TO THE MEMBERS OF SUCHITRA FINANCE AND TRADING COMPANY LIMITED
We have audited the accompanying financial statements of Suchitra Finance and TradingCompany Limited (the Company) which comprise the Balance Sheet as at 31stMarch 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended andnotes to financial statements and a summary of the significant accounting policies andother explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (the Act) in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended(Ind AS) and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2020 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis of Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe financial 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 our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our opinion on the financial statements.
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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Sr. No. KEY AUDIT MATTERS ||HOW ADDRESSED IN AUDIT |
|1. The Company has adopted Ind AS notified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended from 1st April 2019 and the effective date of such transition is 1st April 2018. ||Assessed the Company's process to identify the impact of adoption and transition to Ind AS. |
|Accordingly for transition to Ind AS the Company has prepared its Ind AS financial statements for the year ended 31st March 2020 togetherwith the comparative financial information for the previous year ended March 31 2019 and the opening Balance Sheet as at April 1 2018 under Ind AS. ||Evaluated the design of internal controls and tested the operating effectiveness of key internal controls around the process of preparation of Ind AS financial statements; |
|In view of significant degree of management judgment involved in the implementation of Ind AS framework and significance of various disclosures the transition to Ind AS accounting framework has been identified as an area of key focus in our audit of the Ind AS financial statements. ||Reviewed the mandatory and optional exemptions and exceptions allowed by Ind AS and availed by the Company applying the first-time adoption principles of Ind AS 101; |
| ||Obtained an understanding of the governance over the determination of key judgments; |
| ||Evaluated and tested the key assumptions and judgments adopted by management in line with principles under Ind AS: |
| ||Assessed the disclosures made against the relevant Ind AS; and |
| ||Determined the appropriateness of the methodologies and models used along with the reasonability of the outputs. |
|2. Accuracy in identification and categorisation of receivables from financing activities as performing and non-performing assets including those under securitisation arrangements and in ensuring appropriate asset classification existence of security income recognition provisioning/ write off thereof and completeness of disclosure including compliance in accordance with the applicable extant guidelines issued by Reserve Bank of India (RBI). ||We have assessed the systems and processes laid down by the Company to appropriately identify and classify the receivables from financing activities including those in place to ensure correct classification income recognition and provisioning/write off including of Non-performing assets as per applicable RBI guidelines. The audit approach included testing the existence and effectiveness of the control environment laid down by the management and conducting of detailed substantive verification on selected samples of continuing and new transactions in accordance with the principles laid down in the Standards on Auditing and other guidance issued by Institute of Chartered Accountants of India. Agreements entered into regarding significant transactions including related to corporate loans and securitization/assignment arrangements have been examined to ensure compliance. We have also reviewed the reports generated from management information systems audit reports issued by the internal/secretarial auditors. The impact of all significant external and internal events including those if any subsequent to balance sheet date have been taken into consideration for the above purposes. Compliance with material disclosure requirements prescribed by RBI guidelines and other statutory requirements have been verified. |
|3. Completeness in identification accounting and disclosure of related party transactions in accordance with the applicable laws and financial reporting framework. ||We have assessed the systems and processes laid down by the Company to appropriately identify account and disclose all material related party transactions in accordance with applicable laws and financial reporting framework. We have designed and performed audit procedures in accordance with the guidelines laid down by ICAI in the Standard on Auditing (SA 550) to identify assess and respond to the risks of material misstatement arising from the entity's failure to appropriately account for or disclose material related party transactions which includes obtaining necessary approvals at appropriate stages of such transactions as mandated by applicable laws and regulations. We have also reviewed the Secretarial Audit report during the course of evaluating the internal control systems in ensuring compliance with applicable laws rules regulations and guidelines. |
Emphasis of Matter
We draw attention to Note 31 to the Ind AS financial statements which describe theextent to which the COVID-19 pandemic will impact the Company's operations and financialperformance which will depend on future developments which are uncertain.
Our opinion is not modified in respect of this matter.
The Company's Board of Directors is responsible for the other information. The otherinformation comprises Board's Report Report on Corporate governance and BusinessResponsibility report but does not include the financial statements and our auditor'sreport thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibilities for the financial statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error. In preparing thefinancial statements management is responsible for assessing the Company's ability tocontinue as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.
Those Board of Directors are also responsible for overseeing the Company's financialreporting 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 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 financial controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such control.
evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management. conclude on theappropriateness of management's use of the going concern basis of accounting and based onthe audit evidence obtained whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company's ability to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the Company to cease to continue as a going concern.evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 (theOrder') issued by the Central Government of India in terms of Section 143(11) of theAct we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4of the Order.
2. As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Companies (Indian AccountingStandards) Rules 2015 as amended.
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 with reference to these financial statements and the operatingeffectiveness of such controls refer to our separate Report in Annexure-B.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Section 197(16) of the Act in our opinion and to the best of ourinformation and according to the explanations given to us the remuneration paid by theCompany to its directors during the year is in accordance with the provisions of section197 of the Act.
h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us:
i. The Company has disclosed the impact of pending litigations as on 31stMarch 2020 on its financial position vide Note 18 to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has not been an occasion in case of the Company during the year under reportto transfer any sums to the Investor Education & Protection Fund and therefore thequestion of delay in transferring such sums does not arise.
ANNEXURE A TO INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirementssection of our Report of even date)
1. (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
(b) As explained to us the Management has physically verified fixed assets during theyear and no discrepancies have been noticed. In our opinion the frequency of physicalverification of fixed assets is reasonable.
(c) Reporting under clause 3(i)(c) of the Order is not applicable as the Company doesnot own any immovable property.
2. The Company does not have any inventories. Hence reporting under clause3(ii) of the Order is not applicable to the Company.
3. As informed to us the Company has granted unsecured loans to companiescovered in the register maintained under section 189 of the Companies Act 2013. There areno firms/LLP/other parties which are covered in the said register.
(a) The terms and conditions of the grants of such loans are not prejudicial to theCompany's interest.
(b) The loans advanced to the aforesaid companies are repayable on demand and interestaccrues accordingly and on that basis the same is regular.
(c) In respect of aforesaid loans there is no amount which is overdue for more thanninety days.
4. In our opinion and according to the information and explanations given to usthe provisions of section 185 of the Act are not applicable to the Company. The Companyhas complied with the provisions of section 186 of the Act to the extent applicable.
5. The Company has not accepted any deposits from the public within the meaningof Sections 73 to 76 of the Act and the Rules framed thereunder to the extent notified.
6. Reporting under clause 3(vi) of the Order is not applicable as the Company'sbusiness activities are not covered by the Companies (Cost Records and Audit) Rules 2014.
7. (a) According to the information and explanations given to us and the recordsof the Company examined by us in our opinion the Company has been regular in depositingundisputed statutory dues applicable to it.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of Service Tax Customs Duty Excise Duty Goodsand Service Tax & Value Added Tax that have not been deposited with the appropriateauthorities on account of any dispute. Details of dues towards Income Tax that have notbeen deposited on account of dispute are as stated below:
|Name of the Statute ||Nature of Dues ||Amount (in Rs.) ||Period to which it relates ||Forum where dispute is pending |
|Income-tax Act 1961 ||Income Tax ||26445041/- ||A.Y. 2011-12 ||CIT(Appeals)- 12 Pune |
|Income-tax Act 1961 ||Income Tax ||11597726/- ||A.Y. 2012-13 ||CIT(Appeals)- 12 Pune |
8. According to the information and explanations given to us the Company hasnot defaulted in repayment of loans or borrowings to financial institution. The Companyhas not taken any loans or borrowings from Bank and Government nor has it issued anydebentures as at the balance sheet date.
9. The Company has not raised any moneys by way of initial public offer orfurther public offer (including debt instruments). The term loan raised by the Company inthe earlier year were for the purpose of advancing loans interalia to M/s Kalyan TollInfrastructure Ltd which though initially advanced to the said company has become NILduring the year. During the year the lender has exercised its right of Put Option andrequired the Company to pay the entire outstanding loan which exercise of rights ischallenged by the Company and in any event offered to repay the said loan by availingfresh loan from a NBFC for which it requested the lender to issue NOC. In absence of thesaid NOC the Company is repaying the said loan as per terms of the loan originallysanctioned.
10. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
11. 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 of the Act.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly the provisions of clause 3(xii) of the Orderare not applicable to the Company.
13. According to the information and explanations given to us and based on ourexaminations of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and the details havebeen disclosed in the Financial Statements as required by the applicable AccountingStandards.
14. According to the information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly the provisions of clause 3(xiv) of the Order arenot applicable to the Company.
15. According to the information and explanations given to us the Company has notentered into any non-cash transactions with its directors or persons connected with him.Accordingly the provisions of clause 3(xv) of the Order are not applicable to theCompany.
16. On examination of relevant records and according to the information andexplanations given to us the Company is required to be registered under section 45-IA ofReserve Bank of India Act 1934 and holds a valid certificate of registration under thesame.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
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 SuchitraFinance and Trading Co. Ltd. (the Company) as of 31st March 2020in conjunction with our audit of the financial statements of the Company for the yearended on that date.
Management's Responsibility for the 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 Guidance Note on Audit of Internal Financial Controls over Financial Reporting issuedby the Institute of Chartered Accountants of India (ICAI). These responsibilities includesdesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of businessincluding adherence to Company's policies the safeguarding of the assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.
Our responsibility is to express an opinion on Company's internal financial controlsover financial reporting with reference to these financial statements based on our audit.We conducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the Guidance Note') and the Standards onAuditing prescribed under Section 143(10) of the Act to the extent applicable to an auditof internal financial controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and Guidance note require that we comply with ethicalrequirements and plan and perform audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting with reference to thesefinancial statements was established and maintained and if such controls operatedeffectively in all material respects. An audit involves performing procedure to obtainaudit evidence about the adequacy of the internal financial controls over financialreporting with reference to these financial statements and their operating effectiveness.Our audit of internal financial controls over financial reporting with reference to thesefinancial statements included obtaining an understanding of internal financial controlsover financial reporting with reference to these financial statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal controls based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements 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 overfinancial reporting with reference to these financial statements.
Meaning of Internal Financial Controls over financial reporting with reference to thesefinancial statements
A Company's internal financial control over financial reporting with reference to thesefinancial statements is a process designed to provide a reasonable assurance regarding thereliability of financial reporting and preparation of financial statements for externalpurpose in accordance with generally accepted accounting principles. A Company's internalfinancial control over financial reporting with reference to these financial statementsincludes those policies and procedures that:
(1)pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that the transactions are recorded as necessary topermit preparation of financial statements in accordance with the generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over financial reporting withreference to these financial statements
Because of the inherent limitations of internal financial controls over financialreporting with reference to these financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial control over financial reporting with reference to these financialstatements to future periods are subject to the risk that the internal financial controlover financial reporting with reference to these financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects maintained adequate internal financialcontrols over financial reporting with reference to these financial statements and suchinternal financial controls over financial reporting with reference to these financialstatements were operating effectively as at 31st March 2020 based on thecriteria for internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.