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CIFCO Finance Ltd.

BSE: 511086 Sector: Financials
NSE: N.A. ISIN Code: N.A.
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CIFCO Finance Ltd. (CIFCOFINANCE) - Auditors Report

Company auditors report

To the Members of Cifco Finance Limited. Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of CIFCO FINANCELIMITED which comprises of Balance Sheet as at 31st March 2015 and the Statement ofProfit and Loss and the Cash Flow Statement for the year ended on that date and a summaryof significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. The Company’s Board of Directors is responsible for the matters in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance flowsof the and cashCompany in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provision of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

4. 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 thereunder.

5. 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.

6. An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrol system over financial reporting and operating effectiveness of such controls. Anaudit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by Company’s Directors as well asevaluating the overall presentation of the financial statements.

7. 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

8 Preparation of accounts of the Company on the basis of the assumption of goingconcern without making any adjustment for recoverability/classification of assets and itsamounts and classification of liabilities and its amounts inspite of the followingindicators:

i The application of the Company to carry on business of a Non-Banking FinancialInstitution has been rejected by the Reserve Bank of India (Department of Non BankingSupervision) by its order of November 25 1998; nevertheless as the Company has beenlegally adviced it carries on activities of a non-banking financial company for thebenefit of deposit holders; (Refer Note 15(2) to the Accounts)

ii . Attention is invited to Note 15(5) to the Accounts relating to the Order ofSpecial Court and payment of only Rs. 31487341/- against deposit and interest amountingto Rs. 161263932/- in the aggregate;

iii. a. Attention is invited to Note 15 (6) (a) to the Accounts relating to delay inrepayment of outstanding principals of Public Deposits matured and interest thereon forwhich the Company is to follow a Schedule of Repayment as per the directions issued by theCompany Law Board. According to the said directions the Company was expected to pay up toMarch 31 2015 an aggregate sum of Rs. 74981015/- to its deposit holders. Neverthelessthe Company has not been able to adhere to the said Schedule of Repayment. During theyear it has paid only Rs. NIL and the balance of Rs. 74951015/- remains unpaid. Theaggregate principal amount of Public Deposits matured and not paid as on March 31 2015 isRs. 53864656/-.

b. Attention is also invited to Note 15(6)(b) to the Accounts relating to delay inpayment of 19% Non convertible Debenture - 1997 series (NCDs) which have already becomedue for redemption; for the said Debentures the Company is to follow a Schedule ofRepayment on the same lines with the Order of CLB for Public Deposits. Accordingly theCompany was expected to pay upto March 31 2015 an aggregate sum of Rs.9252835/-.Nevertheless the Company has not been able to adhere to the said Schedule of Repayment.During the year company paid Rs. NIL . The aggregate overdue NCDs as on March 31 2015 wasRs.9252835/-.

iv. Our remarks in Para 1 2 & 3 above - whether considering the saidcircumstances the Company would be able to continue as a going concern and consequentialeffects and adjustments if any on the Accounts; and

v. Non redemption of 10% cumulative preference shares of Rs. 12000000 due forredemption on 31st March 2003 ( refer note 9 to the Accounts)

Qualified Opinion

9. 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 standalone financial statements give theinformation required by the Act in the manner so required and give true and fair view inconformity with the accounting principles generally accepted in India of state of affairsof the Company as at 31st March 2015 and its loss and its cash flows for theyear ended on that date.

Report on Other Legal and Regulatory Requirements

10 As required by the Companies (Auditor’s Report) Order

2015 issued by the Central Government of India in terms of Section (11) of section 143of the Act (hereinafter referred to as the "Order") and on basis of such checksof the books and records of the Company as we considered appropriate and according to theinformation and explanations given to us we give in the Annexure a statement on thematters specified in the paragraph 3 and 4 of the Order to the extent applicable.

11 As required by section 143(3) of the Act we report that:

a) We have sought all the information and explanations which to the best of ourknowledge 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 theCompany so far as appears from our examination of those books and proper returns adequatefor the purposes of our audit have been received from branches not visited by us;

c) The Balance Sheet Statement of Profit

Account and Cash Flow statement dealt with by this report are in agreement with thebooks 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 (as amended).

e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company.

f) In our opinion and as per the information and according to explanation given to usall of the Directors are prima facie disqualified as on 31st March 2015 from beingappointed as a director in terms section 164(2) of the Act.

g) With respect to the other matters included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to our 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.

ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.

iii. There were no amounts which required to be transferred to the Investor Educationand Protection Fund by the Company.

For M D PANDYA & ASSOCIATES
Chartered Accountants
A. D. PANDYA
Partner
Membership No.:033930
Mumbai
Dated : 30th May 2015

Annexure to the Independent Auditors’ Report

i a The records of Fixed assets maintained by the company have not been properlyupdated.

b The Fixed Assets have not been physically verified by the management during the year.

ii. The provisions of clause 4 (ii) of the Companies (Auditors Report) Order 2015 arenot applicable to the Company.

iii a The Company has not granted any loans secured or unsecured to companies firmsor other parties covered in the register maintained under Section 189 of the CompaniesAct 2013. Accordingly provisions of sub-clause (b) are not applicable.

iv. In our opinion and according to the information and explanation given to us thereare adequate internal control procedures commensurate with the size of the company and thenature of its business with regards to sale of shares and securities. During the courseof audit no major weakness has been noticed in these internal controls.

v. The Company was required to repay the deposits as per the schedule of repayment ofPublic Deposits approved by the Company Law Board. However the Company has not been ableto adhere to the said schedule of repayment ( refer note ). Further in our opinion andaccording to the information and explanation given to us the Company has also notcomplied with the Directives issued by the Reserve Bank of India in terms of Non-BankingFinancial Companies Acceptance of Public Deposits (Reserve Bank) Directions 1998 and moreparticularly the following:

a) Not obtaining credit rating.

b) Not regularizing public deposits held in excess of permissible limits

c) Non-payment of interest till date of repayment in respect of deposits matured butrepaid later:

d) Non- submission of various returns to the Reserve Bank of India:

e) Not maintaining of minimum percentage of liquid assets.

vi The provisions of clause 4 (vi) of the Companies (Auditors Report) Order 2015 arenot applicable to the Company.

vii a According to the records of the Company the Company is generally regular indepositing with appropriate authorities undisputed statutory dues in respect of ProvidentFund Employee’s State Insurance Sales-tax Wealth tax Custom Duty Excise Dutyvalue added tax cess and any other statutory dues with appropriate authorities. exceptfor nonpayment of Income tax amounting to Rs. 279.03 lacs (Previous year Rs. 279.03 lacs).

According to the information and explanations given to us no undisputed amountspayable in respect Provident Fund Employee’s State Insurance Sales-tax Wealthtax Custom Duty Excise Duty value added tax cess and any other statutory dues were inarrears as at 31st March 2015 for a period of more than six months from thedate they became payable except for nonpayment of Income tax amounting to Rs. 279.03 lacs(Previous year Rs. 279.03 lacs).

b According to the information and explanations given to us there were no dues inrespect of wealth tax sales tax service tax duty of custom and value added tax whichhave not been deposited on account of any dispute except for income tax as detailed below:

Name of statutory dues Amount Rs in crores Forum where dispute is pending
Income tax 3.00 ITAT

c According to the information and explanation given to us the amount required to betransferred to investor education and protection fund in accordance with the relevantprovision of the Companies Act 1956( I of 1956) and rules made there under has beentransferred to such fund within time.

viii The Company has accumulated losses exceeding 50% of its net-worth at the end ofthe financial year. It has not incurred cash losses in the current financial year and alsoin the immediately preceding financial year

ix According to information and explanation given to us the Company has defaulted inrepayment of dues to the debenture holders:

Lender Amount due including interest Period of Default
Debentures 92.52 lacs 14 years*

x According to information and explanations given to us the Company had givenguarantees for loan taken by another Company from a bank in earlier years. We are informedthat the loans taken by the company are in process of being settled and as such terms andconditions are not prejudicial to the interest of the company.

xi According to information and explanation given to us the term loans availed havebeen applied for the purpose for which they were raised.

xii According to the information and explanation given to us no fraud on or by theCompany has been noticed or reported during the year.

For M D PANDYA & ASSOCIATES
Chartered Accountants
A. D. PANDYA
Partner
Membership No.:033930
Mumbai
Dated : 30th May 2015

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