We have audited the accompanying standalone financial statements of MONARCH NETWORTH CAPITAL LIMITED ("the Company”), which comprise the balance sheet as at March 31, 2024, the Statement of Profit and Loss, including the statement of Other Comprehensive income, statement of cash flows, and the Statement of Changes in Equity for the year then ended, and notes to the standalone 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 standalone financial statements give the information required by the Companies Act, 2013 (‘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, 2024, its Profit / Loss and cash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit in accordance with the standards on auditing specified under section 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 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 standalone financial statements under the provisions of the Act and the rules there under, 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.
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 as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters below to be key audit matters to be communicated in our report:
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Key audit matters
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How the matter was addressed in our Audit
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Information Technology system for the financial
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In view of the significance of the matter we applied
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reporting process
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the following audit procedures, on test check basis,
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The Company is highly dependent on its information
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in this area, among others to obtain reasonable
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technology (IT) systems for carrying on its operations which require large volume of transactions to be
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audit assurance:
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processed on a daily basis.
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Obtained an understanding of the Company’s IT environment and identified IT applications,
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Further, the Company’s accounting and financial
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databases and operating systems, for the
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reporting processes are dependent on the automated
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areas which are relevant to our audit. Sample
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controls enabled by IT systems which impacts key
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verification of the key transactions was carried out
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financial accounting and reporting items such as
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to verify the effectiveness of the IT environment
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Brokerage income, Trade receivable ageing amongst
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in the company.
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others. The controls implemented by the Company in
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Obtained understanding of IT infrastructure i.e.
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its IT environment determine the integrity, accuracy,
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operating systems and databases supporting
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completeness and validity of data that is processed
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the identified systems and related data security
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by the applications and is ultimately used for financial
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controls in relation to large number of users
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reporting.
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working on the entity’s systems remotely.
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Key audit matters
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How the matter was addressed in our Audit
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Further, the prevailing COVID-19 situation has caused
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Management has given us reasonable assurance
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the required IT applications to be made accessible to
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about the existence of the suitable IT controls
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the employees on a remote basis.
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and their persistent review and monitoring of the performance and issues arising on IT matters on a periodic basis.
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Reliance is also placed on the independent system audit carried out by the external agencies, as per the mandate of the regulators.
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Expected credit loss allowances
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In view of the significance of the matter we applied
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Recognition and measurement of impairment of
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the following audit procedures, on test check basis,
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financial assets involve significant management
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in
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this area, among others to obtain reasonable
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judgement. With the applicability of Ind AS 109, credit
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audit assurance:
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loss assessment is now based on expected credit loss (ECL) model. The Company’s impairment allowance is
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We evaluated management’s process and
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derived from estimates including the historical default
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tested key controls around the determination
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and loss ratios. Management exercises judgement in
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of extent of requirement of expected credit
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determining the quantum of loss based on a range
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loss allowances, including recovery process
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of factors. The most significant areas are loan staging
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& controls implemented in the company for
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criteria, calculation of probability of default / loss and
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trade receivables and other financial assets. It
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consideration of probability weighted scenarios and
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was explained to us by the management that
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forward-looking macroeconomic factors. There is a large
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the control exists relating to the recovery of
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increase in the data inputs required by the ECL model.
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receivables, including those aging for large
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This increases the risk of completeness and accuracy
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periods and in the opinion of the board there
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of the data that has been used to create assumptions
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is no requirement making expected credit loss
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in the model. In some cases, data is unavailable and
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allowance.
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reasonable alternatives have been applied to allow calculations to be performed. As per management
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We have also reviewed the management
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opinion, there is no expected credit loss in several
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response and representation on recovery process
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financial assets including the trade receivables and
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initiated for sample receivables, and based on
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other financial assets of the Company and all are on
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the same we have place reliance on these key
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fair value, based on the assessment and judgement made by the board of the company.
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controls for the purposes of our audit.
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Deferred Tax Assets
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In view of the significance of the matter we applied
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Recognition and measurement of deferred tax assets
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the following audit procedures in this area, among
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The Company has deferred tax assets in respect of
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others to obtain reasonable audit assurance:
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temporary differences and MAT credit entitlements.
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a
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Through discussions with management, we
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The recognition of deferred tax assets involves judgment regarding the likelihood of the reasonable certainty of
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understood the Company’s process for recording deferred tax assets;
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realisation of these assets, in particular whether there
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Discussed with the management about the
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will be taxable profits in future periods that support
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basis of the management estimations of the
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recognition of these assets.
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future revenue for the reasonable certainty of utilisation of the deferred tax assets and therefore
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Management records deferred tax assets in respect of MAT credit entitlements, temporary differences and brought forward business losses in cases where it is reasonably certain based on the presumed profitability determined on the basis of management estimation that sufficient taxable income will be available to absorb the differed tax assets in future.
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recognition of deferred tax assets; and
Accordingly based on the projected business plan made by the management, for the purpose of recognition of deferred tax assets in the financial statements, the asset provision seems to be reasonable.
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Key audit matters
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How the matter was addressed in our Audit
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Investment and Loans to group companies
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In view of the significance of the matter we applied
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The Company has investments in group company and
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the following audit procedures in this area, among
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associates which are considered to be associated with
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others to obtain reasonable audit assurance:
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significant risk in respect ofvaluation of such investments. These investments are carried at cost. Management has given us confirmation that the investments are reviewed for impairment at each reporting date. This assessment is based on the presumed future financial performance of these underlying entities, which involve significant estimates and judgment, due to the inherent uncertainty involved in forecasting future cash flows.
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Comparing the carrying amount of investments with the relevant group entity’s balance sheet to identify whether their net assets, being an approximation of their minimum recoverable amount, were in excess of their carrying amount and assessing whether those entities have historically been profit-making;
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There is significant judgment in estimating the timing
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For the investments where the carrying amount
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of the cash flows and the appropriate discount rate.
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exceeded the net asset value, comparing the carrying amount of the investment with the
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In addition, considering the materiality of the
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profitability estimation by the management of
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investments in group companies, vis-a-vis the total
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these group entities;
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assets of the Company, this is considered to be significant to our overall audit strategy and planning.
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Understanding the return prospects from the group entities, based on discussion with the
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The Company has also extended loans to group entities
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management; and
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and related parties that are assessed for recoverability
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Obtained independent confirmations to ensure
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at each period end.
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completeness and existence of loans and advances held by related parties as on reporting date.
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Balances of Various Financial Assets and Liabilities
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We evaluated the management procedure and
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Refer Note No. 49 to the financial statements which
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tested key controls employed by the management
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describes that the balance of Receivables and Payables,
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to review over the reconciliation and recoverability
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including Trade Receivables, loans, deposits & advances
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of the long outstanding assets and payability of long
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given as well as taken, payable to vendors, etc, are subject
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outstanding liabilities. Based on the explanations
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to confirmation and consequent reconciliation and
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and representations provided by the management,
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adjustments, if any. Hence, the effect thereof, on Profit/
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it was explained to us that the Board is carrying
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Loss, Assets and Liabilities, if any, is not ascertainable.
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out a regular review of balances of all outstanding assets and liabilities, based on the formal/ informal arrangements with the respective parties involved. As per their opinion, there will be no substantial impact on their reconciliation with their balance confirmations. Based on the same, we have placed reliance on these key controls for the purposes of our audit.
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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 Board’s Report including Annexures to Board’s Report, Business Responsibility Report 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.
MANAGEMENT’S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Company’s board of directors are responsible for the matters stated in section 134 (5) of the Act with respect to the preparation of these standalone 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 principles generally accepted in India, including the Indian Accounting Standards specified under section 133 of the Act. 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 standalone financial statement 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 also responsible for overseeing the Company’s financial reporting process.
AUDITOR’S 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 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 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 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 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 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.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor’s Report) Order, 2020 ("the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure "A”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
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 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 standalone financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act
(e) On the basis of the written representations received from the directors as on March 31, 2024 taken on record by the board of directors, none of the directors is disqualified as on March 31, 2024 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 and the operating effectiveness of such controls, refer to our separate report in "Annexure B”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2024 has been paid/provided by the Company to its directors in accordance with the provisions of Section 197 read with Schedule V to the Act;
(h) 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;
a. The Company does not have any pending litigations which would impact its financial position, other than those mentioned in Note 39 to 41 (Contingent Liabilities) to the Standalone financial statements;
b. The Company did not have any longterm contracts including derivative contracts for which there were any material foreseeable losses; and
c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
d. (i) The management has represented
that, to the best of its knowledge and belief, 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 or entity, 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;
(ii) The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person or entity, 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; and
(iii) Based on such audit procedures that were 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.
e. As stated in Note 15(d) to the standalone financial statements
(i) The final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.
(ii) The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.
f. Based on our examination which included test checks, the company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with. Additionally, the audit trail has been preserved by the company as per the statutory requirements for record retention.
For PAREKH SHAH & LODHA
Chartered Accountants
Firm Registration No.: 107487W
Amit Saklecha
(Partner)
M. No.: 401133
UDIN: 24401133BKADTP3300
Place: Mumbai
Date: May 24, 2024
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