TO THE MEMBERS OF
SAHARA HOUSINGFINA CORPORATION LIMITED
Report on Audit of the Financial Statements
We have audited the accompanying financial statements of SAHARA HOUSINGFINACORPORATION LIMITED
(the Company) which comprise the Balance Sheet as at March 312019 theStatement 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 Standards prescribed under section 133 of theAct read with relevant rules issued there under and other accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2019 its profitand its cash flows for the year ended on that date.
2. Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion on the financial statements.
3. Key Audit Matters
Key Audit Matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key Audit Matter: ||How the Key Audit Matter was addressed in the Audit |
|Identification and provision for Non-Performing Assets (NPA) and recognition of interest income thereon (refer notes 2 (iv) and (v) and 28 to the financial statements) ||The audit procedures performed by us included the following: |
| Assessed the design and tested the operating effectiveness of internal controls related to identification and categorization of NPA provision for NPA and interest income recognition. |
|Interest income on Non-Performing Loan Asset is recognized on realization / collection of Equated Monthly Instalment (EMI) / Pre-Equated Monthly Instalment Interest (PEMII) in line with the provisioning requirement encompassed in The Housing Finance Companies (HFC) Directions 2010( NHB Direction) that is duly incorporated in the loan agreement and has to be abided to while computation of provision for NPA. Hence provision for NPA and interest income on NPA are key factors that may impact profitability. The terms of agreement with the borrowers and internal control relating to timely identification of NPA provision for NPA and recognition of interest income thereon create complexity and judgement in determining timing for identification and provision for NPA and interest income recognition thereon. Accordingly due to significant risk associated with identification and provision for NPA and interest income recognition it was determined to be Key Audit Matter in our audit report. |
| Performed sample test of individual loan and traced to EMI/PEMII payment bank entry default status and other related documents. Checked whether the calculation of provision for NPA and recognition of interest income are in accordance with NHB directions along with management decision. |
| Performed reconciliation of individual loan account and trade receivable testing of cut- off procedure and analytical procedure. |
| Examined sample of loans which had not been identified by management as NPA/potentially delinquent loan and formed our own judgement as to whether that was appropriate through examining information such as the counter party's payment history. |
| Completeness and accuracy of the data inputs used from underlying system. |
4. Information Other than the Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Directors Report's including its Annexure Corporate GovernanceReport and Shareholder's Information but does not include the financial statements and ourauditor's report thereon. Other Information as described in above paragraph is expected tobe made available to us after the date of this Auditors' Report.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the Management Discussion and Analysis Directors Report's including itsAnnexure Corporate Governance Report and Shareholder's Information if we conclude thatthere is material misstatement therein we are required to communicate the matter to thosecharged with governance to correct the same. If material misstatement of the otherinformation remains uncorrected we may take appropriate action considering our legalrights and obligations to seek and have the uncorrected misstatement appropriatelybrought to the attention of the user for whom the Auditor's Report is prepared.
5. Responsibilities of Management and Those Charge with Governance for the FinancialStatements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with accounting principles generally accepted in India includingthe accounting standard specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors 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 unlessThe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
6. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We 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 Financial Statements of the currentperiod and are therefore the key audit matters. We describe these matters in our Auditor'sReport unless Law or Regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourReport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
7. 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 in terms of Section 143(11) of the Act we give inAnnexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder.
2. As required by Section 143(3) of the Act based on our audit 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 relevant books of account.
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with relevant rules issued thereunder.
e) On the basis of the written representations received from the directors as on March312019 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure-B. Our report expresses unmodified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
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 opinion and to the best of our information and according to the explanationsgiven to us the company has not paid any remuneration to its directors during the year asper section 197 of the Act. However the remuneration paid by the Company to a managerduring the year is in accordance with the provisions of section 197 read with schedule Vof 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 Financial Statements- Refer Note 46(a) of the Financial Statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses. The Company did not have any long termcontracts including derivative contracts for which there were any material foreseeablelosses.
iii. There are no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
| ||For CHATURVEDI & PARTNERS |
| ||Chartered Accountants |
| ||Firm Registration No. 307068E |
| ||ANUJ MAHANSARIA |
|Place : New Delhi ||Partner |
|Dated : May 29 2019 ||Membership No. 500819 |