Mar 31, 2019
Report on the Audit of Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of SONAL MERCANTILE LIMITED (âthe Companyâ), which comprise the balance sheet as at 31st March 2019, the statement of profit and loss and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereby referred as âthe financial statementâ).
In our opinion and to the best of our information and explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (âthe Actâ) in the manner so required and give a true and fair view in conformity with the Accounting standard (AS) prescribed under section 133 the Companies Act, 2013 read with the Companies (Accounting Standard) Rules, 2006, as amended and the other accounting principles generally accepted in India: -
i. In case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2019;
ii. In case of Statement of Profit and Loss , of the profit for the year ended on that date; and
iii. In case of Cash Flow Statement, of the cash flows for 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. Our responsibilities under those standards are further described in the âAuditorâs Responsibilities for the Audit of the Financial Statementsâ section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the rules there under, and we have fulfilled our ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidences we have obtained are sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described hereunder to be key audit matters to be communicated in our report.
S.No. |
Key audit matters |
Auditorâs response |
1. |
Loans and advances: - As primary business of Company is advancing of the loan and during the year significant loan advancing transactions taken place. |
Our audit procedure inter- alia include the following: - 1.We evaluated the control environment including authorization, sanctioning and |
We focused on the conditions of disbursement of and appropriateness sanctioning process. |
disbursement of significant loans advanced during the year. 2.We have obtained external confirmations from third parties in respect of transactions and closing balance for significant loans advanced by the company. 3.We tested all material entries recorded in connection with the loan advance and interest thereon to determine whether the accounting was appropriate. |
||
2. |
Compliance of RBI directions and circulars: The recent RBI regulations increased the responsibility of auditors of NBFCs. As Company is an NBFC, it is responsibility of Company to duly follow the directions and circulars. We focused on the requisite compliance and disclosure as per the requirements in the norms. |
Our audit procedure inter- alia include the following: - We have reviewed the conditions for prudential norms prescribed by the RBI including: - a) Provision on standard assets. b) Transfer of 20% profit to reserve maintain under section 45-IC of the RBI Act. c) Holding of at least 50% of the financial assets and 50% of the financial income respectively. d) Maintaining minimum Net Owned Fund of Rs. 200 Lakhs. |
Information other than the Standalone financial statements and Auditorâs Report Thereon
The Companyâs Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boardâs Report including Annexures to Boardâs Report, Business Responsibility Report, Corporate Governance and Shareholderâs Information, but does not include the standalone financial statements and our auditorâs report thereon.
Our opinion on the standalone financial statement does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.
Managementâs Responsibility for the Standalone Financial Statements
The Companyâs board of directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the AS and the other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that are operating effectively for insuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Companyâs financial reporting process.
Auditorâs Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain a reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise due to fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
(i) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.
(ii) Obtain an understanding of the internal controls relevant to the audit in order to design 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 has adequate internal financial controls system in place and the operating effectiveness of such controls.
(iii) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
(iv) Conclude on the appropriateness of managementâs use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained upto the date of our auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern.
(v) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statement, individually or in aggregate, makes it probable that the economic decision of reasonable knowledgeable user of the financial statement may be influenced.
We consider quantitative materiality and qualitative factors in (i) Planning the scope of our audit work and in evaluating the results of our work; and, (ii) to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonable be thought to bear on our independence, and where applicable, relevant safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditorâs report unless law or regulation precludes public disclosure about the matter or when, or when in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonable be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), as amended, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the order, to the extent applicable.
2. The Company is a non- banking financial company not accepting public deposits and holding certificate of registration no- B-14.02393 dated 19/02/2002 from Reserve Bank of India has been issued to the Company.
a) The Board of Directors has passed resolution for the non- acceptance of any public deposits.
b) The Company has not accepted any public deposits during the relevant year.
c) The Company has complied with the prudential norms relating to income recognition, accounting standards, assets classification and previously for bad and doubtful debts as applicable to it.
3. 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 best of 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 the Company so far as it appears from our examination of those books;
c. the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;
d. In our opinion, the aforesaid financial statements comply with the accounting standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
e. On the basis of the written representations received from the directors as on 31st March, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.
f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure-B. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companyâs internal financial controls over financial reporting.
g. With respect to the other matters to be included in the Auditorâs 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 the explanations given to us:
i. The Company has disclosed the impact, if any of pending litigations on its financial position, in its standalone financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. The Company is not required to transfer any amount to the Investor Education and Protection Fund.
The Annexure referred to in Paragraph 1 under the heading of âReport on other Legal and Regulatory Requirementsâ of our report of even date to the members of SONAL MERCANTILE LIMITED for the year ended on 31st March 2019.
(i) (a) As per information and explanation given to us, the company is maintaining proper records showing full disclosures of fixed assets.
(b) As per information and explanation given to us, physical verification of fixed assets has been conducted once in a year by the management and no material discrepancies were noticed during the course of verification.
(c) According to information and explanation given to us, the title deeds of immovable property are in the name of company;
(ii) As per records, information and explanation given to us, Company does not hold any physical inventory, hence the provision of sub- clause (ii) of the clause 3 of the order not applicable;
(iii) According to information and explanations given to us, the Company has not granted any loans secured or unsecured to parties covered in register maintained under section 189 of the Companies Act, 2013;
(iv) According to information and explanations given to us, the Company has complied with the provisions of section 185 and section 186 of the Companies Act, 2013 to the extent applicable in respect of loans, advances, guarantees and securities so given.
(v) According to information and explanations given to us, the Company has not accepted public deposits and the provision of section 73 to 76 or other relevant provisions of the Companies Act, 2013 and rules framed there under are not applicable to the Company;
(vi) According to information and explanations given to us, the Company is not liable to maintain cost records as prescribed under section 148(1) of the Companies Act, 2013;
(vii) (a) According to information and explanations given to us, the company is generally regular in depositing undisputed statutory dues including income-tax and any other applicable statutory dues to the appropriate authorities and there are no outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable;
(b) According to information and explanations given to us, there are no outstanding statutory dues on the part of Company which is not deposited on account of dispute.
(viii) According to information and explanations given to us, the company has not defaulted in repayment of loans and borrowings from any financial institution, bank, government or dues to debenture holders;
(ix) According to information and explanations given to us, the Company has not raised money by way of initial public offer or further public offer. The Company has not taken any term loans from any bank or financial institution;
(x) According to information and explanations given to us, there is no noticed or unreported fraud on or by the Company during the year under audit;
(xi) According to information and explanations given to us, the Company has not paid any managerial remuneration during the year, hence the provision of sub- clause (xi) of clause 3 of the order, does not applicable;
(xii) As per information, the Company is not a Nidhi Company, hence provisions of sub- clause (xii) of the Paragraph 3 of the Order are not applicable;
(xiii) According to information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 wherever applicable and the details have been disclosed in the financial statements etc., as required by the applicable accounting standards;
(xiv) According to information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year;
(xv) According to information and explanations given to us, the Company has not entered into non- cash transactions with directors or persons connected with him;
(xvi) According to information and explanations given to us, the Company is a Non- Banking Financial Company and registered under Section 45-IA of the Reserve Bank of India Act, 1934.
Report on the Internal Financial Controls under Clause (i) of Sub- section (3) of Section 143 of the Companies Act, 2013
We have audited the internal financial controls over financial reporting of SONAL MERCANTILE LIMITED as on 31st March 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for the Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Control over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of fraud and errors, the accuracy and completeness of accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013 to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material aspects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial control system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidences we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companyâs internal financial control over financial reporting includes those policies and procedures that:
1 . Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
1. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipt and expenditures of the Company are being only in accordance with authorizations of management and directors of the Company; and
2. Provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Companyâs 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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and could not be detected. Also, projections of any evaluation of the internal financial control over financial reporting to future periods are subject to the risk that the internal financial controls over financial reporting may became inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material aspects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2019, based on âthe internal financial controls over financial reporting criteria considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of Indiaâ.
FOR V.N. PUROHIT & CO.
Chartered Accountants
Firm Regn. No. 304040E
O.P. Pareek
Partner
Membership No. 014238
New Delhi, the 30th day of May 2019
Mar 31, 2018
Report on Financial Statements
We have audited the accompanying financial statements of SONAL MERCANTILE LIMITED, which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has in place the adequate internal financial control system over financial reporting and the operating effectiveness of such controls.
An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Opinion
In our opinion and to the best of our information and the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India:
i. In case of the Balance Sheet, of the state of affairs of the company as at 31st March 2018;
ii. In case of Statement of Profit and Loss, of the profit for the year ended on that date; and
iii. In case of Cash Flow Statement, of the cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order 2016 (the Order), as amended, issued by the Central Government of India in terms of sub- section (11) of Section 143 of the Act, we give in the Annexure- A, a statement on the matters specified in paragraphs 3 and 4 of the said Order.
2. The Company is a Non- Banking Financial Company not accepting public deposit and holding certificate of registration no. B-14.02393 dated 19/02/2002 from Reserve Bank of India has been issued to the Company.
a. The Board of Directors of the company has passed a resolution for the non-acceptance of any public deposits.
b. The company has not accepted any public deposits during the relevant year.
c. The company has complied with the prudential norms relating to income recognition, accounting standards, assets classification and provisioning for bad and doubtful debts as applicable to it.
3. 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 best of 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 the Company so far as it appears from our examination of those books.
c. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d. In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e. On the basis of the written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164 (2) of the Act.
f. With respect to adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure- B.
g. With respect to the other matters to be included in the Auditorâs 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 the explanations given to us:
i) The Company does not have any pending litigations in its financial statements;
ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses. However, company does not enter into any long-term contracts including derivative during the specified period;
iii) The Company is not required to transfer any amount to the Investor Education and Protection Fund.
The Annexure referred to in Paragraph 1 under the heading of âReport on other Legal and Regulatory Requirementsâ of our report of even date to the members of Sonal Mercantile Limited (the Company) for the year ended on 31st March 2018.
(i) a) As per information and explanation given to us, the Company is maintaining proper records showing full disclosures of the fixed assets;
(b) As per information and explanation given to us, physical verification of fixed assets has been conducted once in a year by the management and no material discrepancies were noticed during the course of verification;
(c) According to information and explanation given to us, the company does not hold any immovable property during the period dealt with by this report;
(ii) According to information and explanations given to us, the Company holds inventory of shares and securities which have been verified by the management once in a year and no material discrepancies were noticed during the course of said verification;
(iii) According to information and explanations given to us, the Company has not granted unsecured loans to parties covered in register maintained under section 189 of the Companies Act, 2013 and hence provisions of this sub- clause are not applicable;
(iv) According to information and explanations given to us, the Company have complied the provisions of section 185 and 186 of the Companies Act, 2013 so far as applicable in respect of loans, investments, guarantees, and security so given by the Company.
(v) According to information and explanations given to us, the Company has not accepted public deposits and the provision of section 73 to 76 or other relevant provisions of the Companies Act, 2013 and rules framed thereunder are not applicable to the Company;
(vi) According to information and explanations given to us, the Company is not liable to maintain cost records as prescribed under section 148(1) of the Companies Act, 2013;
(vii) (a) According to information and explanations given to us, the company is generally regular in depositing undisputed statutory dues including income-tax and any other applicable statutory dues to the appropriate authorities and there are no outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable;
(b) According to information and explanations given to us, there are no outstanding statutory dues on the part of Company which is not deposited on account of dispute.
(viii) According to information and explanations given to us, the company has not obtained any loans and borrowings from any financial institution, bank, government or dues to debenture holders, and hence question of default of repayment does not arise;
(ix) According to information and explanations given to us, the Company has not raised money by way of initial public offer or further public offer. The Company has not taken any term loans from any bank or financial institution;
(x) According to information and explanations given to us, there is no noticed or unreported fraud on or by the Company during the year under audit;
(xi) According to information and explanations given to us, the Company has not paid managerial remuneration in accordance with applicable provisions of the Companies Act, 2013;
(xii) As per information, the Company is not a Nidhi Company, hence provisions of sub- clause (xii) of the Paragraph 3 of the Order are not applicable;
(xiii) According to information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 wherever applicable and the details have been disclosed in the financial statements etc., as required by the applicable accounting standards;
(xiv) According to information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.
(xv) According to information and explanations given to us, the Company has not entered into noncash transactions with directors or persons connected with him;
(xvi) According to information and explanations given to us, the Company is a Non- Banking Financial Company duly registered under Section 45-IA of the Reserve Bank of India Act, 1934;
Report on the Internal Financial Controls under Clause (i) of Sub- section (3) of Section 143 of the Companies Act, 2013
We have audited the internal financial controls over financial reporting of SONAL MERCANTILE LIMITED (the Company) as on 31st March 2018 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for the Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Control over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of fraud and errors, the accuracy and completeness of accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013 to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material aspects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial control system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidences we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companyâs internal financial control over financial reporting includes those policies and procedures that: -
(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipt and expenditures of the Company are being only in accordance with authorizations of management and directors of the Company; and
(3) Provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Companyâs 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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and could not be detected. Also, projections of any evaluation of the internal financial control over financial reporting to future periods are subject to the risk that the internal financial controls over financial reporting may became inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material aspects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2018, based on âthe internal financial controls over financial reporting criteria considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of Indiaâ.
FOR V.N. PUROHIT & CO.
Chartered Accountants
Firm Regn. No. 304040E
Sd/-
Gaurav Joshi
Partner
Membership No. 516027
New Delhi, the 30th day of May 2018
Mar 31, 2015
We have audited the accompanying financial statements of SONAL
MERCANTILE LIMITED, which comprise the Balance Sheet as at 31st March,
2015 and the Statement of Profit and Loss, the Cash Flow Statement for
the year then ended, and a summary of significant accounting policies
and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these financial statements that give a true and
fair view of the financial position, financial performance and cash
flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances but not for the purpose of expressing
an opinion on whether the Company has in place the adequate internal
financial control system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the financial
statements.
Opinion
In our opinion and to the best of our information and the explanations
given to us, the financial statements give the information required by
the Act in the manner so required and give a true and fair view in
conformity with accounting principles generally accepted in India, of
the state of affairs of the company as at 31st March 2015 and its
profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
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 best of 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 the Company so far as it appears from our examination of those
books.
c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
d) In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the
directors as on 31st March, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2015
from being appointed as a director in terms of Section 164 (2) of the
Act.
f) With respect to the other matters to be included in the Auditor'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 the explanations given to us:
(i) The Company does not have any pending litigations in its financial
statements;
(ii) The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses. However,
company does not enter into any long-term contracts including
derivative during the specified period;
(iii) The Company is not required to transfer any amount to the
Investor Education and Protection Fund.
g) The Company is a Non- Banking Financial Company not accepting public
deposit and the Certificate of Registration No. B-14-02393 dated 19th
July 2002 from Reserve Bank of India has been issued to the Company: -
(i) The Board of Directors of the company has passed a resolution for
the non-acceptance of any public deposits.
(ii) The company has not accepted any public deposits during the
relevant year.
(iii) The company has complied with the prudential norms relating to
income recognition, accounting standards, assets classification and
provisioning for bad and doubtful debts as applicable to it.
h) As required by the Companies (Auditors' Report) Order 2015 (the
Order) issued by the Central Government of India in terms of section
143(11) of the Act, we give in the 'Annexure' a statement on the
matters specified in paragraphs 3 and 4 of the Order.
The Annexure referred to in paragraph 1 of the Our Report of even date
on the accounts of the company for the year ended 31st March, 2015
On the basis of such checks as we considered appropriate and according
to the information and explanation given to us during the course of our
audit, we report that: -
i) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of its fixed
assets.
(b) As explained to us, fixed assets have been physically verified by
the management at reasonable intervals; no material discrepancies were
noticed on such verification.
ii) (a) As explained to us, the inventories consisting of shares and
other securities have been physically verified by the management at
reasonable intervals during the year. In our opinion, the frequency of
such verification is reasonable having regard to the size of the
Company and the nature of its business.
(b) In our opinion and according to the information and explanations
given to us, the physical verification of inventories followed by the
management is reasonable and adequate in relation to the size of the
Company and the nature of the business.
(c) The Company has maintained proper records of inventory. As
explained to us, there was no material discrepancies noticed on
physical verification of stocks, as compared to book records.
iii) According to the information and explanations given to us and on
the basis of our examination of the books of account, the Company has
not granted any loans, secured or unsecured, to companies, firms or
other parties covered in the register maintained under Section 189 of
the Companies Act, 2013. Consequently, the provisions of clauses
iii(a) and iii(b) of the order are not applicable to the Company;
(iv) In our opinion and according to the information and explanations
given to us, there is generally an adequate internal control procedure
commensurate with the size of the company and the nature of its
business, for the purchase of inventories & fixed assets and for the
sale of goods and services. During the course of our audit, no major
instance of continuing failure to correct any weaknesses in the
internal controls has been noticed.
v) In our opinion, and according to the information and explanation
given to us, the company has not accepted any deposits; hence, clause
(v) is not applicable to the company. Accordingly, directives issued by
the Reserve Bank of India and the provisions of section 73 to 76 or any
other relevant provisions of the Companies Act and the rules framed
there under are not applicable.
vi) The Company is not required to maintain cost records pursuant to
the Rules made by the Central Government for maintenance of cost
records under sub-section (1) of section 148 of the Act.
vii) (a) According to the records of the company, undisputed statutory
dues including Provident Fund, Employees' State Insurance, Income-tax,
Sales-tax, Wealth Tax, Service Tax, Duty of Custom, Duty of Excise,
Value added tax, cess to the extent applicable and any other statutory
dues have generally been regularly deposited with the appropriate
authorities. According to the information and explanations
given to us there were no outstanding statutory dues as on 31st of
March, 2015 for a period of more than six months from the date they
became payable.
(b) According to the information and explanations given to us, there is
no amounts payable in respect of income tax, sales tax, wealth tax,
service tax, duty of customs, duty of excise or value added tax or cess
which have not been deposited on account of any disputes.
(c) Company does not have any amount required to be transferred to
investor education and protection fund in accordance with the relevant
provisions of the Companies Act and rules made there under.
viii) The Company does not have any accumulated loss at the end of the
financial year and has not incurred cash losses in the financial year
covered by this report and in immediately preceding such financial
year.
ix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
x) According to the information and explanations given to us, the
Company has not given any guarantees for loan taken by others from a
bank or financial institutions.
xi) Based on the information and explanations given to us by the
management, we are of the opinion that the term loans taken were
applied for the purpose they are obtained.
(xii) During the course of our examination of the books and records of
the Company, carried out in accordance
with the generally accepted auditing practices in India, and according
to the information and explanations given to us, we have neither come
across any instance of material fraud on or by the Company, noticed or
reported during the year, nor have we been informed of any such case by
the management.
For V.N. PUROHIT & CO.
Chartered Accountants
FRN : 304040E
Sd/-
Place: New Delhi O. P. Pareek
Date: 30th May, 2015 Partner
M. No. :014238
Mar 31, 2014
We have audited the accompanying financial statements of Sonal
Mercantile Limited (''the company'') which comprise the balance sheet as
at 31st March 2014, the statement of the profit and loss and the cash
flow statement for the year then ended, and a summary of the
significant accounting policies and other explanatory information.
Management''s responsibility for the financial statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956("the Act") read with the General Circular
15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in
respect of Section 133 of the Companies Act, 2013. This responsibility
includes the design, implementation and maintenance of internal control
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditor''s responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by Institute of Chartered
Accountant of India. Those standards require that we comply with the
ethical requirements and plan and perform the audit to obtain the
reasonable assurance about whether the financial statements are free
from material misstatements.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including assessment of
risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by the management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for audit opinion.
Opinion
In our opinion and best to our information and according to the
explanations given to us, the financial statements read together with
notes thereon give the information required by Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
a. In the case of the balance sheet, of the state of the affairs of
the company as at 31st March 2014,
b. In case of the statement of the profit and loss, of the profit for
the year ended on that date.
Report on other legal and the regulatory requirements:
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. We have obtained all the information and explanations which, to the
best of 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 the Company so far as appears from our examination of
those books.
c. The Balance Sheet and Statement of Profit & Loss referred to in
this report are in agreement with the books of account.
d. In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
sub-section(3C) of section211 of the Companies Act,1956 read with the
General Circular 15/2013 dated 13 September 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013;
and
e. On the basis of the written representations received from the
Directors and taken on records by the Board of Directors, we report
that none of the directors of the Company is disqualified as on 31st
March 2014 from being appointed as a Director of the Company in terms
of clause (g) of sub-section (1) of section 274 of the Companies Act,
1956.
As per Non-Banking Financial Companies Auditors Report (Reserve Bank)
Directions, 1998 issued by Reserve Bank of India vide Notification No.
DFC 117/DG(SPT)-98 dated January 2, 1998, we further report to the
extent to which matters specified therein are applicable to the company
that :
(i) The company is a Non-Banking Financial Company not accepting public
deposit and the certificate of registration no. B-14-02393 dated
19.07.2002 from Reserve Bank of India has been issued to the company.
(ii) The Board of Directors of the company has passed a resolution for
the non- acceptance of any public deposits.
(iii) The company has not accepted any public deposits during the
relevant year.
(iv) The company has complied with the prudential norms relating to
income recognition, accounting standards, assets classification and
provisioning for bad and doubtful debts as applicable to it.
Annexure to Auditors Report
Referred to in paragraph 1 of the Our Report of even date to the
members of Sonal Mercantile Limited (''the company'') on the accounts of
the company for the year ended 31st March, 2014.
1. In respect of its fixed assets:
a)The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets on the
basis of available information.
b) As explained to us, all the fixed assets have been physically
verified by the management in a phased periodical manner, which in our
opinion is reasonable, having regard to the size of the company and
nature of its assets. No material discrepancies were noticed on such
physical verification.
c) In our opinion, the company has not disposed off a substantial part
of its fixed assets during the year and the going concern status of the
company is not affected.
2. In respect of its inventories:
a)The inventories have been physically verified during the year by the
management. In our opinion, the frequency of verification is
reasonable.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
c) The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed on
physical verification of inventories as compared to the book records.
3. In respect of the loans, secured or unsecured, granted or taken by
the company to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956:
a)In our opinion, and according to the information and explanation
given to us, the company has not granted any loans, secured or
unsecured during the year to companies, firms or other parties covered
in the register maintained under Section 301 of the Companies Act,
1956. Consequently, the requirements as per clause (iii) (e) of
paragraph 4 of the order are not applicable in case of the company.
b) The Company has not taken any loans, secured or unsecured during the
year from companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956. Consequently,
the requirements as per clause (iii) (f) and (iii) (g) of paragraph 4
of the order are not applicable in case of the company.
4. In our opinion, and according to the information and explanation
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and for the sale of goods or
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system.
5. As explained and according to information given to us there has not
been any contract or arrangement referred to in section 301 of the Act,
particulars of which need to be entered in the register required to be
maintained under section 301 of the Companies Act, 1956.
6. According to the information and explanations given to us, the
Company not accepted any deposits from public within the meaning of
sections 58A, 58AA and other relevant provisions of the Companies Act
1956,. Therefore, the provisions of Clause (vi) of paragraph 4 of the
Order are not applicable to the company.
7. In our opinion, the Company has an internal audit system
commensurate with the size of the company and the nature of its
business.
8. The cost record maintained by the Companies (Cost Accounting
Records) Rules, 2011 prescribed by the Central Government under section
209(1)(d) of the Companies Act, 1956 are not applicable to the company.
9. In respect of statutory dues:
a)According to the records of the company, undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees State Insurance, Income-tax, Sales-tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty, Cess and other statutory dues have been
generally regularly deposited with the appropriate authorities.
According to the information and explanations given to us, there are no
undisputed amount payable in respect of the aforesaid statutory dues
were outstanding as at 31.03.2014 for a period of more than six months
from the date of becoming payable.
b) According to the information and explanations given to us, there are
no outstanding statutory dues on the part of company which is not
deposited on account of dispute.
10. The company does not have accumulated losses at the end of
financial year. The company has not incurred any cash losses during the
financial year covered by the audit and in the immediately preceding
financial year.
11. on the basis of books and records examined by us and according to
the information and explanations given to us, the company has not
defaulted in repayment of dues to financial institution, Banks or
debenture holders during the year.
12. The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities,
and in our opinion, adequate documents and records are maintained.
13. The Company is not a chit fund, nidhi or mutual benefit society.
Therefore, the provisions of clause (xiii) of paragraph 4 of the Order
are not applicable to the Company.
14. The Company has kept adequate records of its transactions and
contracts in shares, securities, debentures and other investments and
timely entries have been made therein. The shares, securities,
debentures and other investments held by the company, in it''s own name.
15. According to the information and explanations given to us, the
company has not given any guarantee for loans taken by other from bank
or financial institutions.
16. As per information and explanations given to us, term loans
obtained by the company has been utilised for the purpose for which
they are obtained .
17. According to the information and explanations given to us, no
funds raised on short-term basis have been used for long-term
investment.
18. According to the information and explanations given to us no
preferential allotment of shares has been made by the company to
companies, firms or other parties listed in the register maintained
under section 301 of the Companies Act, 1956.
19. The company has not issued any debentures. Hence the requirements
of clause (xix) of paragraph 4 of the Order is not applicable to the
company.
20. As explained to us, the Company has not raised any money through a
public issue during the year.
21. According to the information and explanations given to us, a fraud
on or by the company has not been noticed or reported during the year.
For V.N. PUROHIT & CO.
Firm Regn. No. 304040E
Chartered Accountants
Sd/-
O.P. Pareek
Place : New Delhi Partner
Date : 30th May, 2014 M.No.014238