To the Members of
STEL Holdings Limited
Report on the audit of the standalone financial statements
We have audited the accompanying standalone financial statements of STEL HoldingsLimited (the Company') which comprise the balance sheet as at March 31 2020and the statement of Profit and Loss (including other comprehensive income) statement ofchanges in equity and statement of cash flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information. In our opinion and to the best of our information and accordingto the 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 the accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2020 its profitand other income changes in equity and its cash flows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with theStandards section10 Auditing(SAs')specifiedundersub-of section 143 of the Act. 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 thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Emphasis of matter
We draw attention to Note No. 24 of the consolidated financial statements whichdescribes the uncertainties due to the outbreak of COVID-19 pandemic and the management'sevaluation of the impact on the consolidated financial statements of the Company as at thebalance sheet date. The impact of these uncertainties on the Company's operations issignificantly dependent on future developments. Our opinion is not modified in respect ofthis matter
Key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Valuation of investments in unquoted securities
|Key audit matter ||Auditors' response |
|The Company has investments in equity shares preference shares and convertible debentures which things an assessment of are unquoted. ||Our audit procedures included among other the methodology and the appropriateness of the valuation models and inputs used by management to value investments. |
|These instruments are measured at fair value with the corresponding fair value change recognized in other comprehensive income. The valuation the company using a fair value hierarchy as applicable below: ||Further we assessed the valuation of all individual investments to determine whether the valuations performed by the Company were within a predefined tolerable differences threshold. |
|Level 1: valuations based on quoted prices (unadjusted) in active markets. ||As part of these audit procedures we assessed the accuracy of key inputs used in the valuation |
|Level 2: valuations based on other than quoted prices included within level 1 that are observable either directly or indirectly. ||We also evaluated the company's assessment whether objective evidence of impairment exists for individual investments. Based on these procedures we have not noted any material differences outside the predefined tolerable differences threshold. |
|Level 3: valuations based on unobservable inputs for the asset. The valuation of investments is inherently subjective most predominantly for the level 2 and level 3 investments since these are valued using inputs other than quoted prices in an active market. || |
|Key inputs used in the valuation of individual level 3 investments are inputs other than quoted prices in an active market. In addition the company determines whether objective evidence of impairment exists for individual investments. || |
|Given the inherent subjectivity in the valuation of level 3 investments we determined this to be a significant for our audit. This was an area of focus for our audit and an area where significant audit effort was directed. || |
Information other than the standalone financial statements and auditor's report thereon
The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Director's report ManagementDiscussion & Analysis and Business Responsibility Report but does not include thestandalone financial statements and our auditor's report thereon. Our opinion on thestandalone financial statements does not cover the other information and we do not expressany form of assurance conclusion thereon.
In connection with our audit of the standalone financial information and in doing soconsider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
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 sub-sectionwith respect to the preparation of these standalone financial financial positionfinancial Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) specified under section 133 ofthe Act. 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 policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error. Inpreparing the standalone financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financial
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalscepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone 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 omissionsmisrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriatenessofaccountingpolicies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease to
Evaluate the overall presentationstructure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation. We communicate with those charged with governance regarding among othermatters 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 we have compliedwith relevant ethical requirements regarding independence and to communicate withthemallrelationshipsandothermatters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of Section 143 (11) of the Act we givein Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order tothe extent applicable.
2. As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and belief were necessary for thepurposes of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The balance sheet the statement of profit and loss including other comprehensiveincome statement of changes in equity and the statement of cash flows dealt with by thisReport are in agreement with the books of account;
d. In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards prescribed under Section 133 . ofthe Act
e. On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct.
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'. Our report expresses an unmodified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g. In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 read with Schedule V to the Act.
h. With respect to other matters to be included in the Auditors' Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) in ouropinion and 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
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
For J. Krishnan & Associates
Chartered Accountants Firm Registration No. 001523S
Nishanth Sebastian Jose
Membership number: 218068
UDIN: 20218068AAAAGJ2214 Cochin June 25 2020
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF STEL HOLDINGS LIMITED
i. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of b. As explained to us the fixed assets have beenphysically verified by the management at reasonable intervals; no material discrepancieswere noticed on such verification.
c. As per the information and explanations provided to us the records examined by usand based on the conveyance deeds provided to us we report that the title deedscomprising of the freehold immovable property of the Company are held in the name of theCompany as at the balance sheet date.
ii. The Company does not have any inventory. Therefore the provisions of clauses3(ii)(a) 3(ii)(b) and 3(ii)(c) of the said Order are not applicable to the Company.
iii. According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not granted any loans secured orunsecuredtocompaniesfirmsLimited Liability Partnerships or other parties listed in theregister maintained section 189 of the Act. Consequently the provisions of clauses3(iii)(a) to 3(iii)(c) of the Order are not applicable to the Company. to us and on thebasis of our examination of the books
iv. Accordingtotheinformation of account the Company has complied with the provisionsof section 185 and 186 of the Act with respect to the loans investments guarantees andsecurities provided.
v. The Company has not accepted any deposit from public within the meaning of sections73 to 76 or any other relevant provisions of the Act and the rules framed thereunder. vi.The provisions regarding maintenance of cost records under sub-section applicable to theCompany.
vii. a. According to the records of the Company undisputed statutory dues includingprovident fund employees' state insurance income tax sales tax wealth tax servicetax customs duty excise duty cess to the extent applicable and any other statutory dueshave generally been regularly deposited with the appropriate authorities. According to theinformation and explanations given to us there were no statutory dues on the last day ofthe financial year outstanding for a period of more than six months from the date theybecame payable. b. According to the information and explanations given to us there are noamounts payable in respect of income tax wealth tax service tax sales tax customs dutyand excise duty which have not been deposited on account of any disputes.
viii. Based on our examination of documents and records the Company has not taken anyloan from a financial institution a bank the government or issued debentures and hencereporting under paragraph 3 (viii) of the Order is not applicable.
ix. Based on our audit procedures and on the information given by the management wereport that the Company has not raised any moneys by way of initial or further publicoffer or any term loans during the year.
x. According to the information and explanations given to us during the year no fraudon or by the Company has been noticed or reported during the year.
xi. The managerial remuneration paid is in accordance with the requisite approvalsmandated by the provisions of section 197 read with schedule V of Act.
xii. The Company is not a Nidhi company. Therefore the provisions of clause 3 (xii) ofthe Order is not applicable to the Company.
xiii. Based on our audit procedures performed for the purpose of reporting the true andfair view of the standalone financial statements and according to the information andexplanations given by the management transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and the details havebeen disclosed in the notes to the standalone financial statements as required by theapplicable accounting standards.
xiv. Based on the audit procedures performed and the information and explanations givento us by the management we report that the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under
xv. Based on our audit procedures performed for the purpose of reporting the true andfair view of the standalone financial statements in our opinion and according to theinformation and explanations given to us the Company has not entered into any non-cashtransactions with directors or persons connected with the directors.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For J. Krishnan & Associates
Chartered Accountants Firm Registration No.001523S
Nishanth Sebastian Jose
Membership number: 218068
UDIN: 20218068AAAAGJ2214 Cochin June 25 2020
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF STEL HOLDINGS LIMITED
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 STELHoldings Limited (the Company') as of March 31 2020 in conjunction with our auditof the 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 (the Guidance Note').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal assessing the risk that a material weakness existsand testing and evaluating the design and operating effectiveness of internal controlbased on the 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.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of internal financial controls over financial reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositionsof 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note.
For J. Krishnan & Associates
Firm Registration No. 001523S
Nishanth Sebastian Jose
Membership number: 218068
UDIN: 20218068AAAAGJ2214 Cochin June 25 2020