TO THE MEMBERS OF DCM FINANCIAL SERVICES LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of DCM FinancialServices Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2016 and the Statement of Profit and Loss and Cash Flow Statement for the yearended and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the 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 the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation of the financialstatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances but not for the purpose of expressing an opinion onwhether the Company has in place an adequate internal financial control system overfinancial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluating theoverall 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 Hon'ble Delhi High Court in totality whichis still pending for approval & acceptance financesand opportunities would be (b)adequate available in the foreseeable future to enable the company to start operating on aprofitable basis and (c) injection of Rs. 1950 lacs as promoters quota which has alreadybeen infused by the management group. The same has been explained in Note 29.
(ii) No provision of Rs. 86855 lacs (Rs. 15647.48 lacs towards accumulated Interestas at 31st March 2016) (Previous Year Rs. 14778.93 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 Hon'ble Delhi High Court does not envisage and seek payment of anyinterest as the interest has been considered waived off in the proposed scheme. The orderof Company Law Board (CLB) which was issued in 1998 in the context of Fixed Depositsstipulated payment of Interest of 10% per annum to Fixed Depositors. The order of CompanyLaw Board (CLB) applies to Fixed Deposits only however considering the principles ofprudence it is deemed prudent to provide Interest @10% per annum since inception orrenewal on outstanding 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 netloss for the year ended 31st March 2016 and cumulative net loss as well as Current /Non-Current Liabilities as at 31st March 2016 would have been overstated by Rs. 868.55lacs and Rs 15647.48 lacs respectively. The same has been explained in Note 3.1.f Note3.4(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-30
(vi) The subsidiary company namely Global IT Options Limited has till 31st March 2016incurred expenditure of Rs 22.39 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 Inter-Corporate 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 22.39 lacs by Company to its subsidiary - Global IT Options Limited
Had interest @12% per annum been provided for in the financial statements onoutstanding amount of Inter Corporate Deposit with effect from 01-April-2014 Interestexpense not provided would have been Rs 2.98 lacs and correspondingly the net profit wouldhave been lower by same amount and cumulative net loss as well as Current / Non-CurrentLiabilities as at 31st March 2016 would have been overstated Rs. 2.98 lacs. It is noncompliance of Section 186 of 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 punishablewithfinewhich shall not be less than one lakh rupeesbut which may extend to five lakh rupees. During the year ended March 31st 2016 theCompany 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.
(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. Total estimated penalty/fine comesto Rs. 10.50 lacs till 31-Mar-2016. Had provision been provided for in the financialstatements the net loss for the year ended 31st March2016 and cumulative net loss aswell as Current/ Non Current Liability as at 31st March2016 would have been higher by Rs.10.50 lacs
(ix) Contingent liabilities and Other Commitments
ix(a) Mr. Dhruv Prakash had lodged a claim of Rs 65 lacs and winding up petitionagainst the company. The contingent liability arising out of this suit amounts to Rs. 65lacs. There are also other cases filed in consumer civil & criminal courts and othercourts against the company for which the company is contingently liable but for which theamount is not quantifiable.Refer Note No. 24(a)
ix(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. 98.4 lacs and the balanceof Rs. 803.40 lacs as on 30th June 2008 is payable as per the Fresh Restructuring Schemepending before the Hon'ble Delhi High Court. Out of Rs.803.40 lacs i.e. Rs.442.68 lacsshall be payable in 6 equal yearly installments after one year from the date of approvalof the scheme or 1st April 2006 whichever is earlier. The balance of Rs 360.72 lacs shallbe converted in equity shares at any time within 3 years of the effective date of approvalof Fresh Restructuring Scheme by Hon'ble Delhi High Court in accordance with applicableSEBI Guidelines for issuance of preferential allotment of the effective date or 1st April2006 whichever is earlier
Prior to filing of Fresh Restructuring Scheme by company before Hon'ble 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 24(b)
ix(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. 576.99 lacsshall be payable as per Fresh Restructuring Scheme.
Prior to filing of Fresh Restructuring Scheme by company before Hon'ble 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. 576.99 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 967.93 lacs 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 24(c)
ix.(d) During the year 1999 the company had received Rs. 100 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 Hon'ble Punjab and Haryana Court deemed that payment is outof turn/preferential payment made by Pure Drinks New Delhi Ltd where winding up petitionproceedings was already initiated and asked the company to deposit back the said amountwith Hon'ble Punjab and Haryana Court. The company had filed a SLP with the Hon'bleSupreme Court of India which has been dismissed by them. Therefore the company is liableto deposit the amount mentioned above which is yet to be deposited. And in view ofrestrictions imposed on operations of Bank A/c's by Hon'ble Delhi High Court the companyhas filed an application to release this money for depositing the same with Punjab &Haryana High Court which still pending to be addressed. Refer Note No. 24(d)
ix.(e) During the year ended 30th June 2011 the company's tenant had filed a claim ofRs. 100 lacs against the company due to damages suffered by the tenant which is stillpending under arbitration proceedings as on 31st March 2016. Refer Note No. 24(e)
ix.(f) There is a demand of Rs. 141.75 lacs and Rs. 34.59 lacs raised by Income TaxDepartment for the Assessment Year 2010-11 and 2006-07 respectively for payment of incometax under the Income Tax Act 1961 which is disputed by the company as brought forwardlosses under the Income Tax Act has not been allowed by the department and rectificationapplication for deletion of above said demand has been filed by pending before theappropriate authorities. Refer Note No. 24(f)
ix.(g) There is an award passed by the arbitrator against the company in the matter ofMS Shoes East Limited on May 28 2012 for Rs. 51.28 lacs i.e. the claim amount along withRs. 306.81 lacs towards interest cost for an underwriting given by the company in the year1995 for the public issue of M/s MS Shoes East Ltd. Furthermore an incidental cost whichincludes arbitration venue rent record keeping cost administrative cost and stamp papercharges amounting to Rs. 5.49 lacs had been awarded to the company. The total financialimpact comes to Rs. 363.58 lacs which has been contested by Company before Hon'ble DelhiHigh Court. Refer Note No. 24(g)
ix.(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 Rs. 288.30 lacs mentioned supra is as follows Refer Note No. 24(h) :-
| || ||Rs (in Lacs) |
|S. No. ||Description ||Amount |
|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 |
|7. ||Arbitration cost ||5 |
|TOTAL || ||288.30 |
ix.(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 the Hon'bleDelhi High Court. Out of which the company has recorded Rs. 36.30 lacs in the books ofaccount. Provision for Rs. 18.10 lacs liability on account of interest overdue interestand other charges claimed and claimable by SIDBI has not been ascertained and provided inthe books due to waiver of interest sought under the proposed "Fresh RestructuringScheme" filed with Hon'ble Delhi High Court.Refer Note No. 24(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 2016 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 (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 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 our mayhave 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 subjuiced as Company had already submittedFresh Restructuring Scheme with Hon'ble 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 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
a. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 23 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 Hon'ble Company Law Board New Delhi on22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a freshrepayment schedule for fixed depositors debenture-holders and other creditors of theCompany. The company filed for the reorganization of the share capital of the company andfor compromise with the secured and unsecured creditors of the company hereinafterreferred to as the "Fresh Restructuring Scheme" before the Hon'ble DelhiHigh Court on 24th September 2004 mentioning therein repayment schedule. All the unpaidmatured Public Fixed Deposits of Rs 5637.28 lacs Unpaid Matured Debentures of Rs. 2552.30lacs and Rs 549.72 lacs which were initially received towards Share Application Moneystanding as at 31st March 2016. All these matured Fixed Deposits Unpaid MaturedDebentures and amount received initially towards Share Application Money are more thanseven year old.
The matter regarding payment to fixed depositors debenture-holders and other sums arealready covered under Fresh Restructuring Scheme which is pending before Hon'ble DelhiHigh Court. Accordingly except the matter stated above there has been no delay intransferring amounts or there were no amounts which were required to be transferredto the Investor Education and Protection Fund by the Company Refer Note No. 3.13.4 and4(i)
| ||For V Sahai Tripathi & Co. |
| ||Chartered Accountants |
| ||Firm's Registration Number-000262N |
|Place: New Delhi ||MANISH MOHAN |
|Date : 30th May 2016 ||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 Auditor's Report to the members of DCM Financials ServicesLimited on the financial statements for the year ended March 31 2016
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 2016.
(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 allthe unpaid matured public Fixed Deposits of Rs 5637.28 lacs Unpaid Matured Debentures ofRs. 2552.30 lacs standing as at 31st March 2016 which were accepted in prior periods inview of filing of Fresh Restructuring Scheme filed with Hon'ble 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 2016.
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 Insurance IncomeTax Sales Tax Wealth Tax Service Tax Custom Duty Excise Duty Cess and otherundisputed statutory dues were outstanding at 31st March2016 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.
| || || || ||Rs. (in Lacs) |
|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 ||CIT(A) ||Case to be listed |
|Income Tax Act 1961 ||2009-2010 ||Rs. 143.22 ||ITAT ||Matter has been heard however the order is yet to be received |
|Income Tax Act 1961 ||2010-2011 ||Rs. 141.75 ||CIT (AP- PEALS)14 ||Under process |
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 Hon'ble 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 the Hon'bleDelhi High Court at New Delhi on 24th September 2004 and the same is pending as at 31stMarch 2016. The matter of payment to aforesaid Banks and Financial Institutions arecovered in the Fresh Scheme and payment shall be released aforesaid Banks and FinancialInstitutions in accordance with decision regarding Fresh Scheme by Hon'ble Delhi HighCourt.
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 2016.
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 2016.
11) During the year no managerial remuneration except prior period dues amounting toRs.1.22 lacs has been paid to the Key Managerial Personnel defined under section 2(51) ofCompanies Act 2013. Due to insufficiency of funds and unavailability of requiredapprovals from relevant authorities the Company has not paid any managerial remunerationto the Key Managerial Personnel defined under section 2(51) of Companies Act 2013pertaining the financial year ended 31st March 2016.
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 |
| ||Firm's Registration Number-000262N |
|Place: New Delhi ||MANISH MOHAN |
|Date : 30th May 2016 ||Partner |
| ||M. N. - 091607 |
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS 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 ofDCMFinancials Services Limited ("the Company") as of March 31 2016 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
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 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 risk that a material weakness exists andtesting and controls over evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements 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 financial reporting is a process designed toprovide over 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 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 company's assets that could have amaterial 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 financialcontrols were operating effectively as at March
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 of the company and the disclaimer does not affect our opinion on thestandalone financial statements of the company.
For V Sahai Tripathi & Co.
Firm's Registration Number : 000262N
Membership No. 91607
Place : New Delhi
Dated : 30th May 2016