To the Members of
VERTEX SECURITIES LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of VertexSecurities Limited ("the Company") which comprise the Balance Sheet as at 31March 2021 the Statement of Profit and Loss Statement of Changes in Equity and the CashFlow Statement for the year then ended and a summary of significant accounting policiesand other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31st March 2021its profit (including other comprehensive income) changes in equity and its cash flowsfor the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on
Auditing (SAs) specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the Code ofEthics' issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thefinancial year ended 31 March 2021. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. We have determined thematters described below to be the key audit matters to be communicated in our report.
|Key Audit Matter ||How our audit addressed the key audit matter |
|Impairment of financial assets as at balance sheet date (expected credit losses) (Refer Note No. 5 to the standalone financial statements) || |
|Ind AS 109 requires the Company to provide for impairment of its financial assets using the expected credit loss (ECL) approach. || Read and assessed the Company's accounting policies for impairment of financial assets and their compliance with Ind AS 109. |
|The Company recognises lifetime ECL from initial recognition of trade receivables by using a provision matrix based on the Company's historical credit loss experience adjusted for factors that are specific to the debtors general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date including time value of money where appropriate. In the process a significant degree of judgment has been applied by the Management for: || Evaluated the reasonableness of the Management estimates by understanding the process of ECL estimation and related assumptions and tested the controls around data extraction and validation. |
| Staging of Trade Receivables [i.e. classification in significant increase in credit risk' (SICR') and default' categories]; || Assessed the criteria for staging of receivables based on their past-due status to check compliance with requirement of Ind AS 109. Tested a sample of performing (stage 1) receivables to assess whether any SICR or loss indicators were present requiring them to be classified under stage 2 or 3. |
| Grouping of receivables based on homogeneity by using appropriate statistical techniques; || Evaluated the completeness accuracy and relevance of data used in the expected credit loss model and checked the mathematical accuracy of the calculations. |
| Determining macro-economic factors impacting credit quality of receivables; || Obtained an ageing report of trade receivables and tested the accuracy by checking the ageing of select invoices on a sample basis |
|In view of the high degree of Management's judgment involved in estimation of ECL it is a key audit matter. || Assessed the additional considerations applied by the Management for staging of receivables as SICR or default categories in view of Company's policy on receivables. |
| || Tested assumptions used by the Management in determining the overlay for macro-economic factors. |
Emphasis of Matter
We draw attention to Note No. 5 to the standalone financial statementswherein the Company has provided for impairment losses of Rs. 19515486/- on tradereceivables as on 31st March 2021. Our opinion is not modified in respect of this matter.
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Board'sReport including Annexure to Board's Report but does not include the standalonefinancial statements and our auditors' report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed on the other information obtained prior to the date ofthe auditors' report 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.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation and presentation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of theStandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)
(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of theStandalone financial statements including the disclosures and whether the Standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended March 31 2021 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law orregulation 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
As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of Section 143 of the Companies Act 2013 we give in the Annexure A' astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss Statement ofChanges in Equity and Cash Flow Statement dealt with by this Report are in agreement withthe books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from thedirectors as on 31st March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2021 from being appointed as a director interms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate report in Annexure B'.p>
(g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actin our opinion and to the best of our information and according to the explanations givento us the managerial remuneration paid by the Company to its directors during the year isin accordance with the provisions of section 197 of the Act.
(h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements - Refer Note No. 30 to the financialstatements.
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.
ANNEXURE A' TO INDEPENDENT AUDITORS' REPORT
(Annexure referred to in paragraph 1 under the heading Report onOther Legal and Regulatory Requirements' of our report of even date.)
(i) (a) In our opinion the Company has maintained proper
records showing full particulars including quantitative details andsituation of fixed assets.
(b) As explained to us some of the fixed assets have been physicallyverified by the management according to a programme of verification which in our opinionis reasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies with respect to book records were noticed on such verification.
(c) The Company did not own any immovable property during the year.Accordingly paragraph 3(i)(c) of the Order is not applicable to the Company.
(ii) The Company is a service company primarily rendering sharebroking services. Accordingly it does not hold any physical inventory. Thus paragraph 3(ii) of the Order is not applicable to the Company.
(iii) According to the information and explanations given to us theCompany has granted unsecured loan to a company covered in the register maintained underSection 189 of the Companies Act 2013.
(a) In our opinion the rate of interest and other terms and conditionson which the loan had been granted to the company listed in the register maintained underSection 189 of the Act were not prima facie prejudicial to the interest of the Company.
(b) The borrower company listed in the register maintained undersection 189 of the Act has been regular in the payment of the principal and interest asstipulated.
(c) There are no overdue amounts in respect of the loan granted to thecompany listed in the register maintained under Section 189 of the Act.
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 and 186 of theAct with respect to the loans and investments made.
(v) According to the information and explanations given to us theCompany has not accepted any deposit attracting the directives issued by the Reserve Bankof India and the provisions of Section 73 to 76 of the Companies Act 2013 and the rulesframed there under. Thus paragraph 3(v) of the Order is not applicable to the Company.
(vi) In our opinion and according to the information and explanationgiven to us pursuant to the Rules made by the Central Government the maintenance of costrecords as prescribed under Section 148 (1) of the Companies Act 2013 is not applicableto the Company for the year under report.
(vii) (a) According to the records of the Company and the informationand explanations given to us the Company has been regularly depositing with theappropriate authorities undisputed statutory dues including Provident FundEmployees' State Insurance Income tax Sales Tax Service tax Goods and Servicetax Customs Duty Excise Duty Value added Tax Cess and any other statutory duesapplicable to it. There are no undisputed statutory dues as referred to above as at 31stMarch 2021 outstanding for a period of more than six months from the date they becomepayable.
(b) The disputed statutory dues aggregating to Rs. 860261/- that havenot been deposited on account of matters pending before the appropriate authority are asunder:
|Name of the statute ||Nature of dues ||Amount (Rs.) ||Period to which the amount relates ||Forum where dispute is pending |
|1 Finance Act ||Tax/ Penalty ||622000 ||2006-07 to 2009-10 ||The Customs Excise and Service tax Appellate Tribunal. |
|2 Income Tax Act ||Tax/ Penalty ||127290 ||2013-14 ||Commissioner of Income tax (Appeals). |
|3 Finance Act ||Tax/ Penalty ||110971 ||2014-15 ||The Customs Excise and Service tax Appellate Tribunal. |
(viii) Based on our audit procedures and according to the informationand explanation given by the management we are of the opinion that the Company has notdefaulted in repayment of dues to banks or financial institutions. The Company did nothave any outstanding loans or borrowings from government or dues to debenture holders.
(ix) According to the information and explanations given to us termloan taken by the Company was applied for the purpose for which it was raised. The Companydid not raise any money by way of initial public offer or further public offer (includingdebt instruments) during the year.
(x) To the best of our knowledge and according to the information andexplanations to us no material fraud on or by the Company has been noticed or reportedduring the year.
(xi) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has paid or providedfor managerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.
(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Companies Act 2013 whereapplicable and the details of such transactions have been disclosed in the financialstatements as required by the applicable accounting standards.
(xiv) According to the information and explanations give to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review. Accordingly paragraph 3(xiv) of the Order is notapplicable.
(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.
ANNEXURE B' TO INDEPENDENT AUDITORS' REPORT
(Annexure referred to under the heading Report on Other Legal andRegulatory Requirements' of our report of even date.)
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013
We have audited the internal financial controls over financialreporting of Vertex Securities Limited ("the Company") as of 31 March 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. 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 over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlover financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(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 timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31 March 2021. Howeverthe Company is in the process of establishing the internal control over financialreporting criteria considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial
Reporting issued by the Institute of Chartered Accountants of India.
| ||For S S KHAN & CO |
| ||Chartered Accountant |
| ||(FRN: 133324W) |
|Place: Mumbai ||SARFARAZ KHAN |
|Date: 08 June 2021 ||Proprietor |
|UDIN: 21144212AAAACU7429 ||Membership No.: 144212 |