgementincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to financial statements.
Meaning of Internal Financial Controls with Reference to FinancialStatements
6. A company's internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to financial statements includethose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could havea material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with Reference toFinancial Statements
7. Because of the inherent limitations of internal financial controlswith reference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
8. In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such controls wereoperating effectively as at 31 March 2022 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by the ICAI.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Membership No.: 507892 UDIN: 22507892AJNGRS1573
Place: New Delhi Date: 24 May 2022
Statement on Impact of Audit Qualifications (for audit report withmodified opinion) submitted along-with Annual Audited Financial Results - (Standalone)
II. Audit Qualification (each audit qualification separately): a.Details of Audit Qualification:
The Auditors draw attention to note 11 of the Statement which statesthat the Company has a non-current investment in DS Digital Private Limited (DSDigital') a subsidiary of the Company amounting to INR 247.78 million (net ofimpairment of INR 55 million) and has loans and trade/ other receivables recoverable fromsuch subsidiary company amounting to INR 149.56 million and INR 48.65 millionrespectively as at 31st March 2022. DS Digital has been incurring operationallosses since earlier years as a result of which the net worth of such subsidiary companyhas been completely eroded. Management based on their internal assessment has assessedthat the aforesaid recoverable balances are fully recoverable as at 31st March2022 and hence no adjustments are required to be made to the accompanying financialresults. However in absence of sufficient and appropriate evidence to supportmanagement's assessment as above the Auditors were unable to comment on theappropriateness of the carrying value of the aforesaid recoverable balances as at 31stMarch 2022 and the consequential impact thereof on the accompanying standalone financialresults for the quarter and year ended 31st March 2022.
b. Type of Audit Qualification: Qualified Opinion / Disclaimer ofOpinion / Adverse Opinion Qualified Opinion c. Frequency of qualification: Whetherappeared first time / repetitive / since how long continuing Continuing since Quarterended December 2021
d. For Audit Qualification(s) where the impact is quanti_ed by theauditor Management's Views:
The Company has a non-current investment in DS Digital Private Limited(DS Digital') subsidiary of the Company amounting to Rs 247.78 million (net ofimpairment of Rs 55 million) in form of investment in equity shares and preference sharesas at 31st March 2022. Furter there are loans and trade/ other receivablesrecoverable from DS Digital amounting to Rs 149.56 million and Rs 48.65 millionrespectively. DS Digital has been incurring losses since earlier years and have eroded itsnet worth. The management has filed a composite Scheme of arrangement (theScheme') (refer note below) having an appointed date as 1 April 2017. As per theScheme DS Digital would cease to exist as education business would get demerged into SChand and the residual business of DS Digital would get merged into Safari Digital. Mergerwould bring synergies which will help the resulting entity (Safari Digital) to optimizethe utilization of resources to exploit the anticipated business opportunities moreefficiently leading to financial strengthening. The Scheme has been filed with NCLT anddue to the current scenario of COVID-19 and nationwide restrictions the hearing for thismatter has been delayed. Management believes that the aforesaid recoverable balances fromDS Digital are good and recoverable as at 31st March 2022 based upon anindependent valuation of the Intellectual Property which the company holds.
The Company had filed Draft Composite Scheme of Arrangement on 9January 2018 amongst Blackie & Son (Calcutta) Private Limited ("Blackie")Nirja Publishers & Printers Private Limited ("Nirja") DS Digital PrivateLimited ("DS Digital") Safari Digital Education Initiatives Private Limited("Safari Digital") and S Chand And Company Limited ("S Chand") andtheir respective shareholders and creditors (Composite Scheme) with BSE Limited(BSE') and National Stock Exchange of India Limited (NSE') underRegulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and Circular no. CFD/DIL3/CIR/2017/21 dated 10 March 2017 ("SEBICircular"). The Scheme inter alia includes amalgamation of Blackie and Nirja with andinto S Chand demerger of the education business of DS Digital & Safari Digital withand into S Chand and amalgamation of residual business (after demerger) of DS Digital withand into Safari Digital. The Company had filed the Scheme with NCLT. NCLT vide its orderdated 10 February 2020 had directed to convene meetings of shareholders secured &unsecured creditors of S Chand and meeting of secured and unsecured creditors of Nirja andDS Digital ("the meetings") for approval of the Scheme. However due to Covid19pandemic and nationwide lockdown the meetings were deferred. NCLT vide its order dated 29May 2020 has directed to convene these meetings through video conferencing in the month ofJuly 2020. These meetings were convened through video conferencing on 17 July 2020 and 18July 2020. Respective creditors and shareholders have approved the Composite Scheme andthereafter Company has filed a second motion application with NCLT for approval of theComposite Scheme. The approval of NCLT is awaited. e. For Audit Qualification(s) wherethe impact is not quanti_ed by the auditor: (i) Management's estimation on theimpact of audit qualification:
(ii) If management is unable to estimate the impact reasons for thesame:
(iii) Auditors' Comments on (i) or (ii) above:
For S Chand and Company Limited
Place : New Delhi Date : 24th May 2022
For S Chand and Company Limited
Place : New Delhi Date : 24th May 2022
For S Chand and Company Limited
Audit Committee Chairperson
Place : New Delhi Date : 24th May 2022
For Walker Chandiok & Co LLP Chartered Accountants FirmRegistration No.: 001076N/N500013 Sd/-
Tarun Gupta Partner
Membership No. 507892 Place: New Delhi Date: 24thMay 2022