<dhhead>INDEPENDENT AUDITORS REPORT </dhhead>
To
The Members of
M/s Citiport Financial Services Limited Report on the Audit of the
Financial Statements
Opinion
We have audited the accompanying financial statements of CITIPORT
FINANCIAL SERVICES LIMITED ("the Company"), which comprise the Balance Sheet as
at March 31, 2023, the Statement of Profit and Loss (including other comprehensive
income), Statement of changes in Equity and the Statement of Cash Flows for the year ended
on that date, and a summary of the significant accounting policies and other explanatory
information.
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid financial statements give the information required
by the Companies Act, 2013 ("the Act") in the manner so required and give a true
and fair view in conformity with the accounting principles generally accepted in India, of
the state of affairs of the Company as at March 31, 2023, the profit and total
comprehensive income, changes in equity and its cash flows for the year ended on that
date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with
the Standards on Auditing specified under section 143(10) of the Act (SAs). Our
responsibilities under those Standards are further described in the Auditors
Responsibilities for the Audit of the Financial Statements 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 the independence requirements that
are relevant to our audit of the financial statements under the provisions of the Act and
the Rules made there under, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the ICAIs Code of Ethics. 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.
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. In our professional judgement, we have determined that there is no key
audit matter to be communicated in our report
Information Other than the Financial Statements and Auditors Report
Thereon
The Companys Board of Directors is responsible for the preparation of
the other information. The other information comprises the information included in the
companys annual report but does not include the financial statements and our auditors
report thereon.
Our opinion on the financial statements does not cover the other
information and we do not express any form of assurance conclusion there on
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the 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
Managements Responsibility for the Financial Statements
The Companys 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 state of affairs, Profit/Loss and other
comprehensive income, changes in equity and cash flows of the Company in accordance with
the accounting principles generally accepted in India, including the Accounting Standards
referred to in Section 133 of Companies Act 2013, 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 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.
In preparing the financial statements, management is responsible for
assessing the Companys 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 are responsible for overseeing the Companys
financial reporting process.
Auditors Responsibilities for the Audit of the Financial Statements
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 disclosures in the financial statements. The procedures selected depend on
the auditors 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 control relevant to the Companys preparation and fair
presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the Accounting estimates made by
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 our audit opinion.
As part of an audit in accordance with SAs, we exercise professional
judgment and maintain professional skepticism throughout the audit We also:
• 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 for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control
• Obtain an understanding of internal financial 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.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by management
• Conclude on the appropriateness of managements 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
Companys ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditors 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 up to the
date of our auditors report However, future events or conditions may cause the Company to
cease to continue as a going concern.
• 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
statements that, individually or in aggregate, makes it probable that the economic
decisions of a reasonably knowledgeable user of the financial statements 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 control 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 reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of 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 auditors report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be
in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2020, issued
by the Central Government of India, in terms of section 143 (11) of the companies Act,
2013, we give in the Annexure A" a statement on the matters specified in paragraph 3
and 4 of the Order, to the extent applicable.
2. As required by section 143(3) of the Companies Act 2013, 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 purpose 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 and Loss including other
comprehensive income, Statement of changes in equity and Cash flow Statement dealt with by
this Report are in agreement with the books ofaccount
d) In our opinion, the aforesaid financials comply with the Accounting
Standards specified under of Section 133 of the Companies Act, 2013 read with Companies
(Indian Accounting standard ) Rules 2015, as amended
e) On the basis of written representations received from the directors
as on March 31, 2023, and taken on record by the Board of Directors, none of the directors
is disqualified as on March 31, 2023, from being appointed as a director in terms of sub
section (2) of section 164 of the Companies Act, 2013.
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"; and
g) With respect to the other matters to be included in the Auditors
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) There are no pending litigations for or against the Company which
would impact its financial position.
ii) The Company does not have any derivatives contracts. Further there
are no long term contracts for which provisions for any material foreseeable losses is
required to be made.
iii) There are no amounts pending that are required to be transferred
to Investor Education and Protection Fund.
iv) The Management has represented, to best of their knowledge and
belief, that no funds have been advanced or loaned or invested (either from borrowed funds
or share premium or any other sources or kind of funds) by the Company to or in any other
person(s) or entity(ies), including foreign entities (Intermediaries), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall,
whether, directly or indirectly lend or invest in other persons or entities identified in
any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
v) The Management has represented, to best of their knowledge and
belief, that no funds have been received by the Company from any person(s) or entity(ies),
including foreign entities (Funding
Parties), with the understanding, whether recorded in writing or
otherwise, that the Company shall, whether, directly or indirectly, lend or invest in
other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.
vi) Based on such audit procedures, that has been considered reasonable
and appropriate in the circumstances, performed by us, nothing has come to our notice that
has caused us to believe that the representation under para (iv) and (v) contain any
material misstatement
vii) Proviso to rule 3(1) of the Companies (Accounts) Rules, 2014 for
maintaining books of account using accounting software which has a feature of recording
audit trail (edit log) facility is applicable to the Company with effect from 1 April
2023, and accordingly, reporting under rule 11(g) of Companies (Audit and Auditors) Rules,
2014 is not applicable for the financial year ended 31 March 2023.
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 under Report on Other Legal and Regulatory
Requirements section of our report to the Members of CITIPORT FINANCIAL SERVICES LIMITED
of even date)
To the best of our information and according to the explanations
provided to us by the Company and the books of account andrecords examined by us in the
normal course of audit, we state that:
a. In respect of the Companys Property, Plant and Equipment
(A) According to the information and explanations given to us and on
the basis of our examination of the records of the company, the company has maintained
proper records full particulars, including quantitative details and situation of Property,
Plant and Equipment
(B) According to the information and explanations given to us and on
the basis of our examination of the records of the company, in our opinion, Maintenance of
proper records for intangible assets is not applicable to the company.
(b) The company has a regular programme of physical verification of its
property, plant and Equipment by which all property, Plant and Equipment are verified in a
phased manner. In our Opinion, this periodicity of physical verification is reasonable
having regard to the size of the company and the nature of its assets. Pursuant to the
programme, certain Property, Plant and Equipment were physically verified by the
management during the year. In our Opinion, and according to the information and
explanations given to us, no material discrepancies were noticed on such verification.
(c) The company does not have any immovable Property. Accordingly,
clause 3(i)(c) of the order is not applicable.
(d) The company has not revalued its Property, Plant and Equipment
during the year and hence this sub-clause 3(i)(d) of the order is not applicable.
(e) According to the information and explanation given to us and on the
basis of our examination of the records of the company, there are no proceedings initiated
or pending against the company for holding any benami property under the Prohibition of
Benami Property transactions Act,1988 and rules made thereunder.
ii. (a) The Company is in the business of providing loans and does not
have any physical inventories. Accordingly, the provision of clause 3 (ii) (a) of the
Order is not applicable to it.
(b) According to the information and explanations given to us and on
the basis of our examination of the records of the Company, the Company has not been
sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks
or financial institutions on the basis of security of current assets.
iii. (a) Since the Companys principal business is to give loans.
Accordingly, the provision of clause 3(iii)(a) of the Order is not applicable to it
(b) The Company, being a Non-Banking Financial Company (NBFC),
registered under provisions of RBI Act, 1934. In our opinion and according to the
information and explanations given to us, the terms and conditions of the grant of all
loans and advances in the nature of loans provided during the year are, prima facie, not
prejudicial to the Companys interest.
(c) The Company, being a Non-Banking Financial Company (NBFC),
registered under provisions of RBI Act, 1934 and rules made thereunder, in pursuance of
its compliance with provisions of the said Act/Rules, particularly, the Income
Recognition, Asset Classification and Provisioning Norms, monitors repayments of principal
and payment of interest by its customers as stipulated In our opinion and according to the
information and explanations given to us, in respect of loans and advances in the nature
of loans, the schedule of repayment of principal and payment of interest has been
stipulated and in cases where repayment of principal and payment of interest is not
received as stipulated, the cognizance thereof is taken by the Company in course of its
periodic regulatory reporting.
(d) The Company, being a NBFC, registered under provisions of RBI Act,
1934 and rules made thereunder, in pursuance of its compliance with provisions of the said
Act/Rules, particularly, the Income Recognition, Asset Classification and Provisioning
Norms, monitors and report total amount overdue including principal and/or payment of
interest by its customers for more than 90 days. In cases where repayment of principal and
payment of interest is not received as stipulated, the cognizance thereof is taken by the
Company in course of its periodic regulatory reporting. According to the information and
explanation made available to us, reasonable steps are taken by the Company for recovery
thereof.
(e) Since the Companys principal business is to give loans.
Accordingly, the provision of clause 3 (iii) (e) of the Order is not applicable to it
(f) Based on our audit procedures, according to the information and
explanation made available to us, the C ompany has not granted any loans or advances in
the nature of loans to promoters / Related parties either repayable on demand or without
specifying any terms or period of repayment during the year.
iv. In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections 185 and 186 of the
Act in respect of grant of loans, making investments and providing guarantees and
securities, as applicable.
v. The Company has not accepted any deposits from the public and hence
the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76
or any other relevant provisions of the Act and the Companies (Acceptance of Deposit)
Rules, 2015 with regard to the deposits accepted from the public are not applicable.
vi. As informed to us, the maintenance of Cost Records has not been
specified by the Central Government under sub-section (1) of Section 148 of the Act, in
respect of the activities carried on by the company.
vii. According to the information and explanations given to us, in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Goods
and Service Tax, Cess and other material statutory dues applicable to it with the
appropriate authorities. There were no undisputed amounts payable in respect of Provident
Fund, Employees State Insurance, Income Tax, Goods and Service Tax, Cess and other
material statutory dues in arrears as at March 31, 2023 for a period of more than six
months from the date they became payable.
(b) There were no disputed dues pending as on March 31,2023.
viii. There were no transactions relating to previously unrecorded
income that have been surrendered or disclosed as income during the year in the tax
assessments under the Income Tax Act, 1961 (43 of 1961).
ix. (a) The Company has not defaulted in repayment of Loans or
borrowings from any lender. Hence reporting under clause 3(ix)(a) of the Order is not
applicable.
(b) The Company has not been declared willful defaulter by any bank or
financial institution or government or any government authority.
(c) On overall examination of financial statements, Term loans were
utilized for the purpose for which it has been obtained
(d) On an overall examination of the financial statements, the Company
has not utilized short term funds for long term purpose.
(e) On an overall examination of the financial statements of the
Company, the Company has not taken any funds from any entity or person on account of or to
meet the obligations of its subsidiaries, Joint ventures or associates.
(f) The Company has not raised any loans during the year on the pledge
of securities held in its subsidiaries, Joint ventures or its associates.hence reporting
on clause 3 (ix)(f) of the Order is not applicable.
x. (a) The Company did not raise money by way of initial public offer
or further public offer (including debt instruments) during the year.
(b) During the year, the Company has not made any preferential
allotment or private placement of shares or convertible debentures (fully or partly or
optionally) and hence reporting under clause 3 (x)(b) of the Order is not applicable.
xi. To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company or no material fraud on the Company by
its officers or employees has been noticed or reported during the year.
No whistle blower complaints received by the Company during the year
(and upto the date of this report)
xii. The Company is not a Nidhi Company and hence reporting under
clause (xii) of the Order is not applicable.
xiii. In our opinion and according to the information and explanations
given to us, the Company is in compliance withSection 177 and 188 of the Companies Act,
2013 where applicable, for all transactions with the related parties and the details of
related party transactions have been disclosed in the financial statements as required by
the applicable accounting standards.
xiv. During the year, the Company has not made any preferential
allotment or private placement of shares or fully or partly paid convertible debentures
and hence reporting under clause (xiv) of the Order is not applicable to the Company. We
have considered, the internal audit reports for the year under audit, issued to the
Company during the year and till date, in determining the nature, timing and extent of our
audit procedures.
xv. In our opinion and according to the information and explanations
given to us, during the year the Company has not entered intoany non-cash transactions
with its Directors or persons connected to its directors and hence provisions of section
192 of the Companies Act, 2013 are not applicable to the Company.
xvi. (a) The Company is required to be registered under section 45-IA
of the Reserve Bank of India
Act, 1934 and it has obtained Registration.
(b) The company has not conducted any Non-Banking Financial or Housing
Finance activities without a valid Certificate of Registration (CoR) from the Reserve Bank
of India as per the Reserve Bank of India Act, 1934;
(c) In our opinion, there company is nota core investment company as
defined in the regulations made by Reserve bank of india. Hence this clause is not
applicable to the company.
(d) There are no Core investment companies within the Group (as defined
in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly
reporting under clause 3(xvi) (d) of the Order is not applicable.
xvii. The Company has not incurred cash losses during the financial
year covered by our audit and the immediately preceding financial year, accordingly this
clause is not applicable.
xviii. There has been no resignation of the statutory auditors of the
Company during the year.
xix. On the basis of the financial ratios, ageing and expected dates of
realization of financial assets and payment of financial liabilities, other information
accompanying the financial statements, the auditors knowledge of the Board of Directors
and management plans, we are Opinion that no material uncertainty exists as on the date of
the audit report that company is capable of meeting its liabilities existing at the date
of balance sheet as and when they fall due within a period of one year from the balance
sheet date;
xx. According to the information and explanations given to us and based
on our examination of the records of the Company, is not required to transfer any unspent
amount pertaining to the year under report to a Fund specified in Schedule VII to the
Companies Act in compliance with second proviso to sub section 5 of section 135 of the
said Act.
ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 2 (f) under Report on Other Legal and
Regulatory Requirements section of our report to the Members of CITIPORT FINANCIAL
SERVICES LIMITED of even date)
Report on the Internal Financial Controls under Clause (i) of
Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
Opinion:
We have audited the internal financial controls over financial
reporting of CITIPORT FINANCIAL SERVICES LIMITED ("the Company") as of March
31,2023 in conjunction with our audit of the financial statements of the Company for the
year ended on that date.
In our opinion, the Company has, in all material respects, an adequate
internal financial controls system over financial reporting and such internal financial
controls over financial reporting were operating effectively as at 31 March 2023, based on
the internal control over financial reporting criteria established by the Company
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 India.
Managements Responsibility for Internal Financial Controls
The Board of Directors of the Company 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 control stated in the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting issued by the Institute of Chartered Accountants of India. 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 respective companys policies, the
safeguarding of its assets, the prevention and detection of frauds and errors, the
accuracy and completeness of the accounting records, and the timely preparation of
reliable financial information, as required under the Companies Act,2013.
Auditors Responsibility
Our responsibility is to express an opinion on the internal financial
controls over financial reporting of the Company based on our audit We conducted our audit
in accordance with the Guidance Note on Audit of Internal F inancial Controls Over
Financial Reporting (the "Guidance Note") issued by the Institute of Chartered
Accountants of India and the Standards on Auditing prescribed under Section143(10) of the
Companies Act,2013, to the extent applicable to an audit of internal financial controls.
Those Standards and the Guidance N ote 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 respects.
Our audit involves performing procedures to obtain audit evidence about
the adequacy of the internal financial controls 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 auditors judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained, is sufficient and
appropriate to provide a basis for our audit opinion on the internal financial controls
system over financial reporting of the Company.
Meaning of Internal Financial Controls Over Financial Reporting
A companys 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 statement for external purpose in accordance
with generally accepted accounting principles. A companys internal financial controls
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 that receipts and expenditures of the company are
being made only in accordance with authorisations 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 companys assets that
could have a material effect on the financial statements.
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 not be
detected. Also, projections of any evaluation of the internal financial controls over
financial reporting to future periods are subject to the risk that the internal financial
control over financial reporting may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
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