To the Members of Capital Trade Links Limited
Report on the Audit of the Indian Accounting Standard (Ind AS) Financial Statements
Opinion
We have audited the accompanying Ind AS financial statements of Capital Trade Links
Limited ("the Company"), which comprise the Balance sheet as at March 31 2023,
the Statement of Profit and Loss, including the statement of Other Comprehensive Income,
the Cash Flow Statement and the Statement of Changes in Equity for the year then ended,
and notes to the financial statements, including a summary of 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 Ind AS financial statements give the information required by
the Companies Act, 2013, as amended ("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, its profit
including other comprehensive income its cash flows and the changes in equity for the year
ended on that date.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with the
Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our
responsibilities under those Standards are further described in the Auditors
Responsibilities for the Audit of the Ind AS 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 together with the ethical requirements that
are relevant to our audit of the financial statements under the provisions of the Act and
the Rules thereunder, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the 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 Ind AS 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 Ind AS financial statements for the financial year ended
March 31, 2023. These matters were addressed in the context of our audit of the Ind AS
financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
| Key audit matters |
How our audit addressed the key audit matter |
| • Adoption of new accounting framework (Ind AS) Effective 1 April 2019, the
Holding Company adopted the Indian Accounting Standards (Ind AS) notified by the
Ministry of Corporate Affairs with the transition date of 1 April 2018. |
• Our key audit procedures included: |
|
* Evaluated managements transition date choices and exemptions for
compliance/acceptability under Ind AS 101. |
|
* Understood the methodology implemented by management to give impact on the
transition. |
| The following are the major impact areas for the Holding Company upon transition: |
* Assessed the accuracy of the computations related to significant Ind AS adjustments |
| - Classification and measurement of financial assets and financial liabilities -
Measurement of loan losses (expected credit losses) |
* Tested the select system reports with the help of our IT specialists to check the
completeness and accuracy of the data and reports used to perform computations for giving
effect to Ind AS transition adjustments. |
| - Accounting for loan fees and costs |
|
| - Accounting for employee stock options |
* Confirmed the approvals of Audit Committee for the choices and exemptions made by
the Company for compliance/acceptability under Ind AS 101. |
| The migration to the new accounting framework (Ind AS) is a complicated process
involving multiple decision points upon transition. Ind AS 101, First Time Adoption
prescribes choices and exemptions for first time application of Ind AS principles at the
transition date. |
* Assessed areas of significant estimates and management judgment in line with
principles under Ind AS. |
|
* Assessed the appropriateness of the disclosures made in the Financial Statements. |
| (b) Impairment of financial assets (expected credit losses) |
Our audit procedures included: |
|
Design and operating effectiveness of controls |
| • Recognition and measurement of impairment of loans involve significant
management judgement. |
• Evaluated the appropriateness of the impairment principles based on the
requirements of Ind AS 109, our business understanding and industry practice. |
| With the applicability of Ind AS 109: Financial Instruments, credit loss assessment is
now based on expected credit loss (ECL) model. The Holding Companys impairment
allowance is derived from estimates including the historical default and loss ratios. |
• We obtained understanding of the managements new / revised processes, systems
and controls implemented in relation to impairment allowance process. |
|
• Assessed the design and implementation of key internal financial controls over
loan impairment process used to determine the impairment charge. |
| Management exercises judgement in determining the quantum of loss based on a range of
factors. |
• We used our internal specialist to test the model methodology and
reasonableness of assumptions used. |
| The most significant areas are: |
• We tested the management review controls over measurement of impairment
allowances and disclosures in the Financial Statements. |
| - Segmentation of loan book |
|
| - Loan staging criteria |
Substantives tests |
| - Calculation of probability of default / Loss given default |
• We focused on appropriate application of accounting principles, validating
completeness and accuracy of the data and reasonableness of assumptions used in the model. |
| - Consideration of probability weighted scenarios and forward looking macroeconomic
factors |
|
| - Management overlays |
• Test of details over calculation of impairment allowance to assess the
completeness, accuracy and relevance of data. |
| • There is a large increase in the data inputs required by the ECL model. This
increases the risk of completeness and accuracy of the data that has been used to create
assumptions in the model. In some cases, data is unavailable and reasonable alternatives
have been applied to allow calculations to be performed. |
• The appropriateness of managements judgments was also independently
reconsidered in respect of calculation methodologies, segmentation, economic factors, the
period of historical loss rates used and the valuation of recovery assets and collateral. |
Other Information
The Companys Board of Directors is responsible for the other information. The other
information comprises the information included in the Annual report, but does not include
the Ind AS financial statements and our auditors report thereon.
Our opinion on the Ind AS 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 Ind AS financial statements, our responsibility is
to read the other information and, in doing so, consider whether such other information is
materially inconsistent with the financial statements or our knowledge obtained in the
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.
Responsibilities of Management for the Ind AS 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 Ind AS financial statements
that give a true and fair view of the financial position, financial performance including
other comprehensive income, cash flows and changes in equity of the Company in accordance
with the accounting principles generally accepted in India, including the Indian
Accounting Standards (Ind AS) specified under section 133 of the Act read with the
Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also
includes maintenance of adequate accounting records in accordance with the provisions of
the Act for safeguarding of 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 the 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 Ind AS financial statements
that give a true and fair view and are free from material misstatement, whether due to
fraud or error.
In preparing the Ind AS 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.
Those Board of Directors are also responsible for overseeing the Companys financial
reporting process.
Auditors Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditors 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 Ind AS 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 Ind AS 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 control 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. The company is however not having any internal audit
system in place.
• 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 Ind AS financial
statements, including the disclosures, and whether the Ind AS 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 most significance in the audit of the Ind AS financial statements for
the financial year ended March 31, 2023 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 communicated 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 ("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 A" a statement on the matters specified in
paragraphs 3 and 4 of the Order.
2. (A) 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 purposes of our audit;
b) In our opinion, proper books of accounts 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 including the Statement of Other
Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt
with by this Report are in agreement with the books of account;
d) In our opinion, the aforesaid Ind AS financial statements comply with the Accounting
Standards specified under Section 133 of the Act, read with Companies (Indian Accounting
Standards) Rules, 2015, as amended;
e) On the basis of the written representations received from the directors as on March
31, 2023 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 Section 164 (2) of the
Act;
f) With respect to the adequacy of the internal financial controls over financial
reporting of the Company with reference to these Ind AS financial statements and the
operating effectiveness of such controls, refer to our separate Report in "Annexure
B" to this report;
(B) 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, as amended in
our opinion and to the best of our information and according to the explanations given to
us:
a. The Company does not have any pending litigation which would impact its financial
position.
b. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses.
c. There were no amounts which were required to be transferred, to the Investor
Education and Protection Fund by the Company.
d. The management has represented that, to the best of its knowledge and belief, other
than as disclosed in the notes to the accounts,
i. 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; and
ii. 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.
iii. Based on audit procedures carried out by us, that we have considered reasonable
and appropriate in the circumstances, nothing has come to our notice that has caused us
believe that the representations under sub-clause (i) and (ii) contain any material
misstatement.
e. The Company has not declared or paid any dividends during the year and accordingly
reporting on the compliance with section 123 of the Companies Act, 2013 is not applicable
for the year under consideration.
(C) With respect to the matter to be included in the Auditors Report under section
197(16) of the Act:
In our opinion and according to the information and explanation given to us, the
remuneration paid by the Company to its directors during the current year is in accordance
with the provisions of Section 197 of the Act. The remuneration paid to director is not in
excess of the limit laid down under section 197 of the Act.
Other Matters
We draw attention to Note no.17.1 of the statement regarding Equity Company has
already passed resolution for consolidation of Share in the AGM held as on 23.09.2021, by
virtue of which face value of each equity share of the company has been changed from Re.
1/- to Rs. 10/-. As on 08.12.2022, the abovementioned resolution was rescinded by the
shareholders of the company by way of postal ballot. Consequently, the Capital clause of
the MOA was amended and nominal value of each equity of the company was altered from Rs.10
to Rs.1, with effect from 08.12.2022.
For A. C. Gupta & Associates
Chartered Accountants
Firms Regn. No. 008079N
Sd/-
A. C. Gupta
Partner
UDIN: 23008565BGYACE3326
Place: New Delhi
Date: 17.05.2023.
+91-9892691696
