You are here » Home » Companies » Company Overview » Max Financial Services Ltd

Max Financial Services Ltd.

BSE: 500271 Sector: Financials
NSE: MFSL ISIN Code: INE180A01020
BSE 00:00 | 24 Apr Max Financial Services Ltd
NSE 05:30 | 01 Jan Max Financial Services Ltd
OPEN 414.75
PREVIOUS CLOSE 423.75
VOLUME 48380
52-Week high 611.05
52-Week low 279.75
P/E 116.70
Mkt Cap.(Rs cr) 11,262
Buy Price 425.55
Buy Qty 50.00
Sell Price 449.00
Sell Qty 10.00
OPEN 414.75
CLOSE 423.75
VOLUME 48380
52-Week high 611.05
52-Week low 279.75
P/E 116.70
Mkt Cap.(Rs cr) 11,262
Buy Price 425.55
Buy Qty 50.00
Sell Price 449.00
Sell Qty 10.00

Max Financial Services Ltd. (MFSL) - Auditors Report


Notice: Undefined variable: pattern in /usr2/unibs/application/modules/live-market/views/scripts/company/annual-report.php on line 72

Company auditors report

To The Members of Max Financial Services Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of Max FinancialServices limited ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow statement and the Statement of Change in Equity for the year then ended andother a summary of significant explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 and its profit totalcomprehensive income its cash flows change in equity for the year ended on that date.

Basis for opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility 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 theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance 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 financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the the matters described below tobe the key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditor's Response
1. Fair value of derivative financial instruments Principal Audit Procedures performed:
(Standalone Financial Statements)
(Refer note 42 of the standalone financial statements) • Obtained an understanding of the Company's process for determining the valuation and disclosure of derivative.
Derivatives arose out of Option arrangements executed during the year ended March 31 2016. • Tested the design and operating effectiveness of the internal controls on the valuation of the derivatives as at the period end.
The fair value of the derivative is determined through the application of valuation techniques which involves exercise of judgement by the Management and the use of assumptions estimates and valuation models. Hence it is considered as a key audit matter. • Assessed the competency capability and objectivity of the management's valuer
• Tested the mathematical accuracy of the valuation model used.
• Involved our internal valuation expert in relation to testing of the appropriateness of the valuation method applied and on sample basis re-priced the valuation of derivative.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

• The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Board's Report (includingannexures thereto) Business Responsibility Statement and Management discussion andanalysis (MD&A) (collectively referred to as "other information") but doesnot include the auditor's report standalone financial thereon.

• Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

• In connection with our audit of the standalone to read the other financialinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone obtained during the financial course of our audit orotherwise appears to be materially misstated.

• If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the standalone financial statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to statements thepreparation of these standalone financialposition that give a true and fair view of the financial financial performance includingother comprehensive income cash flows and change in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing doubt on the the Company'sfinancial reporting process.

Auditor's Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism ements. throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial relevant to the audit in order todesign audit procedures audit findings including that are appropriate in thecircumstances. Under deficiencies in internal control that we section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant Company's ability tocontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thestandalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial disclosures and whether the standalone financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial informationof the Company to express an opinion on the Standalone financial statements.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions whetherdue of a reasonably knowledgeable user of the standalone financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the standalone financialstatements.

We communicate with those charged with governance regarding among other matters theplanned scope and control timing of the audit and significant any significant identifyduring our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with governance we determine those matters that were ofmost significance in the audit of the standalone financial statements of the currentperiod and are therefore the key audit matters. We describe these matters in our auditor'sreport unless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

Report on Other legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report that:

a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Change in Equity dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure A".Our report expresses an unmodified opinion on the adequacy and operating effectiveness ofthe Company's internal financial controls over financial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.

h) With respect to the other matters to be included . in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition statements Refer in its standalone financial Note 25 of the forming part ofstandalone financial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses - Refer Note 36 of the notes forming partof standalone financial statements.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company - Refer Note 37 of the notesforming part of standalone financial statements.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order"or "CARO 2016") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 117366W/W-100018)

SATPAL SINGH ARORA

Place: New Delhi

(Partner)

Date: May 28 2019

(Membership No. 98564)

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of MaxFinancial Services limited ("the Company") as of March 31 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's 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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 117366W/W-100018)

SATPAL SINGH ARORA

Place: New Delhi

(Partner)

Date: May 28 2019

(Membership No. 98564)

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the management inaccordance with our a regular programme of verification the opinion provides for physicalverification fixed assets at reasonable intervals. According to the information andexplanation given to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the recordsexamined by us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds of the building is held inthe name of the Company. According to the information and explanations given to us and therecords examined by us no other immovable properties of land and buildingshave been taken on lease and disclosed as fixed asset in the standalone financialstatements.

(ii) The Company does not have any inventory and hence reporting under clause (ii) ofthe CARO 2016 is not applicable.

(iii) The Company has not granted any loans secured or unsecured to companies firmsPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposits during the year. The Company does not have any unclaimed depositsand accordingly the provisions of Sections 73 to 76 or any other relevant provisions ofthe Companies Act 2013 are not applicable to the Company.

(vi) The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Income Tax Goods and Service Tax cess and other materialstatutory dues as applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Income-taxGoods and Service Tax and cess as at March 31 2019 for a period of more than six monthsfrom the date they became payable.

(c) Details of dues of Income-tax Sales Tax Service Tax and Customs Duty which havenot been deposited as on March 31 2019 on account of disputes are given below: LimitedLiability

Name of Statute Nature of Dues (Refer note 25 of the standalone financial statements) Forum where Dispute is Pending Period to which the Amount Relates Amount involved Amount unpaid
(Rs. in lakhs) (Rs. in lakhs)
Customs Act 1962 Custom Duty Demand on non-fulfillment of export obligation Directorate General of Foreign Trade FY 1994-95 548.97 548.97
Finance Act 1994 (Service tax) Service Tax Demand on consultancy services Commissioner (Central Excise) Chandigarh FY 1997-98 To FY 2000-01 213.00 201.00
Finance Act 1994 (Service tax) Service Tax Demand on Banking and Financial Services Joint/Additional Commissioner Service Tax Commissione rate Delhi-II FY 2011-12 To FY 2015-16 139.58 139.58
Income Tax Act 1961 Income Tax Demand in disallowance made on various matters High Court Punjab AY 2003-04 159.04 159.04

We are informed that the provisions of Employees State Insurance Act 1948 are notapplicable to the Company and that the operations of the Company do not give rise to anyliability for Sales Tax Excise Duty and Value Added Tax.

(viii) The Company has not taken any loans or borrowings from financial institutionsbanks and government or has not issued any debentures. Hence reporting under clause (viii)of CARO 2016 is not applicable to the Company.

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised moneys by way of initial public offer or further public offer(including debt instruments) or term loans and hence reporting under clause (ix) of theCARO 2016 Order is not applicable.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us the Company has paid /provided managerial remuneration in accordance with the requisite approvals mandated bythe provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 is not applicable.

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements etc. as requiredby the applicable Ind AS.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with them and hence provisions of section 192 of theCompanies Act 2013 are not applicable.

(xvi) As per section 45-IA of the Reserve Bank of India Act 1934 read with RBI /2006-07 / 158 DNBS (PD) C.C. No. 81 / 03.05.002 / 2006-07 dated 19 October 2006 aCompany whose 50% of total assets and 50% of total income is from financial activity asat the last audited balance sheet is said to carry on financial activity as its principalbusiness and hence is required to obtain registration as a Non-Banking Finance Company(NBFC).

As indicated in note 38 the Company is of the view supported by legal opinion that theCompany is a ‘Core Investment Company' (‘CIC') and does not meet the criteriafor Systemically Important Core Investment Company (‘CIC-SI') as laid down in the CICMaster Circular dated 1 July 2015 and hence registration under section 45-IA of theReserve Bank of India Act 1934 is not required.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 117366W/W-100018)

SATPAL SINGH ARORA

Place: New Delhi

(Partner)

Date: May 28 2019

(Membership No. 98564)