To
The Members of
ACTION FINANCIAL SERVICES (INDIA) LTD
Report on the Audit of the Standalone Financial Statements
1. Opinion
We have audited the accompanying standalone financial statements of Action Financial
Services (India) Limited ("the Company"), which comprise the Balance Sheet as at
March 31, 2019, the Statement of Profit and Loss, and the Statement of Cash Flows for the
year ended and notes to the financial statements including 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 standalone 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, 2019, and profit, and its cash flows for
the year ended on that date.
2. Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with
Standards on Auditing (SAs) specified u/s 143(10) of the Companies Act, 2013. Our
responsibilities under those Standards are further described in the Auditor s
Responsibilities for the Audit of the standalone Financial Statements section of our
report. We are independent of the entity in accordance with the ethical requirements that
are relevant to our audit of the financial statements, and we have fulfilled our other
responsibilities in accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Information Other than the Standalone Financial Statements and Auditors Report
Thereon
The Company s Board of Directors is responsible for the preparation of the other
information. The other information comprises the information included in the Management
Discussion and Analysis, Board s Report including Annexures to Board s Report, Business
Responsibility Report, Corporate Governance and Shareholder s Information, but does not
include the standalone financial statements and our auditor s report thereon. Our opinion
on the standalone financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon. In connection with our audit of the
standalone financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the
standalone financial statements or our knowledge obtained during the course of our audit
or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information; we are
required to report that fact. We have nothing to report in this regard.
4. Responsibilities of Management for Standalone Financial Statements
The Company s Board of Directors is responsible for the matters stated in section
134(5) of the Act with respect to the preparation of these financial statements that give
a true and fair view of the financial position, financial performance, and cash flows of
the Company in accordance with the Accounting Standards and other accounting principles
generally accepted in India. This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of the Act for safeguarding 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 standalone financial statements that give a true and fair view and are
free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for
assessing the Company s 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 Company s financial reporting
process.
5. Auditors Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone
financial statements as a whole are free from material misstatement, whether due 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 audit conducted in accordance
with SAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these standalone financial statements.
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 standalone 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. In the extant case, the provisions of section 143(3)(i) is
not applicable to the Company and hence we will not express opinion on the same.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management s 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 Company s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor s report to the related disclosures in
the standalone 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 s 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 consolidated
financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fair
presentation.
Materiality is the magnitude of misstatements in the standalone 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 of the Company of which we are the
independent auditors 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 most significance in the audit of the standalone financial statements
of the current period and are therefore the key audit matters. We describe these matters
in our auditor s 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
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
6. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor s Report) Order, 2016 ( the Order ), as
amended, issued by the Central Government of India in terms of subsection (11) of section
143 of the Act, we give in the "Annexure A" a statement on the matters specified
in paragraphs 3 and 4 of the Order.
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 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 it appears from our examination of those books;
c. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement
dealt with by this Report are in agreement with the books of account
d. In our opinion, the aforesaid financial statements comply with the Accounting
Standards specified under section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014.
e. On the basis of written representations received from the directors as on 31 March
2019 taken on record by the Board of Directors, none of the directors are disqualified as
on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the
Act.
f. 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 March 31, 2018, based on
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. (Refer to our report in Annexure "B")
g. With respect to the other matters to be included in the Auditor s Report in
accordance with Rule 11 of the Companies (Audit and
Auditors) Rules, 2014, in our opinion and to the best of our information and according
to the explanations given to us:
i. The Company did not have any pending litigation as on 31 March 2019
ii. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses during the year ending 31 March 2019;
iii. There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company during year ended 31 March 2019;
For and on behalf of Jain Chowdhary & Co.
Chartered Accountants
FR No.113267W
Siddharth Jain
Partner M.No.104709
Date: 27th May 2019 Place: Mumbai
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT
As referred to in Paragraph 5(1)(a) under the heading of "Report on Other Legal
and Regulatory Requirements" of our report of even date to the members of Action
Financial Services (India) Limited on the financial statements for the year ended 31 March
2019.
i. (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets;
(b) The Company has a regular program of physical verification of its fixed assets, by
which all fixed assets are verified by the management during the year. In our opinion, the
periodicity of physical verification is reasonable having regard to the size of the
company and the nature of its assets. No discrepancies were noticed on such physical
verification.
(c) The company holds title deed of its immovable property namely office premises in
its own name during the financial year ended 31 March 2019.
ii. The inventory consists of equity shares and is held in dematerialized form. The
Company compares the Balances in Depository Participant Account with Books at regular
interval. The inventory quantity and value has been certified by the management which has
been relied upon by us. In our opinion, the frequency of verification is reasonable. On
the basis of our examination of the inventory records, in our opinion the company is
maintaining proper records of inventory and there is no material discrepancies noticed.
iii. According to the information and explanations given to us, the Company has not
granted any loans, secured or unsecured to companies, firms, limited liability
partnerships or other parties covered in the Register maintained under Section 189 of the
Act.
iv. According to the information and explanations given to us, the Company has not
granted any loan or given guarantees or provided any securities during the year as per the
provisions of Sections 185 and 186. In respect of investments made, the Company has
complied with the provisions of Section 186 of the Act.
v. The Company has not accepted any deposits from the public within the meaning of
Sections 73 to 76 of the Act and the rules framed thereunder to the extent notified.
vi. The Central Government of India has not prescribed the maintenance of cost records
under subsection (1) of Section 148 of the Act for any of the services rendered by the
Company.
vii. According to the records of the Company, examined by us and information and
explanations given to us: a) Undisputed statutory dues including Provident Fund, Employees
State Insurance, Income-Tax, Sales tax, Service Tax, Duty of Customs, Duty of Excise,
Value added Tax, Cess and any other statutory dues with the appropriate authorities.
According to the information and explanations given to us, no undisputed amounts payable
in respect of the above were in arrears as at March 31, 2019 for a period of more than six
months from the date on when they become payable.
b) According to the information and explanations given to us and the records of the
Company examined by us, there are no disputed dues of wealth tax, service tax, custom duty
and cess as at 31st March, 2019, which has not been deposited on account of dispute,
except the following disputed income tax demand :
| Sr. |
Name of dues |
Forum where Dispute is pending |
Period to which amount relates |
Amount involved in Rs. |
| No. |
|
|
|
|
| 1 |
Income Tax |
CIT (A) against the DCIT order |
A.Y. 2008-09 |
2,61,89,620 |
|
|
|
|
Paid (87,51,819) |
|
|
|
|
Net 1,74,37,801 |
| 2 |
Income Tax |
CIT (A) against the DCIT Order |
A.Y. 2010-2011 |
16,77,670 |
| 3 |
Income Tax |
CIT (A) against the DCIT Order |
A.Y. 2011-2012 |
7,09,780 |
|
|
|
|
Paid (1,41,956) |
|
|
|
|
Net 5,67,824 |
| 4 |
Income Tax |
CIT (A) against the DCIT Order |
A.Y. 2012-2013 |
12,90,000 |
|
|
|
|
Paid (1,43,845) |
|
|
|
|
Net 11,46,155 |
| 5 |
Income Tax |
CIT (A) against the DCIT Order |
A.Y. 2015-2016 |
30,11,520 |
|
|
|
|
Paid (1,92,160) |
|
|
|
|
Net 28,19,360 |
viii.In our opinion and according to information and explanation given to us Company
has not defaulted in repayment of its dues from bank. The company has not taken any loan
from financial institution or Government nor issued any debentures.
ix. The Company did not raise any money by way of initial public offer or further
public offer (including debt instruments) and term loans during the year.
Accordingly, paragraph 3 (ix) of the Order is not applicable.
x. According to the information and explanations given to us, no material fraud by the
Company or on the Company by its officers or employees has been noticed or reported during
the course of our audit.
xi. According to the records of the Company examined by us, and information and
explanations given to us, the provisions of Section 197 read with Schedule V to the Act
are not applicable to the Company.
xii. In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of
clause 4 (xii) of the Order are not applicable to the Company.
xiii.According to the information and explanations given to us and based on our
examination of the records of the Company, transactions with the related parties are in
compliance with Sections 177 and 188 of the Act and details of such transactions have been
disclosed in the financial statements as required by the applicable accounting standards.
xiv. According to the information and explanations give to us and based on our
examination of the records of the Company, the company has not made any preferential
allotment or private placement of shares or fully or partly convertible debentures during
the year.
xv. According to the information and explanations given to us and based on our
examination of the records of the Company, the Company has not entered into non-cash
transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of
the Order is not applicable.
xvi.The Company is not required to be registered under section 45-IA of the Reserve
Bank of India Act 1934.
For and on behalf of
Jain Chowdhary & Co.
Chartered Accountants
FR No.113267W
Siddharth Jain
Partner M.No.104709
Date: 27th May 2019 Place: Mumbai
ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 8(f) under ‘Report on Other Legal and Regulatory
Requirements section of our report to the Members of Action Financial Services (India)
Limited of even date)
1. Report on the Internal Financial Controls Over Financial Reporting under Clause (i)
of Subsection 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of ACTION
FINANCIAL SERVICES (INDIA) LIMITED ( the Company ) as of March 31, 2019 in conjunction
with our audit of the standalone financial statements of the Company for the year ended on
that date.
2. 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, 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.
3. 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 Financial Controls Over Financial
Reporting (the Guidance Note ) issued by the Institute of Chartered Accountants of India
and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013,
to the extent applicable to an audit of internal financial controls. Those Standards and
the Guidance Note require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether adequate internal financial
controls over financial reporting was established and maintained and if such controls
operated effectively in all material 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 auditor s 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 Company s internal financial controls system
over financial reporting.
4. Meaning of Internal Financial Controls Over Financial Reporting
A company s internal financial control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company s internal financial control over financial
reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company s assets that could have a
material effect on the financial statements.
5. 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.
6. Opinion
In our opinion, to the best of our information and according to the explanations given
to us, 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 March 31, 2019, 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.
For and on behalf of
Jain Chowdhary & Co.
Chartered Accountants
FR No.113267W
Siddharth Jain
Partner M.No.104709
Dated: 27th May 2019 Place: Mumbai
+91-9892691696
