Independent Auditors' Report on the Standalone Ind AS financialstatements
Reliance Capital Limited
Report on the audit of the Standalone Ind AS financial statementsOpinion
We have audited the standalone Ind AS financial statements of RelianceCapital Limited ("the Company") which comprise the Balance Sheet as at March31 2019 the statement of Profit and Loss (including other comprehensive income)statement of changes in equity and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information. In our opinion and to the best of our information andaccording to the explanations given to us the aforesaid standalone Ind AS financialstatements give the information required by the Companies Act 2013 ("the Act")in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2019 its profit (including other comprehensive income) changes in equity and itscash flows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing("SAs") specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Ind AS Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of theStandalone Ind AS financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
(a) We draw attention to Note No. 41(a) of the Standalone Ind ASfinancial statements referring to filing under Section 143(12)
of the Companies Act 2013 to Ministry of Corporate Affairs by one ofthe previous auditors. Based on the facts fully described in the aforesaid note views ofthe Company in-depth examination carried out by the independent legal experts of therelevant records there were no matters attracting the said Section.
(b) We draw attention to Note No. 41(c) to the Standalone Ind ASfinancial statements which describes that the Company has Inter corporate deposits to twoentities aggregating to Rs 2 812 crore which are fully secured by way of first charge ontheir assets. The same is additionally secured by a corporate guarantee of Rs 1 654 croreby a group company. The Company has already recovered Rs 665 crore post the balance sheetdate and the balance amount of Rs 2 147 crore is expected to be recovered soon. TheCompany has evaluated the financial position and the repayment capacity of the aboveentities and believes that no adjustments are required to the carrying value of the saidexposures.
Our opinion is not modified in respect of the above matters.
Key audit matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Ind AS financial statements ofthe current period. These matters were addressed in the context of our audit of theStandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each matters below ourdescription of how our audit addressed the matters is provided in that context.
We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone Ind AS financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone Ind AS financial statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying standalone Ind AS financialstatements.
|Key audit matters ||How our audit addressed the key audit matters |
|(a) First time adoption of Ind AS (as described in Note No. 53 of Standalone Ind AS financial statements) || |
|In accordance with the roadmap for implementation of Ind AS for non-banking financial companies as announced by the Ministry of Corporate Affairs the company has adopted Ind AS from April 1 2018 with an effective date of April 1 2017 for such transition. For periods up to and including the year ended March 31 2018 the company had prepared and presented its Standalone Ind AS financial statements in accordance with the erstwhile generally accepted accounting principles in India(Indian GAAP). In order to give effect of the transition to the Ind AS these Standalone Ind AS financial statements for the year ended March 31 2019 together with the comparative financial information for the previous year ended March 31 2018 and the transition date balance sheet as at April 1 2017 have been prepared under Ind AS. || Read the Ind AS impact assessment performed by the Management and the resultant changes made to the accounting policies considering the requirements of the new framework. |
| We understood the exemption availed by the management in applying the first- time adoption principles of Ind AS 101. |
| We understood the Standalone Ind AS financial statements closure process (including disclosure in notes to accounts) and the additional controls established by the Company for transition to Ind AS. We have tested the design and operating effectiveness of key controls for processes identified by the company for impact assessment. |
| We understood the changes made to the accounting policies in light of the requirements of the new framework. |
|The transition has involved significant change in the Company's policies and processes for financial reporting including generation of supportable information and applying estimates to inter- alia determine impact of Ind AS on accounting and disclosure requirements prescribed under extant Reserve Bank of India (RBI) directions. || We performed test of details on the accounting adjustments posted as at the transition date and in respect of the previous year to convert the financial information reported under erstwhile Indian GAAP to Ind AS. |
|We assessed the disclosures included in the Ind AS financial statements in accordance with the requirements of Ind AS 101 with respect to the previous years presented. |
|In view of the complexity involved Ind AS transition and the preparation of Standalone Ind AS financial statements subsequent to the transition date have been areas of key focus in our audit. |
(b) Impairment of financial assets and Corporate Guarantee (CG) Issued (expectedcredit losses) (as described in Note No. 7 & 18 of the Ind AS financial statements)
|Ind AS 109 requires the Company to recognise impairment loss allowance towards its financial assets designated at amortised cost and corporate gurantee issued using the expected credit loss (ECL) approach. Such ECL allowance is required to be measured considering the guiding principles of Ind AS 109 including: || We read and assessed the Company's accounting policies for impairment of financial assets and their compliance with Ind AS 109. |
| unbiased probability weighted outcome under various scenarios; || We tested the criteria for staging of loans/CG based on their past-due status to check compliance with requirement of Ind AS 109. Tested a sample of performing stage 1 & 2 loans to assess whether any |
| time value of money; || |
| impact arising from forward looking macro-economic factors and; || loss indicators were present requiring them to be classified under stage 3 and vice versa. |
| availability of reasonable and supportable information without undue costs. || |
| Applying these principles involves significant estimation in various aspects such as: || We evaluated the reasonableness of the Management estimates by understanding the process of ECL estimation and tested the controls around data extraction and validation. |
|- grouping of borrowers based on homogeneity by using appropriate statistical techniques; || Tested the ECL model including assumptions and underlying computation. |
|- staging of loans and estimation of behavioral life; || |
|- determining macro-economic factors impacting credit quality of receivables; || Assessed the floor/minimum rates of provisioning applied by the Company for loan products. |
|- estimation of losses for loan products with no/minimal historical defaults. || Audited disclosures included in the Ind AS financial statements in respect of expected credit losses. |
|Considering the significance of such allowance to the overall Standalone Ind AS financial statements and the degree of estimation involved in computation of expected credit losses this area is considered as a key audit matter impairment assessment. || |
Impairment assessment for Investments in subsidiaries and associates (asdescribed in note 8 of the Ind AS financial statements)
|As detailed in Note 8 the Company has equity investments in subsidiary companies amounting to Rs 15 197 crore and associate companies amounting to Rs 5 208 crore. Such investments are carried at deemed cost as per Ind AS 27 - Separate Standalone Ind AS financial statements and are individually assessed for impairment as per Ind AS 36 - Impairment of Assets. Such impairment assessment commences with management's evaluation on whether there is an indication of impairment loss. As part of such evaluation management considers financial information liquidity and solvency position of investments in subsidiaries and associates. Management also considers other factors such as assessment of company's operations business performance and modifications if any by the auditors of such subsidiaries and associates. No impairment triggers have been identified by the management based on above assessment. ||Our audit procedures in respect of testing impairment assessment for investments in subsidiaries and associates included the following:: |
|- Obtained understanding of the process evaluated the design and tested operating effectiveness of controls in respect of impairment assessment of investments in subsidiaries and associates. |
|- held discussions with management regarding appropriate implementation of policy on impairment. |
|- reconciled financial information mentioned in impairment assessment to underlying source details. Also assessed of management's estimates considered in such assessment. |
|We focused on this area due to magnitude of the carrying value of investments in subsidiaries and associates which comprise 68.60% of the total assets as at March 31 2019 and are subject to annual impairment assessment. ||- obtained and read latest audited Standalone Ind AS financial statements of subsidiaries and associates. Noted key financial attributes. |
|We evaluated the impairment assessment performed by management. |
|Fair valuation of investments in Financial Instruments (as described in Note No. 8 of the Ind AS financial statements) || |
|As detailed in Note No. 8 the Company has investments in compulsorily convertible debentures and other financial instruments. Such investments are recognized under the 'fair value through profit and loss' and through other comprehensive income category as per Ind AS 109 - Financial Instruments. The valuation method considered in measuring such investments are based on inputs that are not observable by third parties and for which valuation is provided by management's external experts. The valuation of such investments is important to our audit considering the value and use of management's estimates. ||We carried out following procedures in respect to investments: |
| ||- held discussions with management and obtained understanding of valuation process including management's determination and approval of assumptions and data inputs |
| ||- evaluated the design and tested operating effectiveness of controls related to the data considered in the valuation related calculations and review of report provided by management's external expert |
| ||We evaluated fair valuation of such investments taking into account the requirements of of Ind AS 109 - Financial Instruments. |
|Valuation of Market Linked Debentures (as described in note 15 Standalone Ind AS financial statements) || |
|The Company has issued Market Linked Debentures (MLD) during current and previous years. The outstanding balance of MLD as on March 31 2019 is Rs 619 crore. These MLDs are economically hedged with Exchange instruments like Nifty Bank Nifty & Stock Options. The Company has done an internal valuation of the outstanding MLD using internal valuation techniques. ||- Audit procedures included an assessment of internal controls over valuation methodologies inputs judgments made and assumptions used by management in determining fair valuation of MLD. |
| ||- Assessed and reviewed the fair valuation of MLD by the Company for compliance with Ind AS. |
|Considering that internal valuation of MLD is significant to overall Standalone Ind AS financial statements and the degree of management's judgement involved in the estimate any error in the estimate could lead to material misstatement in the Standalone Ind AS financial statements. Therefore it is considered as a key audit matter. ||- Compared resulted valuations against independent sources and externally available market valuation data for sample cases. |
Information Other than the Standalone Ind AS financial statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the preparation ofother information. The other information comprises the information included in Board'sReport including Annexures to Board's Report but does not include the Standalone Ind ASfinancial statements and our auditor's report thereon. The report containing otherinformation is expected to be made available to us after the date of this auditor'sreport.
Our opinion on the Standalone Ind AS financial statements does notcover the other information and we will not express any form of assurance conclusionthereon.
In connection with our audit of the Standalone Ind AS financialstatements our responsibility is to read the other information identified above when itbecomes availalbe and in doing so consider whether the other information is materiallyinconsistent with the Standalone Ind AS financial statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated. When we read the reportcontaining other information if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.
We draw attention to the following matters:
Note No. 53 to the Standalone Ind AS financial statements which statesthat the company has adopted Ind AS for the financial year commencing from April 1 2018and accordingly the standalone annual financial results have been prepared by theCompany's Management in compliance with Ind AS.
Note No. 46 to the standalone Ind AS financial statements in respect ofScheme of Arrangement (the "Scheme") as approved by National Company LawTribunal vide its order dated 10 August 2017 pursuant to which adjustment amounting to Rs73 crore was made
to the Capital Reserve of the Standalone Ind AS financial statements ofthe Company for the year ended March 31 2018. As stated in Note No. 46 to the standaloneInd AS financial statements the scheme of arrangement was given effect to in theStandalone Ind AS financial statements from the appointed date as per the Scheme (i.e.April 1 2017) which was different from the date required under Ind AS 105 - Non-currentAssets Held for Sale and Discontinued Operations and Ind AS 16 Property Plant andEquipment.
Our opinion is not modified in respect of the above matters.
The comparative financial information of the Company for the transitiondate opening balance sheet as at April 1 2017 included in these Standalone Ind ASfinancial statements is based on the previously issued statutory Standalone Ind ASfinancial statements for the year ended March 31 2017 prepared in accordance with theCompanies (Accounting Standards) Rules 2006 (as amended) which were audited by us alongwith then Joint Statutory Auditor M/s B S R & Co. LLP Chartered Accountants weexpressed an unmodified opinion vide report dated April 27 2017. The adjustments to thoseStandalone Ind AS financial statements for the differences in accounting principlesadopted by the Company on transition to the Ind AS have been audited by us.
The comparative financial information of the Company for the year endedMarch 31 2018 included in the standalone Ind AS financial statements are based on thepreviously issued statutory Standalone Ind AS financial statements prepared in accordancewith the Companies (Accounting Standards) Rules 2006 audited jointly by us along withPrice Waterhouse & Co. Chartered Accountants LLP whose audit report for the year endedMarch 31 2018 dated 26 April 2018 expressed an unmodified opinion on those Standalone IndAS financial statements as adjusted for the differences in the accounting principlesadopted by the Company on transition to the Ind AS which have been audited by us.
Our opinion is not modified in respect of above matters.
Responsibilities of management and those charge with governance for theStandalone Ind AS financial statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these Standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate implementation and maintenance ofaccounting 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 financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the Standalone Ind AS financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Those Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the Standalone Ind ASfinancial statements
Our objectives are to obtain reasonable assurance about whether theStandalone Ind AS financial statements as a whole are free from material misstatementwhether 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Ind AS financialstatements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of theStandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the Standalone Ind AS financial statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of theStandalone Ind AS financial statements including the disclosures and whether theStandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the Standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on other legal and regulatory requirements
As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of subsection (11) ofsection 143 of the Companies Act 2013 we give in "Annexure B" a statement onthe matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss and the CashFlow Statement dealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid Standalone Ind AS financial statementscomply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director in termsof Section 164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A".
g) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
a. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements - Refer Note 39 to the financialstatements;
b. The Company did not have any material foreseeable losses inlong-term contracts including derivative
contracts during the year ended March 31 2019; - Refer Note 49 to thefinancial statements;
c. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during the yearended March 31 2019.
For Pathak H.D. & Associates
Firm Registration No.: 107783W
Parimal Kumar Jha
Membership No.: 1 24262
UDIN:1 91 24262AAAAAW5998
August 14 2019
Annexure A to the Independent Auditors' Report on the Standalone Ind ASfinancial statements
Referred to in the Independent Auditors' Report of even date to themembers of Reliance Capital Limited ("the Company") on the Standalone Ind ASfinancial statements for the year ended March 31 2019
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls over financialreporting of Reliance Capital Limited ('the Company') as of March 31 2019 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
2. The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
3. Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls system over financial reporting andtheir operating effectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the Standalone Ind AS financialstatements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial
6. A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Standalone Ind AS financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofStandalone Ind AS financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the company's assets that could have a material effect on theStandalone Ind AS financial statements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
7. Because of the inherent limitations of internal financial controlsover financial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrols over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
Basis for Qualified Opinion
8. Based on our audit information & explanation provided by themanagement following weakness have been observed with regard to internal financialcontrol.
The Company needs to strengthen loan processing documentation includingjustification for sanctioning the loans/ exposures risk assessment of exposures and itsmitigation monitoring of end use of funds evaluation of borrower's repayment capacityand the policy of sanctioning the loan to entities with weaker credit worthiness.
9. In our opinion and to the best of information and according toexplanations given to us the Company has maintained adequate internal financial controlsover financial reporting as at March 31 2019 based on the internal control over financialreporting criteria established by the company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the ICAI and except for possible effects of the materialweakness described in the Basis of Qualified Opinion paragraph above on the achievement ofthe objectives of the Control criteria the Company's internal financial control overfinancial reporting were operating effectively as at March 31 2019.
A 'material weakness' is a deficiency or a combination ofdeficiencies in internal financial control over financial reporting such that there is areasonable possibility that a material misstatement of the Company's annual or interimStandalone Ind AS financial statements will not be prevented or detected on a timelybasis.
10. We have considered the material weakness identified and reportedabove in determining the nature and extent of audit tests applied in our audit of theStandalone Ind AS financial statements of the Company for the year ended March 31 2019and these material weaknesses do not affect our opinion on the Standalone Ind AS financialstatements of the Company.
For Pathak H.D. & Associates
Firm Registration No.: 107783W
Parimal Kumar Jha
Membership No.: 1 24262
UDIN:1 91 24262AAAAAW5998
August 14 2019
Referred to in the Independent Auditors' Report of even date to themembers of Reliance Capital Limited ("the Company') on the Standalone Ind ASfinancial statements as of and for the year ended March 31 2019
i. (a) The Company is maintaining proper records showing fullparticulars including quantitative details and situation of property plant andequipment.
(b) The property plant and equipment are physically verified by theManagement according to a phased programme designed to cover all the items over a periodof three years which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the programme a portion of theproperty plant and equipment has been physically verified by the Management during theyear and no material discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties as disclosed in Note No.11 & 12 on property plant and equipment and investment property to the Standalone IndAS financial statements are held in the name of the Company.
ii. The Company is in the business of rendering services andconsequently does not hold any inventory. Therefore the provisions of Clause 3(ii) ofthe said Order are not applicable to the Company.
iii. The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Act. Therefore the provisions of Clause 3(iii) of thesaid Order are not applicable to the Company.
iv. The Company has not granted any loan or provided any guarantee orsecurity in connection with any loan taken by parties covered under section 185 of theAct. Therefore the provisions of section 185 are not applicable to the Company. TheCompany is registered as Core Investment Company with RBI. Thus the provision of Section186 except sub-section (1) of the Act is not applicable to the Company. In our opinion andaccording to the information and explanations given to us during the year the Companyhas not made any investments through more than two layers of investment companies asmentioned in sub section (1) of Section 186 of the Act.
v. The Company has not accepted any deposits from the public within themeaning of directives issued by the Reserve Bank of India and sections 73 74 75 and 76of the Act and the Rules framed there under to the extent notified. Therefore theprovisions of Clause 3(v) of the said Order are not applicable to the Company.
vi. The Central Government of India has not specified the maintenanceof cost records under sub-section (1) of Section 1 48 of the Act for any of the productsof the Company. Therefore the provisions of Clause 3(vi) of the said Order are notapplicable to the Company.
vii. (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generallyregular in depositing undisputed statutory dues in respect of provident fund income taxand professional tax though there has been a slight delay in a few cases and is regularin depositing undisputed statutory dues including service tax value added tax cessgoods and service tax and other material statutory dues as applicable with theappropriate authorities.
(b) According to the information and explanations given to us and therecords of the Company examined by us there are no dues of income-tax service-tax valueadded tax goods and service tax which have not been deposited on account of any dispute.The particulars of dues of sales tax as at March 31 2019 which have not been depositedon account of a dispute are as follows:
|Name of the statute ||Nature of dues ||Amount |
|Period to which the amount relates ||Forum where the dispute is pending |
|Madhya Pradesh Sales Tax Act 1958 ||Sales |
|4 30 472 ||1996-1997 ||Appellate Deputy Commissioner of the Commercial Tax Indore Division I |
|Gujarat Sales Tax Act 1969 ||Sales |
|4 75 916 ||2001-2002 ||Gujarat Sales Tax Tribunal Ahmedabad |
viii. According to the records of the Company examined by us & theinformation and explanation given to us and as per the additional terms of repaymentwherever applicable the Company has not defaulted in repayment of loans or borrowings toany financial institutions or banks or government or dues to debenture holders as atbalance sheet date.
ix. The Company has not raised any moneys by way of initial publicoffer or further public offer (including debt instruments). In our opinion and accordingto the information and explanations given to us the moneys raised by way of term loanshave been applied for the purposes for which they were obtained.
x. Attention is invited to note no -41(a) of the standalone Ind Asfinancial statements and para (a) of emphasis of matter in our report in addition theretoduring the course of our examination of the books and records of the Company carried outin accordance with the generally accepted auditing practices in India and according tothe information and explanations given to us we have neither come across any instance ofmaterial fraud by the Company or on the Company by its officers or employees noticed orreported during the year nor have we been informed of any such case by the Management.
xi. The Company has paid/ provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it the provisions of Clause 3(xii) of the Order are not applicableto the Company.
xiii. The Company has entered into transactions with related parties incompliance with the provisions of Sections 177 and 188 of the Act. The details of relatedparty transactions have been disclosed in the Standalone Ind AS financial statements asrequired by the Ind AS.
xiv. The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.
xv. The Company has not entered into any non-cash transactions with itsdirectors or persons connected with him. Accordingly the provisions of Clause 3(xv) ofthe Order are not applicable to the Company.
xvi. According to the information and explanations given to us theCompany is registered as Core Investment Company under section 45-IA of the Reserve Bankof India Act 1934.
For Pathak H.D. & Associates
Firm Registration No.: 107783W
Parimal Kumar Jha
Membership No.: 1 24262
UDIN:1 91 24262AAAAAW5998
August 14 2019