To the Members of M/s Banas Finance Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Banas Finance Limited("the Company") which comprise the balance sheet as at 31 March 2017 thestatement of profit and loss and the cash flow statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Basis for Qualified Opinion
The Company is registered as Non Banking Financial Companies (NBFC) having Certificateof Registration under Section 45 IA of RBI Act 1934. The Company has not complied withfew NBFC prudential norms as prescribed by Reserve Bank of India from time to time asmentioned in Note no 24.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph the aforesaid financial statements give the information required by theAct in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2017 and its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure a statement on the matters specified in the paragraph 3and 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 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 and the cash flow statementdealt with by this Report are in agreement with the books of account;
(d) in our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
(e) on the basis of the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164 (2) of the Act.
(f) with respect to adequacy of internal financial control over financial reporting ofthe company and the operating effectiveness of such controls refer to our separate reportin "Annexure B" and
(g) 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 in our opinionand to the best of our information and according to the explanations given to us:
i. the Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note no. 18 to the financial statements;
ii. the Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. The company is not liable to transfer any amounts to the Investor Education andProtection Fund.
Therefore there has been no delay in transferring amounts required to be transferredto the Investor Education and Protection Fund by the Company.
ANNEXURE- A TO THE INDEPENDENT AUDITORS
The Annexure referred to in our IndependentREPORTAuditors' Report to the members of theCompany on the financial statements for the year ended 31 March 2017 we report that:
A. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
B. The company has a regular programme of physical verification of fixed assets. Nomaterial discrepancies were noticed during physical verification.
C. The company does not have any immovable property hence the clause is not applicable.
(ii) As informed to us the equity shares held as inventories in dematerialized formhave been verified by the management with supportive evidence during the year. And forother unquoted equity shares held as inventories the procedures performed by themanagement for physical verification were found to be satisfactory. No materialdiscrepancy was found.
(iii) (a) The Company has not granted loans to any party covered in the registermaintained under section 189 of the Companies Act 2013 (the Act').
(b) In the case of the loans granted to any parties in the register maintained undersection 189 of the Act the borrowers have been regular in the payment of the interest asstipulated. The terms of arrangements do not stipulate any repayment schedule and theloans are repayable on demand. Accordingly paragraph 3(ii)(b) of the order is notapplicable to the Company in respect of repayment of the principal amount. Since thecompany is Non-Banking Financial Institution this clause is not applicable.
(c) There are no overdue amounts for period of more than ninety days in respect of theloans granted to the bodies corporate listed in the register maintained under section 189of the Act.-not applicable. Since the company is Non-Banking Financial Institution thisclause is not applicable.
(iv) Since the company is Non Banking Financial Company the provisions of section 185and 186 of the Companies Act 2013 is not applicable.
(v) During the year Company has not accepted any deposits from the public hence theclause is not applicable.
(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities. As explained to us the Company did not have any dues onaccount of employees' state insurance and duty of excise.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax service tax duty of customsvalue added tax were in arrears as at 31 March 2017 for a period of more than six monthsfrom the date they became payable.
However company is subject to pay dues under Professional Tax but no amount wasdeposited till the reporting date.
However on verification of outstanding demand as per Income Tax Website some demandsare appearing outstanding which are produced in the table below.
|Name of the statute ||Nature of dues ||Amount (in Rs.) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act ||Income Tax and interest ||70835870 ||Assessment Year 2013-14 ||Assessing officer of Income Tax (Appeals) |
(viii) The Company has taken loan from Bajaj Finance Ltd. amounting Rs.35908257 ofwhich 52432.02 is still outstanding as on the Balance Sheet Date.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer during the year. The company has not taken any term loans during the year.
(x) According to the information and explanations given to us no material fraud on orby the Company has been noticed or reported during the course of our audit.
(xi) The company has paid managerial remuneration in accordance with provisions of thesection 197 read with Schedule V of the Companies Act.
(xii) The company is not a Nidhi Company hence the clause is not applicable.
(xiii) All the transactions with the related parties are in compliance with sections177 and 188 of Companies Act 2013 and the necessary details have been disclosed in theFinancial Statements etc as required by the applicable accounting standards.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year
(xv) The company has not entered into any non-cash transactions with directors orpersons connected with him.
(xvi) Since the company is NBFC requirement of registration under section 45-IA of theReserve Bank of India Act 1934 based on its asset and income pattern is not applicable.
ANNEXURE- B TO THE INDEPENDENT AUDITORS
Report on the Internal Financial Controls under Clause (i) of sub- section 3 of theSection 143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of M/s BanasFinance Limited (the company) as of 31st March 2017 in conjunction with our auditof the financial statements of the company for the year 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 Accountant of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Not on Audit of Internal Financial Controls over
Financial Reporting (the Guidance Note') and the Standards on Auditing issued byICAI and deemed to be prescribed under Section 143(10) of the Companies Act2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting were established andmaintained and if such controls 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
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 authorization of theManagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.
According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified as at March 31 2017.
1. The Company did not have an appropriate internal control system for granting Loans.Demand and other loans given are governed by the Board policies. Considering the closemonitoring of Board no appraisal renewal Policies Procedure Committee or documentshave been prescribed and executed.
2. The Company's internal control system is not commensurate to the size and scale ofoperation over purchase and sale of trading division.
3. The Company does not have internal control over supporting documents for fewexpenses.
A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.
In our opinion except for the effects / possible effects of the material weaknessdescribed above on the achievement of the objectives of the control criteria the Companyhas maintained in all material respects adequate internal financial controls overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as of March 31 2017based 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 Chartered Accountants of India.
We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2017financial statements of the Company and the material weakness does not affect our opinionon the financial statements of the Company.
For Pravin Chandak & Associates
Firm's registration number: 116627W
Membership number: 049391
Date: 30th May 2017