TO THE MEMBERS OF DCM FINANCIAL SERVICES LIMITED REPORT ON THE STANDALONE FINANCIALSTATEMENTS
We have audited the accompanying standalone financial statements of DCM FinancialServices Limited ("the Company") which comprises the Balance Sheet as at March31 2017 and the Statement of Profit and Loss and Cash Flow Statement for the year endedand a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Standalone Financial Statements
The Companys Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsreferred specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement 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 anddisclosures in the financial statements. The procedures selected depend on theauditors 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 control relevant to the Companys 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 control systemo also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Companys Directors as wellas evaluating 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 qualified audit opinion.
Basis for Qualified Opinion
(i) The accounts and financials of the company have been prepared on going concern onthe assumption and premises made by the management of the Company that (a) The freshrestructuring scheme would be approved by the Honble Delhi High Court in totalitywhich is still pending for approval & acceptance (b) adequate finances andopportunities would be available in the foreseeable future to enable the company to startoperating on a profitable basis and (c) injection of Rs. 1950.00 Lacs as promoters quotawhich has already been infused by the management group. The same has been explained inNote 27.
(ii) No provision of Rs. 817.81 Lacs (Rs. 16465.30 Lacs towards accumulated Interestas at 31st March 2017)(Previous Year - Rs. 15647.48 Lacs) which is simple interestcalculated @10% per annum towards Interest on Debentures Fixed Deposits and InterCorporate Deposits have been provided in the financial statements on the outstandingamount of Debentures Fixed Deposits and Inter Corporate Deposits. Fresh RestructuringScheme filed before Honble
Delhi High Court does not envisage and seek payment of any interest as the interesthas been considered waived off in the proposed scheme. The order of Company Law Board(CLB) which was issued in 1998 in the context of Fixed Deposits stipulated payment ofInterest of 10% per annum to Fixed Depositors. The order of Company Law Board (CLB)applies to Fixed Deposits only however considering the principles of prudence it isdeemed prudent to provide Interest @10% per annum since inception or renewal onoutstanding amount of Debentures and Inter Corporate Deposits also.
Had interest @10% per annum been provided for in the financial statements onoutstanding amount of Debentures Fixed Deposits and Inter Corporate Deposits the NetProfit before tax would have been lowered by Rs 817.81 Lacs and Net Profit after tax wouldhave been lowered by Rs 651.07 Lacs as at 31st March 2017. The cumulative net loss aswell as Current / Non-Current Liabilities as at 31st March 2017 would have been higher byRs 16298.55 Lacs. The tax effect will be consequential. The same has been explained inNote 3.1.f Note 3.4(g) and Note 3.6.
(iii) For redemption of B series debentures of Rs. 2544.36 Lacs debentureredemption reserve is required to be created. Debenture redemption reserve of Rs. 2544.36Lacs has not been created due to insufficient profits. The same has been explained in Note2.2.
(iv) The value of assets charged as security in favor of banks debenture-holders &financial institutions have been depleted over a period of time. The depletion has not yetbeen ascertained by the Company. To the extent of shortfall if any the liability isunsecured whereas the same has been shown as secured. The same has been explained in Note3.1.d and Note
3.2.b & 3.3.1.
(v) Balance confirmation of bills receivable and payable advances recoverable in cashor in kind receivables and payables relating to lease and hire purchase lease securitydeposit of which party wise details are not available. Balance confirmation ofinter-corporate deposits balance of ex-employees margin against L/C loans frominstitutions banks and other receivables and payables have not been received from theparties/persons concerned. In the absence of balance confirmation the closing balances asper books of accounts have been incorporated in the final accounts and have been shownunless otherwise stated by the management about its recoverability in the financialsincluding considering the NPA Provisions are good for recovery/ payment. Time barreddebts under the Limitations Act have not been separately ascertained and written off orprovided for. In the absence of such confirmation & corresponding reconciliation itis not feasible for us to determine financial impact on the financials and the amountreferred as payable in the financials can differ. Please refer Note No-28
(vi) The subsidiary company namely Global IT Options Limited has till 31st March 2017incurred expenditure of Rs 22.84 Lacs for & on behalf of its Holding Company (i.e. DCMFinancial Services Limited). It comes under the category of short term funding which isin-fact InterCorporate Deposit. In case of Inter-Corporate Deposit Section 186 ofCompanies Act 2013 stipulates to charge interest at a rate not less than the bankdeclared by Reserve Bank of India. No Interest has not been provided on outstandingbalance of Rs 22.84 Lacs by Company to its subsidiary - Global IT Options Limited witheffect from 1-june-2014.
Had interest @12% per annum which comes to Rs. 2.74 Lacs been provided for in thefinancial statements on outstanding amount of Inter Corporate Depositthe net profitbefore tax would have been lowered by Rs. 2.74 Lacs and net profit after tax would havebeen lowered by Rs. 2.18 Lacs towards Interest expense for the year ended 31st March2017. The cumulative net loss as well as Current / Non-Current Liabilities / Provision asat 31st March 2017 would have been higher by Rs. 5.16 Lacs on account of cumulativeinterest with effect from 01-June-2014. The tax effect will be consequential. It is noncompliance of Section 186 of the Companies Act 2013 which could attract penalties.
(vii) Pursuant to sub-section 5 of section 203 Companies Act 2013 read with Rule 8 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 everylisted company is required to appoint a Whole Time Company Secretary non compliance ofwhich the company shall be punishable with fine which shall not be less than one lakhrupees but which may extend to five lakh rupees. During the year ended March 31st 2017the Company was in contravention of the aforesaid provision. As explained to us themanagement has made various attempts to appoint a Whole Time Company Secretary howeverwas unable to appoint Whole Time Company Secretary in the absence of suitable candidate.The Company has made relevant disclosures in the Board of Directors meeting regarding thisissue. It is non compliance of Section 203 of Companies Act 2013 which could attractpenalties. Presently it is not feasible to determine the financial impact on thefinancial.
(viii) Pursuant to section 149 of Companies Act 2013 read with rule 3 of Companies(Appointment and Qualification of Directors) Rules 2014 every listed company is requiredto appoint at least one Woman Director. During the year ended March 31st 2016 theCompany was in contravention of the aforesaid provision as no woman director has beenappointed. It is non compliance of Section 149 of Companies Act 2013. Presently Section149(1) of the Companies Act 2013 is silent on the component of penalty. SEBI guidelinesprescribed penalties for the non compliance which are Rs. 50000 from 1-April-2015 to 30thJune2015 and thereafter Rs. 1000 per day for next 01-July-2015 to 30-Sep-2015 andthereafter from 01-Oct-2015 onwards Rs. 5000 per day. With effect from 6-October 2016woman director has been appointed by the Company. Total estimated penalty/fine comes toRs. 16.85 Lacs (P.Y RS.10.50 Lacs) till date of appointment of women director (i.e. 5thOctober 2016). Had provision been provided for in the financial statements the netprofit before tax for the year ended 31st March 2017 would have been lower by Rs 6.35Lacs and net profit after tax would have been lowered by Rs. 5.05 Lacs. The cumulative netloss as well as Current/ Non Current Liability/ Provisions as at 31st March 2017 wouldhave been higher by Rs.15.55 Lacs. The tax effect would be consequential.
(ix) As per the Guidance Note on Accounting for credit available in respect of MinimumAlternative Tax MAT Credit is an asset to be recognized in the Financial Statement whenit is Probable that the future economic benefits associated with it will flowto the enterprise and asset has a cost or value that can be measured reliably. In theprevious periods the company has already recorded MAT Credit Entitlement of Rs 28.52 Lacsin the books of accounts. Considering that the matter is under jurisdiction of Delhi HighCourt for many years and the company as described in point no (i) of Basis ofQualification and Company is not allowed to carry on its operations except the realizationof old debts and permitted payments there is no virtual certainty that future economicbenefit would flow to company. Considering this we are of opinion that such MAT CreditEntitlement of Rs 28.52 Lacs needs to be derecognized.
Had MAT Credit of Rs 28.52 Lacs had been reversed in financial statements in year endedMarch 2017 the net profit after tax would have been lower by Rs 28.52 Lacs and netprofit after tax would have been lowered by Rs. 22.70 Lacs and consequently the netcumulative loss would have been higher by Rs 22.70 Lacs. In addition to non-current loansand advances would have been lowered by Rs 22.70 Lacs after considering the tax effects.
(x) Contingent liabilities and Other Commitments
x(a) Mr. Dhruv Prakash had lodged a claim of Rs 65.00 Lacs and winding up petitionagainst the company. The contingent liability arising out of this suit amounts to Rs.65.00 Lacs. There are also other cases filed in consumer civil & criminal courts andother courts against the company for which the company is contingently liable but forwhich the amount is not quantifiable. Refer Note No. 22(a)
x(b) As per the Fresh Restructuring Scheme the total amount payable to PSB remainsquantified at Rs. 901.80 Lacs as on 30th June 2004 (after providing interest @10% p.a.compounded quarterly from 30th September 1999 till 31st March 2000 on the principal debtas on 30.09.1997). The company has till date paid/ adjusted Rs. 98.40 Lacs and the balanceof Rs. 803.40 Lacs as on 30th June 2008 is payable as per the Fresh Restructuring Schemepending before the Honble Delhi High Court. Out of Rs. 803.40 Lacs i.e. Rs. 442.68Lacs shall be payable in 6 equal yearly installments after one year from the date ofapproval of the scheme or 1st April 2006 whichever is earlier. The balance of Rs. 360.72Lacs shall be converted in equity shares at any time within 3 years of the effective dateof approval of Fresh Restructuring Scheme by Honble Delhi High Court in accordancewith applicable SEBI Guidelines for issuance of preferential allotment of the effectivedate or 1st April 2006 whichever is earlier
Prior to filing of Fresh Restructuring Scheme by company before Honble Delhi HighCourt Punjab & Sind Bank had filed a recovery suit before the Debt Recovery Tribunal(DRT) for recovery of Rs. 1217.52 Lacs against which the amount payable to them as perbooks is Rs. 803.40 Lacs. After taking effect of interim payments made to Punjab &Sind Bank till date of Rs 98.40 Lacs the claim suite of Rs 1217.52 Lacs is also reducedto Rs. 1119.12 Lacs. Since fresh restructuring scheme was not approved and made effectiveby 1st April 2006 the claim of Rs. 1119.12 Lacs filed before the Debt Recovery Tribunalcould be adjudicated by Debt Recovery Tribunal. No communication has been received fromPunjab & Sind Bank or Debt Recovery Tribunal (DRT) regarding any adjudication ofclaim.
The company contends that the dues of the Bank will be settled as per the FreshRestructuring Scheme and consequently no provision for the difference of Rs. 315.72 Lacshas been made. The company contends that in the event of default in the payment ofinterest and principal or default as per Fresh Restructuring Scheme or Fresh RestructuringScheme is rejected the concessions made by Punjab & Sind bank shall stand withdrawnand their claim before the Debt Recovery Tribunal of Rs. 1119.12 Lacs (after taking effectof payment of Rs 98.40 Lacs) will become payable upon adjudication by Debt RecoveryTribunal. Refer Note No 3.3.2 and 22(b)
x(c.) The amount payable to IndusInd Bank after calculating interest up to March 312000 had been quantified at Rs. 651.49 Lacs as on 30-June-2004 in accordance with the"Fresh Restructuring Scheme Under Review". Out of which Fixed Deposit of Rs74.49 Lacs has been adjusted by IndusInd Bank. The balance amount of Rs. 577.00 Lacs shallbe payable as per Fresh Restructuring Scheme.
Prior to filing of Fresh Restructuring Scheme by company before Honble Delhi HighCourt IndusInd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) ofRs.
1042.42 Lacs against which the amount payable to them as per books is Rs. 577.00 Lacs.After taking effect of interim payments made to Punjab & Sind Bank till date of Rs74.49 Lacs the claim suite is also correspondingly reduced to Rs 96793133 from Rs.1042.42 Lacs. The company contends that the dues of the Bank will be settled as per theFresh Restructuring Scheme and consequently no provision for the difference of Rs. 390.93Lacs has been made. In the event that the company fails to pay the interest or principalor company default as per Fresh Restructuring Scheme or Fresh Restructuring Scheme isrejected the concessions made by IndusInd Bank will be withdrawn and the amount claimedin the Debt Recovery Tribunal amounting to Rs 967.93 Lacs (after taking effect of paymentof Rs 74.49 Lacs) would become payable upon adjudication by Debt Recovery Tribunal. ReferNote No3.3.3 and 22(c)
x.(d) During the year 1999 the company had received Rs. 100.00 Lacs from one of itsdebtors i.e. Pure Drinks New Delhi Ltd. where the winding up petition proceedings wasalready initiated. Upon receipt of payment the Company reduced the recoverable amountaccordingly. Subsequently the Honble Punjab and Haryana Court deemed that paymentis out of turn/preferential payment made by Pure Drinks New Delhi Ltd where winding uppetition proceedings was already initiated and asked the company to deposit back the saidamount with Honble Punjab and Haryana Court. The company had filed a SLP with theHonble Supreme Court of India which has been dismissed by them. Therefore thecompany is liable to deposit the amount mentioned above which is yet to be deposited. Andin view of restrictions imposed on operations of Bank A/cs by Honble DelhiHigh Court the company has filed an application to release this money for depositing thesame with Punjab & Haryana High Court which still pending to be addressed. Refer NoteNo. 22(d)
.(e) During the year ended 30th June 2011 the companys tenant had filed aclaim of Rs. 100.00 Lacs against the company due to damages suffered by the tenant whichis still pending under arbitration proceedings as on 31st March 2017. Refer Note No.22(e)
.(f) There is a demand of Rs. 34.59 Lacs raised by Income Tax Department for theAssessment Year 2006-07 for payment of income tax under the Income Tax Act 1961 which isdisputed by the company and pending before the appropriate authorities. Refer Note No.22(f)
.(g) There is an award passed by the arbitrator against the company in the matterof MS Shoes East Limited on May 28 2012 for Rs. 51.28 Lacs i.e. the claim amount alongwith Rs. 306.80 Lacs towards interest cost for an underwriting given by the company in theyear 1995 for the public issue of M/s MS Shoes East Ltd. Furthermore an incidental costwhich includes arbitration venue rent record keeping cost administrative cost and stamppaper charges amounting to Rs. 5.49 Lacs had been awarded to the company. The totalfinancial impact comes to Rs. 363.58 Lacs which has been contested by Company beforeHonble Delhi High Court. Refer Note No. 22(g)
x.(h) Due to dispute with the builder namely M/s NBCC Ltd. from which the company hadpurchased an office premises in the year 1995 regarding a claim of Rs. 288.30 Lacs onaccount of increase in super area and certain other expenditure which the builder i.e. M/sNBCC Ltd. had incurred and the same is pending in arbitration. Breakup of the amount of Rs288.30 Lacs mentioned supra is as follows Refer Note No. 22(h)
|S. No. Description ||Amount (In Lacs) |
|1. Difference in super area Vs. provisional area ||229.28/- |
|2. Claim of property tax ||3.19/- |
|3. Claim of ground rent ||21.67/- |
|4. Allied charges ||7.83/- |
|5. Augmentation of Electric sub station ||1.33/- |
|6. Loss of profit ||20.00/- |
|7. Arbitration cost ||5.00/- |
|TOTAL ||288.30 |
x.(i) SIDBI had filed a petition for winding-up on alleged non-payment of Rs. 54.40Lacs which consist of interest overdue interest and other charges before theHonble Delhi High Court. Out of which the company has recorded Rs. 36.30 Lacs in thebooks of account. Provision for Rs. 18.10 Lacs liability on account of interest overdueinterest and other charges claimed and claimable by SIDBI has not been ascertained andprovided in the books due to waiver of interest sought under the proposed "FreshRestructuring Scheme" filed with Honble Delhi High Court. Refer Note No. 22(i).
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2017 and its profit/loss and its cash flows forthe year ended on that date.
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in the Annexure a statement on the mattersspecified in paragraphs 3 and 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 except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;
b. Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as appears from our examination of those books;
c. The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
d. Except for the impact of the matter described in the Basis for Qualified Opinionparagraph above in our opinion the Balance Sheet Statement of Profit and Loss and CashFlow Statement comply with the Accounting Standards specified under section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014;
e. The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an qualified effect on the functioning of the Company.
f. Pursuant to section 167 of Companies Act 2013 the office of one of director isvacated due to disqualification incurred under section 164(2) of Companies Act 2013 whichis due to non redemption of debentures and repayment of public deposits. As explained bythe Company the matter presently is sub-juiced as Company had already submitted FreshRestructuring Scheme with Honble Delhi High Court.
g. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
h. The qualified remarks relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above. Thequalification relating to the maintenance of accounts and other matters connectedtherewith are as stated in the Basis for Qualified Opinion paragraph above.
i. With respect to the other matters to be included in the Auditors 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
a. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 22 to the financial statement.
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c. The company moved an application before the Honble Company Law Board NewDelhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposinga fresh repayment schedule for fixed depositors debenture-holders and other creditors ofthe Company. The company filed a Fresh Scheme of Arrangement for the reorganization of theshare capital of the company and for compromise with the secured and unsecured creditorsof the company hereinafter referred to as the "Fresh Restructuring Scheme"before the Honble Delhi High Court on 24th September 2004 mentioning thereinrepayment schedule. All the unpaid matured Public Fixed Deposits of Rs 5629.04 LacsUnpaid Matured Debentures of Rs. 2550.21 Lacs and refundable Share application moneyof Rs 549.72 Lacs which was more than seven year old.
The matter regarding payment to fixed depositors debenture-holders and other sums arealready covered under Fresh Restructuring Scheme which is pending before HonbleDelhi High Court. Accordingly except the matter stated above there has been no delay intransferring amounts or there were no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company Refer Note No.3.13.4 and 4(i)
d. The Company has provided requisite disclosures in the financial statements asregards the holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated 8th November 2016 of the Ministry of Finance during the period from 8thNovember 2016 to 30th December 2016. Based on audit procedures performed and therepresentations provided to us by the management we report that the disclosures are inaccordance with the relevant books of accounts maintained by company. Refer Note 34 to thestandalone financial statements.
| ||For V Sahai Tripathi & Co. |
| ||Chartered Accountants |
| ||Firms Registration Number-000262N |
|Place: New Delhi ||MANISH MOHAN |
|Date : May 29 2017 ||Partner |
| ||M. N. - 091607 |
ANNEXURE TO INDEPENDENT AUDITORS REPORT
(Referred to in paragraph (1) of our report on other legal and regulatory requirementsof even date)
Annexure referred to in paragraph (1) of our report on other legal and regulatoryrequirements of Independent Auditors Report to the members of DCM FinancialsServices Limited on the financial statements for the year ended March 31 2017
1) In respect of Fixed Assets:-
(a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) Physical verification of fixed assets was conducted by the management at reasonableintervals during the financial year ended 31st March 2017.
(c) The title deeds of all the immovable properties are held in the name of thecompany.
2) Inventory consists of shares considered stock-in-trade. Physical verification ofinventory has been conducted at reasonable intervals by the management and discrepanciesnoticed on verification between the physical stocks and the book records were notmaterial.
3) The Company has not granted loans to Companies Firms Limited Liability Partnership(LLP) or other parties covered in the register maintained under section 189 of theCompanies Act 2013.
4) The company has not granted any loans investments guarantees and securities duringthe year in terms of provisions of Section 185 and 186 of Companies Act 2013.
5) The company has not accepted deposits from the public during the year.
The directives issued by the Reserve Bank of India and the provision of section 73 to76 or any other relevant provision of the Companies Act 2013 are not applicable on all theunpaid matured public Fixed Deposits of Rs 5629.04 Lacs Unpaid Matured Debentures of Rs.2550.21 Lacs standing as at 31st March 2017 which were accepted in prior periods in viewof filing of Fresh Restructuring Scheme filed with Honble Delhi High Court on 25thSeptember 2004. The company contends that the aforesaid Public Deposits and payment toDebenture-holders shall be settled as per the outcome of Fresh Restructuring Scheme.
6) According to information and explanations given to us the Central Government hasnot prescribed the maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013 in respect of business carried out by the Company. Accordingly thisclause is not applicable on the Company during the year ended 31st March 2017.
7) In respect of statutory dues:
(a) According to the information and explanations given to us and the records of thecompany examined by us in our opinion no undisputed amounts payable in respect ofProvident Fund Investor Education and Protection Fund Employees State InsuranceIncome Tax Sales Tax Wealth Tax Service Tax Custom Duty Excise Duty Cess and otherundisputed statutory dues were outstanding at 31st March2017 for a period of more thansix months from the date they became payable.
(b) According to the information and explanations given to us and records of thecompany produced before us there are disputed demands as mentioned below for the paymentof tax under Income tax Act 1961 which is disputed by the company with variousauthorities.
|Name of the Statuses ||Assessment years ||Tax Demand in (Rs.) ||Forum where dispute is pending ||Remarks |
|Income Tax Act 1961 ||2006-2007 ||Rs. 34.59 Lacs ||CIT(A) ||Case to be listed |
8) The company had defaulted in the repayment of dues to financial institutions banksand debenture holders as explained in Note Nos. 3.1 to 3.3 and Note No. 3.5 of Notes toAccounts
Lender wise details is as follows for defaults to Banks and Financial Institutions:-
|Particulars ||Amount ||Default Period |
|IndusInd Bank Limited ||Rs. 576.99 Lacs ||Default since Financial Year 1997-98. Refer Note-1 |
|Punjab and Sind Bank ||Rs. 803.40 Lacs ||Default since Financial Year 1997-98. Refer Note-1 |
|SIDBI ||Rs. 36.30 Lacs ||Default since Financial Year 1997-98. Refer Note-1 |
The matter is sub-judice with Honble Delhi High Court as the company had filed aFresh Scheme of Arrangement for the reorganization of the share capital of the company andfor compromise with the secured and unsecured creditors of the company before theHonble Delhi High Court at New Delhi on 24th September 2004 and the same is pendingas at 31st March 2017. The matter of payment to aforesaid Banks and FinancialInstitutions are covered in the Fresh Scheme and payment shall be released aforesaid Banksand Financial Institutions in accordance with decision regarding Fresh Scheme byHonble Delhi High Court.
9) The company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans. Accordingly this clause is notapplicable on the Company during the year ended 31stMarch 2017.
10) According to the information and explanations given to us no fraud on the Companyor by the Company by its officers or employees has been noticed or reported during theyear ended 31st March 2017.
11) Managerial remuneration amounting to Rs.514Lacs to the Key Managerial Personneldefined under Section 2(51) of Companies Act 2013 has been provided for the periodrelating to 1-Dec- 2015 to 31-March-2017 on the basis of post facto approval received fromCentral Government on 9th May 2017. Since the matter pertains to financial year 2016-17same has been recorded in the period ended 31st March 2017.
12) The company is not a Nidhi Company and since this clause does not apply to theCompany it is not required to maintain ten percent unencumbered term deposits as specifiedin the Nidhi Rules 2014 to meet out the liability.
13) According to the information and explanations given to us and the records of thecompany examined by us all transactions with the related parties are in compliance withSections 177 and 188 of Companies Act 2013 and details have been disclosed in theFinancial Statements etc. as required by the applicable accounting standards.
14) According to the information and explanations given to us the company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review and hence Section 42 of the Companies Act 2013 isnot applicable.
15) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him andhence the provisions of Section 192 of Companies Act 2013 are not applicable.
16) Initially the company was NBFC. However renewal of application for registrationhas been rejected by RBI in 2004. In view of rejection of NBFC license Section 45-IA ofReserve Bank of India Act 1934 is not applicable on this company.
| ||For V Sahai Tripathi & Co. |
| ||Chartered Accountants |
| ||Firms Registration Number-000262N |
|Place: New Delhi ||MANISH MOHAN |
|Date : May 29 2017 ||Partner |
| ||M. N. - 091607 |
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF DCM FINANCIALS SERVICES LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of DCMFinancials Services Limited("the Company") as of March 312017 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Managements Responsibility for Internal Financial Controls
The Companys 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 companys policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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 was 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 auditors judgement 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 Companys internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that
(1) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention and timely detection ofunauthorised acquisition use or disposition of the companys assets that could havea 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.
Disclaimer of Opinion
According to the information and explanation given to us the Company has notestablished its internal financial control over financial reporting on criteria based onor considering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over financial reporting issued by the Institute ofChartered Accountants of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for our opinion whether the company hadadequate internal financial controls over financial reporting and whether such internalfinancial controls were operating effectively as at March 312017.
We have considered the disclaimer reported above in determining the nature volume oftransactions materiality timing and extent of audit test applied in our audit of thestandalone financial statement of the company and the disclaimer does not affect ouropinion on the standalone financial statements of the company.
For V Sahai Tripathi & Co.
Firms Registration Number: 000262N
Membership No. 91607
Place : New Delhi Dated :29 May 2017