TO THE MEMBERS OF CAPITAL TRUST LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Capital TrustLimited ("the Company") which comprise the Balance sheet as at March 31 2019the Statement of Profit and Loss and the Cash Flow Statement for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "the financialstatements").
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 accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 its profit and its cash flows forthe year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) as 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 of Ethics' issued by the Institute ofChartered Accountants of India together with the ethical requirements that are relevant toour audit of the financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence obtained byus is sufficient and appropriate to provide a basis for our audit opinion on thestandalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the Auditor's responsibilities forthe audit of the financial statements section of our report including in relation tothese matters. Accordingly our audit included the performance of procedures designed torespond to our assessment of the risks of material misstatement of the financialstatements. The results of our audit procedures including the procedures performed toaddress the matters below provide the basis for our audit opinion on the accompanyingfinancial statements.
|KEY AUDIT MATTER ||AUDITOR'S RESPONSE |
|Non Performing Assets ||How our audit addressed the key audit matter: |
|As at March 31 2019 the Company has loans and advances aggregating to Rs. 6073793714. As RBI prudential norms the Company is required to make provision for non performing assets ("NPA"). Accordingly the Company has recognised provision of Rs. 3082849. Also loans valuing Rs. 400721775 were written off during the year. ||Our audit procedures in relation to NPA were focused on obtaining sufficient appropriate audit evidence as to whether the NPA recognised in the standalone financial statements were reasonable and the related disclosures in the standalone financial statements made by the management were adequate. |
| ||These procedures included but not limited to the following: |
| ||a. obtaining an understanding on calculation of NPA including how management calculated NPA and the appropriateness data on which the calculation isbased; |
|The calculation of NPA requires exercise of judgement around both the timing of recognition of provisions and estimation of the amount of provisions required in relation to non-recoverability / maturity period of loans. ||b. testing consideration of the RBI prudential norms for calculation of NPA provision; |
| ||c. testing the accuracy of inputs through substantive procedures; |
| ||d. testing the arithmetical calculation of the NPA provision;and |
|Considering the significance of the above matter to the standalone financial statements and since the matter required our significant attention to test the calculation of NPA we have identified this as a key audit matter for current year audit. ||e. verifying the adequacy of the relateddisclosures. |
| ||Our Observation: |
| ||Based on our audit procedures performed we found management's calculation of NPA is reasonable and provision and its disclosures are appropriate. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe financial statements and our auditor's report thereon. We have obtained all otherinformation prior to the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards referred inSection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards referred in section 133 of the Act;
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct;
(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B" to this report;
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid /provided by the Company to its directors during the year is inaccordance with the provisions of section 197 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note 27 to the standalonefinancial statements;
ii. The Company did not have material foreseeable losses in long-term contractsincluding derivative contracts;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For Singhi & Co.
Firm Reg. No. 302049E
B. K. Sipani
Membership No. 088926
Place: New Delhi
Date: May 27 2019
Annexure A referred to in paragraph 1 of our report of even date on the other legal andregulatory requirements (Re: Capital Trust Limited)
(i) a. The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant &equipment.
b. The Company has a regular programme of physical verification of its property plantand equipment by which property plant and equipment are verified in a phased manner overa period of three years which in our opinion is reasonable having regard to the size ofthe Company and nature its property plant and equipment. In accordance with thisprogramme property plant & equipment were not physically verified during the year.
c. According to information and explanations given by the management the title deedsof immovable properties included in Property Plant & Equipment are held in the nameof the Company.
(ii) The Company has no inventory. Therefore the provisions of clause 3(ii) of theOrder are not applicable.
(iii) The Company has granted unsecured loans to a company covered in the registermaintained under section 189 of the Companies Act 2013. The terms and conditions of thegrant of such loan are not prejudicial to the interest of the Company. The Company hasstipulated schedules of repayment of principal and payment of interest and repayment ofthe principal amount and receipt of interest are regular. The Company has also grantedinterest free loan in earlier year to a trust covered in the register maintained undersection 189 of the Companies Act 2013 under Employee Stock Option Scheme("ESOP") to purchase equity shares of the Company under such scheme which wasnot due for repayment. The Company has not granted any loan to Firms Limited LiabilityPartnership or any other party covered in the register maintained under section 189 of theCompanies Act2013.
(iv) The Company has complied with provisions of section 186 of the Companies Act 2013in respect of loan granted and Investments made. According to information and explanationsgiven by the management no loan guarantees and securities covered under section 185 andguarantees and security under section 186 of the Companies Act 2013 have given during theyear.
(v) The Company has not accepted any deposit covered under sections 73 to 76 of theCompanies Act 2013 during the year. Therefore provisions of clause 3(v) of the Order arenot applicable to the Company.
(vi) The maintenance of cost records has not been prescribed by the Central Governmentunder the section 148 (1) of the Act read with companies (Cost Records and Audit) Rules2014. Therefore the provisions of clause 3 (vi) of the Order are not applicable.
(vii) a. According to the records of the Company the Company is generally regular indepositing undisputed statutory dues including provident fund employees' state insuranceincome-tax goods and service tax sales tax service tax duty of customs duty ofexcise value added tax cess and other material statutory dues deducted/ accrued in thebooks with the appropriate authorities. There was no undisputed outstanding statutorydues as at the year end for a period of more than six months from the date they becamepayable except Professional Tax Rs.27781.
b. According to the records of the Company there are no dues outstanding of incometax sales tax service tax duty of customs duty of excise and value added tax onaccount of any dispute.
(viii) The Company has not defaulted in repayment of dues to banks financialinstitutions and dues to debenture holders. The Company did not have any borrowing fromGovernment.
(ix) During the year the Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments). Further in our opinion andexplanations given to us term loans raised during the year were applied for the purposefor which loans were raised.
(x) According to the information and explanations given to us we report that no fraudby the Company has been noticed or reported during the year. However the Company hasdiscovered instances of embezzlement of cash aggregating Rs. 9375947 by some employeesagainst which Company has recovered Rs. 3223140 and Rs. 6478532 ( including forearlier years Rs. 325725 ) has been provided in the financial statements.
(xi) According to the information and explanations given by the management managerialremuneration has been paid /provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a Nidhi company. Therefore the provisions ofclause 3(xii) of the Order are not applicable.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 of theCompanies Act 2013 wherever applicable and details for the same have been disclosed inthe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Therefore the provisions of clause 3(xiv) of the Order are not applicable.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withdirectors. Therefore the provisions of clause 3(xv) of the Order are not applicable.
(xvi) The Company has been registered under section 45-IA of the Reserve Bank of IndiaAct 1934 as NonBanking Finance Company.
For Singhi & Co.
Firm Reg. No. 302049E
B. K. Sipani
Membership No. 088926
Place: New Delhi
Date: May 27 2019
Report on the Internal Financial controls under Clause (i) of Sub - section 3 ofSection 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to standalone financialstatements of Capital Trust Limited (the Company") as of March 31 2019 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 and maintaining internalfinancial controls based on the internal control over the financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin 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 as 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 of and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to financial statements.
Meaning of Internal Financial controls with reference to financial statements
A Company's internal financial controls with reference to financial statements is aprocess 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 controlwith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company ; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorization of management and directors of the company ; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial controls with reference to financialstatements
Because of the inherent limitations of Internal Financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has maintained in all material respects adequate internal financialcontrols over financial reporting and such internal financial controls over financialreporting were operating effectively as of March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia however same needs to be further strengthened.
For Singhi & Co.
Firm Reg. No. 302049E
B. K. Sipani
Membership No. 088926
Place: New Delhi
Date: May 27 2019