Purple Finance Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of Purple Finance Limited (‘'the Company”), which comprise the Balance Sheet as at 3 1" March 2024: the Statement of Profit and Loss (including comprehensive income loss). Statement of Changes in Equity, and the Statement of Cash Flows, for the year then ended on that date, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the ‘'financial statements")
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (“the Act") in the manner so required and give a true and fair view in conformin’ with the accounting principles generally accepted in India mcludmg the Indian Accounting Standards (“Ind AS") prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015, as amended and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2024, the profit and other comprehensive income, statement of changes in equity and its cash flows for the year ended on that date.
Basis of Opinion
We conducted our audit of the financial statement in accordance with the Standards on Auditing (“$A"s) specified under Section 143 (10) of the Act. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI") together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAFs Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Emphasis of Matter
We draw attention to notes 47 and 51.10 of the Standalone Financial Statements which state that the Scheme of Merger by Absorption (‘Scheme'), has been given effect to, based on the Appointed date 01" October 2022 as approved by National Company Law Tribunal which is deemed to be the acquisition date for the purpose of accounting under Ind AS 103 ‘Business Combinations'.
Our opinion on the Standalone financial statements is not modified in respect of this matter.
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 year. 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 described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the Standalone F inancial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Financial Statements. Hie results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Financial statements.
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Key Audit Matters
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How the matter was addressed in our audit
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Acquisition accounting for the Scheme of Merger by Absorption (‘Scheme’) of Canopy Finance Limited (CFL) with the Company
During the year, the Hon’ble National Company Law Tribunal, Mumbai Bench ('NCLT') has approved the Scheme of Merger by Absorption ('Scheme'), of CFL with the Company, vide order dated 15th February 2024 effective from Appointed date of the scheme being 1st October 2022. Accordingly, the financials for the year ended 31" March, 2023 have also been restated to give effect to the scheme.
Accounting for the amalgamation has involved judgment in order to:
• determine the fair value of consideration transferred;
• identify and measure the fair value of the identifiable assets acquired and liabilities assumed;
• allocate the purchase consideration between identifiable assets and liabilities and goodwill;
• This is a material acquisition for the Company and given the level of estimation and judgement required, we considered it to be a key audit matter.
(Reference to Notes 4? and 51.10 to the Standalone Financial Statements)
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Audit procedures included but were not limited
to the following:
• Obtained an understanding of the Scheme and the transaction from the management and identified key terms relevant to the accounting for the transaction.
• Read relevant parts of the approval obtained from NCLT and assessed the Company's conclusion as regard business combination accountmg in accordance with Ind AS 103 with respect to the amalgamation.
• We tested the completeness of the identified assets and liabilities acquired by comparison to the scheme of arrangement, through discussions with the Company.
• We assessed the Company's determination of fair values for assets and liabilities acquired and the methods used to value the underlying assets
• We have reviewed the restated financials of financial year 2022-2023 to the extent of effect on account of merger by absorption.
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Iransition to Indian Accounting Standards (“Ind
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Our audit procedures included the following:
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Ao )
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•
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Assessed the Company's process to identify
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The Company has adopted Ind AS notified under
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the unpact of adoption and transition to the
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section 133 of the Companies Act 2013 (“the Act") read
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new accounting standards.
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with the Companies (Indian Accounting Standards)
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•
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Understanding the financial statement closure
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Rules, 2015 from April 01, 2023 and the effective
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process and the controls established by the
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date of such transition is April 01, 2022. For periods
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Company for transition to Ind AS.
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up to and including the year ended March 31, 2023,
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•
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Readmg and assessing the changes made to the
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the Company had prepared and presented its financial
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accounting policies due to the requirements of
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statements in accordance with the erstwhile generally
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the new financial reporting framework.
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accepted accounting principles in India (Indian GAAP).
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•
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Reviewed the exemptions availed by the
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In order to give effect of the transition to Ind AS these
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Company from certain requirements under
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financial statements for the year ended March 31, 2024,
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Ind AS
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together with the comparative financial information
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•
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Assessing the judgements exercised by
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for the previous year ended March 31, 2023 and the
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the management in applying the first-time
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transition date balance sheet as at April 1, 2022 have
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adoption principles of Ind AS 101 especially
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been prepared under Ind AS.
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in respect of fair valuation of assets as at
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The transition to Ind AS, has involved changes in the
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transition date
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Company's policies and processes relating to financial
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•
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Testing accounting adjustments posted as at the
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reporting. Further, the management has also exercised
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transition date, and in respect of the previous
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judgement (wherever applicable) in giving effect to
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year to convert the financial information
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various principles of Ind AS in its first-time adoption.
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reported under erstwhile Indian GAAP to Ind
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In view of the complexity and the resultant risk of a
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AS.
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material misstatement arising from an error or omission
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•
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Assessing the disclosures mcluded in the
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in correctly implementing the principles of Ind AS at the
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Standalone Ind AS Financial Statements in
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transition date, which could result in a misstatement of
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accordance with the requirements of Ind AS.
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one or more periods presented in these Standalone Ind
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AS Financials Statements, this has been an area of key
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focus in our audit.
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Information Other than the Financial Statement and Auditor’s Report thereon
The Company's Board of Directors is responsible for preparation of the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor's report thereon.
Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Management’s Responsibility for the 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 along with other comprehensive income loss, statement of changes in equity and cash flows of the company m accordance with the accounting principles generally accepted in India, including the Ind AS 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, board of directors is responsible for assessing the company's ability- to continue as a gomg concern, disclosmg, 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 Company's financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that mcludes 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 financial statements As pan of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal 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 with reference to financial statements m 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 gomg 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 financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidences 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 gomg concern.
• Evaluate the overall presentation; structure and content of the financial statements; including the disclosures; and whether the financial statements represent the underlying transactions and events in a maimer that achieves fair presentation.
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 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.
Other Matter
The comparative financial information of the Company for the year ended 31st March, 2023, prepared in accordance with Ind GAAP which have been restated as per IND AS, were audited by the predecessor auditor. The report of the predecessor auditor on the same expressed an unmodified opinion. Our opinion on the Statement is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
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 Companies Act, 2013, we give in the “Annexure A”, a statement of the matters specified in paragraph 3 and 4 of the Order.
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, Statement of Profit Loss (including other comprehensive income). Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are m agreement with the books of account;
d) In our opinion, the aforesaid financial statements comply with Ind AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors as on 31st March, 2024 taken on record by the Board of Directors, none of the Directors is disqualified as on 315! March, 2024 from being appointed as a Director in terms of Section 164(2) of the Act;
f) With respect to the adequacy of mternal financial controls over financial reporting of the company and the operatmg effectiveness of such control, refer to our separate report in “Annexure B”. Our report expresses an unmodified opinion on the adequacy and operatmg effectiveness of the
Company's mternal financial controls over financial reporting;
g) In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is m accordance with the provisions of
Section 19" of the Act. The remuneration paid to any director is not m excess of the limit 67.
laid down under Section 197 of the Act.
a) 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 as amended, in our opinion and to the best of our information and according to the explanations given to us:
1) The company does not have any pending litigations which would unpact its financial position in its financial statements.
2) The company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and
3) There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company during the year under audit.
4) (a) The management has represented that, to the best of its knowledge and belief, no funds (which are
material either individually or in the aggregate) 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, securin’ or the like on behalf of the Ultunate Beneficiaries:
(b) The Management has represented , that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties"), with the understandmg, 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 maimer whatsoever by or on behalf of the Funding Party (“Ultunate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(c) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances, performed by us, nothing has come to our notice that has caused us to believe that the representations made under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement
5) The Company has not declared any dividend during the year.
6) Based on our examination which included test checks, the company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility but the same has not been operated throughout the year for all relevant transactions recorded in the software. The company migrated from Tally Prune software to Tally Prune edit log with effect from 15th March, 2024. Consequently, we are unable to comment on audit trail feature under the previous software version. Further during the course of our audit, for the period for which the audit trail facility had been operational during the year, we did not come across any instance of audit trail bemg tampered with.
For Jogin Raval & Associates
Chartered Accountants
ICATs firm registration number: 1285S6W
CA Jogm Raval
Proprietor
Membership number: 122197
Place: Mumbai
Date: 20thApril, 2024 68.
UDIN: 24122197BKAOPI9872
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