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Equitas Holdings Ltd.

BSE: 539844 Sector: Financials
NSE: EQUITAS ISIN Code: INE988K01017
BSE 00:00 | 24 Apr Equitas Holdings Ltd
NSE 05:30 | 01 Jan Equitas Holdings Ltd
OPEN 54.65
PREVIOUS CLOSE 56.05
VOLUME 4426803
52-Week high 143.55
52-Week low 32.75
P/E 231.82
Mkt Cap.(Rs cr) 1,743
Buy Price 51.00
Buy Qty 71.00
Sell Price 51.05
Sell Qty 500.00
OPEN 54.65
CLOSE 56.05
VOLUME 4426803
52-Week high 143.55
52-Week low 32.75
P/E 231.82
Mkt Cap.(Rs cr) 1,743
Buy Price 51.00
Buy Qty 71.00
Sell Price 51.05
Sell Qty 500.00

Equitas Holdings Ltd. (EQUITAS) - Auditors Report


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Company auditors report

To the Members of Equitas Holdings Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements ofEquitas Holdings Limited ("the Company") which comprise the Balance sheet as atMarch 31 2019 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the financial statements including a summary ofsignificant accounting policies and 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 March 31 2019its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the‘Auditor's Responsibilities for the Audit of the Standalone FinancialStatements' section of our report. We are independent of the Company in accordancewith the ‘Code of Ethics' issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

Key Audit Matters

Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone financial statementsfor the financial year ended March 31 2019. These matters were addressed in the contextof our audit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone financial statements.

Key audit matters How our audit addressed the key audit matter
Assessment of Impairment of Investment in Equitas Technologies India Private Limited a subsidiary Company
The Company's investments are subject to assessment of impairment which process involves significant judgments and assessments including over determination of the amount of impairment provision if any that needs to be recognised. In respect of investments in ETPL where the management determined that there were indicators of impairment we performed the following procedures:
• We gained an understanding of the entity's process of assessing impairment of its investments.
• We tested controls over the value in use of the investment including the significant assumptions inputs calculations methodologies and judgements.
As at March 31 2019 the financial statements of Equitas Technologies India Private Limited (‘ETPL') a subsidiary company indicates risk of impairment. • We tested the key assumptions used in forecasting revenues and costs having regard to supporting documentation agreements and past experience.
• We compared the discount rates and long-term growth rates used by management with external market data..
The Company has made investments of र 2000 lakh (2018 र 2000 lakh) in ETPL. In testing for impairment the Company estimates the value in use of its cash generating units based on: • We assessed understood and tested where relevant the method followed by EHL to determine realisable value for valuation of the subsidiary including method of valuations used to assess impairment input data used external market information on market valuation comparable transactions in market space etc.
- Revenue and cost forecasts which are affected by ETPL's expansion plans business and strategic changes underway and the changing competitive environment; and • We read and assessed minutes of management internal meetings and presentations where key judgements were discussed including those used in the value in use model and the carrying value of deferred tax assets.
- Key assumptions used in the recoverability and valuation assessments (discount rates growth rates macroeconomic assumptions etc.)
Due to significance of judgements and estimate used in assessing the impairment provision this audit areas is considered a key audit risk • We read and assessed Board and Audit Committee minutes to assess the effectiveness of management's review process and the appropriateness of the conclusions reached.
Impairment for Financial Instruments based on expected credit loss model
The Company provides various loans and guarantees to group companies and trusts as part of its operations. The Company has in the past not recovered / provided for / written of the exposure to group companies / trusts. As per the expected credit loss model prescribed under Ind- AS 109 companies are required to estimate the probability of loss / expected loss based on past experience and future considerations. There is a risk that inappropriate impairment provisions are booked whether from the use of inaccurate underlying data or the use of unreasonable assumptions. Due to the significance of the judgments used in classifying loans and advances into various stages stipulated in Ind-AS 109 and determining related provision requirements this audit area is considered a key audit risk. • We gained an understanding of the Company's key credit processes comprising granting booking monitoring and provisioning and tested the operating effectiveness of key controls over these processes
• We read the Company's Ind-AS 109 impairment provisioning policy and compared it with the requirements of Ind-AS 109 as well as relevant regulatory guidelines and pronouncements
• We obtained an understanding of the Company's provisioning methodology the underlying assumptions and the sufficiency of the data used by management
• We tested on a sample basis the Exposure at Default used in the ECL calculation
As at March 31 2019 the Company's gross advance and non funded exposures amounted to र 3.07 crore (Previous year ` 130.00 crore) and the related impairment provisions / write off amounted to र NIL (Previous year ` 1.31 crore). • Obtained an understanding of the basis and methodology adopted by management to determine 12 month and life-time probability of defaults and the loss given defaults for various homogenous segments and verified the same on a test basis;
The impairment provision policy is presented in the accounting policies and in Note 3.5 to the financial statements. • We enquired with the management regarding significant judgments and estimates involved in the impairment computation and evaluated the reasonability of such estimates made in accordance with Ind AS 109; and
• We performed analytical reviews of disaggregated data to identify any unusual trends warranting additional audit procedures

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the standalone financial statements and our auditor'sreport 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 financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management for the 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 of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with [the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

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.

Those 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 professionaljudgement 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 financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay 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 defficiencies 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 2019 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

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 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 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 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 including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director in termsof Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone financialstatements and the operating effectiveness of such controls refer to our separate Reportin "Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 31 2019 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to 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 as amended in our opinion and to the best of our information and according tothe explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements – Refer Note 32 to thestandalone financial statements;

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.

For S.R. Batliboi & Associates LLP

Chartered Accountants ICAI Firm

Registration Number: 101049W/E300004

per Aniruddh Sankaran

Partner

Membership Number: 211107

Place of Signature: Chennai

Date: May 10 2019

Annexure 1 to the independent auditor's report of even date on thefinancial statements of Equitas Holdings Limited (the ‘Company')

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property plant andequipment's.

(b) Property plant and equipment's have been physically verifiedby the management during the year and no material discrepancies were identified on suchverification.

(c) According to the information and explanations given by themanagement the title deeds of immovable properties included in property plant andequipment are held in the name of the Company.

(ii) The Company's business does not involve inventories andaccordingly the requirements under paragraph 4(ii) of the Order are not applicable to theCompany.

(iii) (a) The Company has granted loans to companies covered in theregister maintained under section 189 of the Companies Act 2013. In our opinion andaccording to the information and explanations given to us the terms and conditions of thegrant of such loans are not prejudicial to the company's interest.

(a) The schedule of repayment of principal and payment of interest hasbeen stipulated for the loans granted and the repayment are regular.

(b) There are no amounts of loans granted to companies firms or otherparties listed in the register maintained under section 189 of the Companies Act 2013which are overdue for more than ninety days.

(iv) In our opinion and according to the information and explanationsgiven to us provisions of Section 185 and 186 of the Companies Act 2013 in respect ofloans to directors including entities in which they are interested and in respect of loansand advances given investments made and guarantees and securities given have beencomplied with by the company.

(v) The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) To the best of our knowledge and as explained the Company is notin the business of sale of any goods. Therefore in our opinion the provisions of clause3(vi) of the Order are not applicable to the Company.

(vii) (a) Undisputed statutory dues including provident fundemployees' state insurance income-tax sales tax service tax value added taxgoods and services tax cess and other statutory dues have generally been regularlydeposited with the appropriate authorities. The provisions relating to wealth tax duty ofcustom and Duty of excise is not applicable the Company.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employee's state insuranceincome-tax sales tax service tax value added tax goods and services tax cess andother material statutory dues applicable were outstanding at the year end for a periodof more than six months from the date they became payable.

(c) According to the records of the Company the dues of income tax andcess on account of any dispute as at March 31 2019 are as follows:

Name of the statute Nature of dues Amount Involved ( ` in Lakh) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Disallowance of Securitisation Income 852.07 AY 2010-11 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Disallowance of Securitisation Income 188.42 AY 2011-12 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Disallowance under Section 14A 26.88 AY 2014-15 Commissioner of Income Tax (Appeals)

(viii) The Company did not have any outstanding loans or borrowing duesin respect of a financial institution or bank or government or dues to debenture holdersduring the year

(ix) According to the information and the explanation given by themanagement the Company has not raised any money by way of initial public offer/ furtherpublic offer /debt instruments and term loans hence reporting under (ix) of the Order isnot applicable to the Company

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud on or by theofficers and employees of the Company has been noticed or reported during the year.

(xi) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that the 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. Thereforethe provisions of clause 3(xii) of the Order are not applicable to the Company and hencenot commented upon.

(xiii) According to the information and explanations given by themanagement transactions with the related parties are in compliance with Section 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in thenotes to the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence not commented upon.

(xv) According to the information and explanations given by themanagement the Company has not entered into any non-cash transactions with directors orpersons connected with him as referred to in Section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us wereport that the Company has registered as required under Section 45-IA of the ReserveBank of India Act 1934.

For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Aniruddh Sankaran
Partner
Membership Number: 211107
Place of Signature: Chennai
Date: May 10 2019

Annexure to the Independent Auditor's Report of even date on theStandalone Financial Statements of Equitas Holdings Limted

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of Equitas Holdings 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 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting with reference to these standalone financialstatements based on our audit. We conducted our audit in accordance with the Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting (the "GuidanceNote") and the Standards on Auditing as specified under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting with reference to these standalone financial statementswas established and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls over financial reporting with reference tothese standalone financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standalonefinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 internal financial controlsover financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting WithReference to these Financial Statements

A company's internal financial control over financial reporting withreference to these standalone financial statements is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingwith reference to these standalone financial statements includes those policies andprocedures 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 as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting With Reference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls over financial reporting with reference to these standalonefinancial statements and such internal financial controls over financial reporting withreference to these standalone financial statements were operating effectively as at March31 2019 based on the internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.

For S.R. Batliboi & Associates LLP

Chartered Accountants ICAI Firm Registration Number: 101049W/E300004 perAniruddh Sankaran

Partner

Membership Number: 211107

Place of Signature: Chennai

Date: May 10 2019