To the Members of
S.I. CAPITAL & FINANCIAL SERVICES LIMITED
Report on the Audit of Standalone Ind AS Financial Statements
Opinion
We have audited the accompanying standalone Ind AS financial statements of S.I. CAPITAL
& FINANCIAL SERVICES LIMITED (the company), which comprise the Balance Sheet as at
31st March 2023, the Statement of Profit and Loss (Including Other Comprehensive Income),
Statement of changes in equity and Statement of Cash Flow for the year ended and notes to
financial statement including a summary of significant accounting policies and other
explanatory information (herein referred to as "standalone financial
statements").
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 as amended (the "Act") in the manner so required and
give a true and fair view in conformity with the Indian accounting standards prescribed
under section 133 of the Act read with the companies(Indian Accounting standards) Rules
2015,as amended ("Ind AS")and other accounting principles generally accepted in
India, of the state of affairs of the Company as at 31st March 2023,its loss including
other comprehensive income, change in equity and its cash flow for the year ended on that
date.
Basis for Opinion of the Financial Statement
We conducted our audit in accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Companies Act, 2013. Our responsibilities under those
Standards are further described in the Auditors Responsibilities for the Audit of the
standalone 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 standalone
financial statements under the provisions of the Companies Act, 2013 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 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 standalone financial statements of the current period.
These matters were addressed in the context of our audit of the standalone financial
statements, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
1.Provision for Expected Credit Losses (ECL) on Loans
Management estimates impairment provision using Expected Credit loss model for the loan
exposure. Measurement of loan impairment involves application of significant judgement by
the management. The most significant judgements are:
Timely identification and classification of the impaired loans, and
Determination of probability of defaults (PD) and estimation of loss given defaults
(LGD) based on the value of collaterals and relevant factors.
The estimation of Expected Credit Loss (ECL) on financial instruments involves
significant judgements and estimates.
Following are points with increased level of audit focus: Classification of assets to
stage 1, 2, or 3 using criteria in accordance with Ind AS 109; Accounting interpretations,
modelling assumptions and data used to build and run the models; Measurement of individual
borrowers provisions assessment of multiple economic scenarios.
The disclosures made in the financial statements for ECL especially in relation to
judgements and estimates by the Management in determination of the ECL. Refer note 43 to
the standalone financial statements.
Principle Audit Procedures:
We evaluated the design and operating effectiveness of controls across the processes
relevant to ECL. These controls, among others, included controls over the allocation of
assets into stages including managemen ts monitoring of stage effectiveness, model
monitoring including the need for post model adjustments, model validation, credit
monitoring, individual/collective provisions and production of journal entries and
disclosures. We tested the completeness of loans included in the Expected Credit Loss
calculations as of 31 March 2023. We tested assets in stage 1, 2 and 3 on sample basis to
verify that they were allocated to the appropriate stage. For samples of exposure, we
tested the appropriateness of determining Exposure at Default (EAD), PD and LGD. We
performed an overall assessment of the ECL provision levels at each stage including
managements assessment on Covid-19 impact to determine if they were reasonable
considering the Companys portfolio, risk profile, credit risk management practices and
the macroeconomic environment. We assessed the adequacy and appropriate.
We assessed the adequacy and appropriateness of disclosures in compliance with the Ind
AS 107 in relation to ECL especially in relation to judgements used in estimation of ECL
provision.
Information other than the financial statements and auditors report thereon
The Companys Board of Directors are responsible for the other information. The other
information comprises the information included in the Annual Report but does not include
the standalone financial statements and our auditors 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 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.
Managements Responsibility for the standalone Ind AS Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section
134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of
these standalone financial statements that give a true and fair view of the financial
position and financial performance including other comprehensive income, cash flows and
changes in equity of the company in accordance with Ind AS 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 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 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 standalone 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 is also responsible for overseeing the Companys financial
reporting process.
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 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 standalone
financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional scepticism 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 control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances. Under section 143(3)(i)
of the Companies Act 2013, we are also responsible for expressing our opinion on whether
the company has adequate financial control with reference to standalone financial
statements in place and the operating effectiveness of the 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 companys
ability to continue as 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 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
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 standalone
financial statements, including the disclosures, and whether the standalone 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 standalone 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 standalone 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 standalone 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 Companies (Auditors Report) Order, 2020, issued by the Government of
India in terms of subsection 11 of section 143 of the Companies Act 2013 we give in the
Annexure- "A", a statement on the matters specified in the 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 purposes 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 including other comprehensive
income, Statement of changes in Equity and Statement of cash flow dealt with by this
report are in agreement with the books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with Companies (Indian
Accounting Standard) Rules, 2015 as amended including the companies (Indian Accounting
Standards) amendment rules, 2019.
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 section 164(2) of the
Act.
f) With respect to the adequacy of the internal financial controls over financial
reporting of the company in reference to the financial statements and the operating
effectiveness of such controls, refer our separate report in "Annexure- B".
g) With respect to the other matters to be included in the Auditors Report in
accordance 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 explanations given to us, the
remuneration paid by the Company to its directors during the year is in accordance with
the provisions of section 197 of the Act.
h) 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) The company has disclosed the impact of pending litigations on its financial
position in its financials.
ii) The company did not have any long-term contract including derivative contracts for
which there were any material foreseeable losses.
iii) There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the company.
iv) The management has represented that, to the best of its knowledge and belief,
other than as disclosed in the notes to the accounts,
(a) 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
(b) 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.
(c) 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 to believe that the
representations under sub-clause (a) and (b) contain any material misstatement.
(d) 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 FY
2022-23.
"Annexure A" to the Independent Auditors Report
Annexure referred to in Independent Auditors Report to the members of the company on
the standalone financial statements for the year ended 31st March 2023.
1) (a) The Company has maintained proper records showing full particulars, including
quantitative details and
situation of Property Plant and Equipment & Intangible assets.
(b) According to the information and explanation given to me, all the fixed assets were
physically verified during the year by the Management in accordance with a regular program
of verification which, in my opinion, provides for physical verification of the fixed
assets at reasonable intervals. According to the information and explanation given to me,
no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (other than property where the
company is the lessee and the lease agreements are duly executed in favour of the lessee)
disclosed in the financial statements are held in the name of the company.
(d) The company has not revalued its Property, Plant and Equipment (including Right of
Use assets) or intangible assets or both during the year.
(e) According to the information and explanation given to me ,no such proceedings have
been initiated or are pending against the company for holding any benami property under
the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
2) The Company is a Non-Banking Financial Company (‘NBFC) and is in the business
providing financial services and does not have any inventories. Accordingly, the Clause
3(ii) of the Order not applicable to the Company.
3) As explained to us, the company has not made investments in nor provided any
guarantee or security or 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. Accordingly, the provisions of clause 3 (iii) (a) to (c) of the
Order are not applicable to the Company.
4) In our opinion and according to the information and explanation given to us, the
Company has complied with the provisions of section 185 and 186 of the Act in respect of
loans granted, investments made and guarantees given, as applicable.
5) According to the information and explanation given to us, the Company has not
accepted any deposits from the public. Hence directives issued by the Reserve Bank of
India and the provisions of section 73 to 76 or any other relevant sections of the
Companies Act and rules framed thereunder are not applicable.
6) According to the information and explanation given to us the Central Government has
not prescribed the maintenance of cost records under sub-section (1) of the Section 148 of
the Act for any of the products or services of the company.
7) (a) The Company has generally been regular in depositing undisputed statutory dues,
including Provident
Fund, Income Tax, Goods and Service Tax and other material statutory dues applicable to
it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund, Income Tax,
Goods and Service Tax 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.
8) According to the information and explanation given to us, the company does not have
any such transactions that
are not recorded in the books of accounts that have been surrendered or disclosed as
income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).
9) In our opinion and according to the information and explanations given to us, the
Company has not defaulted
in repayment of loans or other borrowings or in the payment of interest thereon to any
lender during the year.
10) (a) In our opinion and according to the information and explanations given to us,
the Company has raised
monies by way of initial public offer or further public offer (including debt
instruments) during the year, which were applied for the purposes for which those are
raised.
(b) i) In our opinion and according to the information and explanations given to us,
the company has made private placement of secured unlisted redeemable non-convertible
debentures (the "debentures issue") during the year and Section 42 of the
Companies Act, 2013, have been complied with and the funds raised have been used for the
purposes for which the funds were raised.
ii) In our opinion and according to the information and explanations given to us, the
company has made preferential allotment of shares during the year and requirements of
Section 62 of the Companies Act, 2013 have been complied with and the funds raised have
been used for the purposes for which the funds were raised.
11) Based upon the audit procedures performed and the information and explanations
given by the management, we report that no fraud by the Company or on the Company by its
officers or employees has been noticed or reported during the year.
12) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of
clause 3 (xii) of the Order is not applicable to the Company.
13) In our opinion and according to the information and explanations given to us, the
Company is compliance with Section 177 and 188 of the Act, where applicable, for all
transactions with related parties and the details of the related party transactions have
been disclosed in the financial statements as required by the applicable Indian Accounting
Standard.
14) a) The company has an internal audit system commensurate with the size and nature
of its business. b) The reports of the Internal Auditors for the period under audit were
considered during the audit.
15) Based upon the audit procedures performed and the information and explanations
given by the management, the Company has not entered any non-cash transactions with
directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of
the Order is not applicable to the Company and hence not commented upon.
16) a). The Company is registered under Section 45-IA of the Reserve Bank of India Act,
1934.
b) . The Company is registered as Non-Deposit Accepting Non-Banking Financial Company
from the Reserve Bank of India as per the Reserve Bank of India Act, 1934
c) . The company is not a Core Investment Company (CIC) as defined in the regulations
made by the Reserve Bank of India, therefore, the provisions of clause 3 (xvi)(c) of the
Order is not applicable to the Company.
17) Based upon the audit procedures performed and the information and explanations
given by the management, The company has incurred a cash loss of Rs 6.67 and 9.17 (Rs. in
lakhs) in the financial year and in the immediately preceding financial year respectively.
18) No such resignation of statutory auditor took place during the previous year.
Therefore, the provisions of clause 3 (xviii) of the Order is not applicable to the
Company.
19) 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, our auditors knowledge of the Board of Directors and management
plans, we are of the 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.
20) (a) Based upon the audit procedures performed and the information and explanations
given by the management, in respect of other than ongoing projects, the Company has not
transferred unspent amount to a Fund specified in Schedule VII to the Companies Act within
a period of six months of the expiry of the financial year in compliance with second
proviso to sub-section (5) of section 135 of the said Act.
(b) No such remaining unspent amount under sub-section (5) of section 135 of the
Companies Act, pursuant to any ongoing project, has been transferred to special account in
compliance with the provision of sub-section (6) of section 135 of the said Act.
21) In our opinion consolidated financial statement is not applicable for the company.
Therefore, the provisions of clause 3 (xxi) of the Order is not applicable to the Company.
"Annexure B" to the Independent Auditors Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SI Capital
& Financial Services Limited ("the Company") as of March 31, 2023 in
conjunction with our audit of the standalone financial statements of the Company for the
year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management 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 (‘ICAI). 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 the 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 Companys internal financial
controls over financial reporting 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") and the Standards on Auditing, issued by ICAI and deemed
to be prescribed under section 143(10) of the Companies Act, 2013, to the extent
applicable to an audit of internal financial controls, both applicable to an audit of
Internal Financial Controls and, both issued by the Institute of Chartered Accountants of
India. 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 were 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 judgement, 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 Companys internal financial controls system
over financial reporting.
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 statements for external purposes in accordance with generally
accepted accounting principles. A Companys 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 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.
Inherent 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.
Opinion
In our opinion, the company maintained 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, 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.
| For Ayyar & Cherian |
| Chartered Accountants |
| Firm Registration No. 000284S |
| Dijo Philip Mathew |
| Membership No. 224930 |
| Place: Ernakulam |
| Date: 25-05-2023 |
| UDIN: 23224930BGTNWJ4040 |
+91-9892691696
