The Members of Dhanlaxmi Bank Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Dhanlaxmi Bank Limited ("theBank") which comprise the Balance Sheet as at 31 March 2017 the Profit and LossAccount and the Cash Flow statement for the year then ended and a summary of significantaccounting policies and notes to the financial statements. Incorporated in these financialstatements are the returns of seventeen branches/offices and Treasury division audited byus 254 branches/offices audited by branch auditors. Management's Responsibility for theFinancial Statements The Bank's Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 (the "Act") with respect to thepreparation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Bank in accordance with theprovisions of Section 29 of the Banking Regulation Act 1949 and accounting principlesgenerally accepted in India including the Accounting Standards specified under section133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 in so far as theyapply to the Bank and the guidelines issued by the Reserve Bank of India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Bank andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies making judgments and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrol that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. Auditor's Responsibility Our responsibility is to express anopinion on these financial statements based on our audit.
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 have conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under section 143(10) of theAct. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are freefrom 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 financial control relevant to the Bank's preparation of the financialstatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by theBank's Directors as well as evaluating the overall presentation of the financialstatements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements together with the Principal AccountingPolicies and Notes appended thereto give the information required by the BankingRegulation Act1949 as well as the Act in the manner so required for the banking companiesand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Bank as at 31 March 2017 its profit andits cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. The Balance Sheet and the Profit and Loss Account have been drawn up in accordancewith the provisions of Section 29 of the Banking Regulation Act 1949 read with Section133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.
2. As required by section 143(3) of the Act and section 30 of the Banking RegulationAct 1949 we report that:
a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit and have found them tobe satisfactory;
b) In our opinion the transactions of the Bank which have come to our notice havebeen within the powers of the Bank;
c) The returns received from the Offices and branches of the Bank have been foundadequate for the purpose of our audit. The reports on the accounts of the branch officesaudited by branch auditors of the Bank under section 143(8) of the Act have been sent tous and have been properly dealt with by us in preparing this report;
d) In our opinion proper books of account as required by law have been kept by theBank so far as it appears from our examination of those books;
e) The Balance Sheet the Profit and Loss Account and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account;
f) 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 applicable to banks;
g) On the basis of written representations received from the directors as on 31 March2017 taken on record by the Board of Directors none of the directors are disqualified ason 31 March 2017 from being appointed as a director in terms of Section 164(2) of theAct;
h) With respect to the adequacy of the internal financial controls over financialreporting of the Bank and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 1" to this report. Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Bank's internalfinancial controls over financial reporting.
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:
i. The Bank has disclosed the impact of pending litigations on its financial positionin its financial statements Refer Note 28 to the financial statements;
ii. The Bank has made provision as required under the applicable law or accountingstandards for material foreseeable losses on long-term contracts including derivativecontracts Refer Note 29 to the financial statements;
iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Bank; and
iv. The disclosure required on holdings as well as dealings in Specified Bank Notesduring the period from November 08 2016 to December 30 2016 as envisaged in notificationGSR 308(E) dated March 30 2017 issued by the Ministry of Corporate Affairs is notapplicable to the Bank. Refer note 30 to the financial statements.
For Sridhar & Co
Firm Registration Number: 003978S.
Place : Thrissur
Date : 16 May 2017
Membership Number: 200969
Annexure 1 to The Independent Auditor's Report of even date on the Financial Statementsof Dhanlaxmi Bank Limited Report on the Internal Financial Controls under Clause (i) ofSubsection3 of Section 143 of the Companies Act 2013 ("the Act") To The Membersof Dhanlaxmi Bank Limited We have audited the internal financial controls over financialreporting of Dhanlaxmi Bank Limited ("the Bank") as of 31 March 2017 inconjunction with our audit of the financial statements of the Bank for the year ended onthat date.
Management's Responsibility for Internal Financial Controls The Bank's Management isresponsible for establishing and maintaining internal financial controls based on theinternal control over financial reporting criteria established by the Bank considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note"). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Bank'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. Auditor's Responsibility Our responsibility is to express anopinion on the Bank's internal financial controls over financial reporting based on ouraudit. We have conducted our audit in accordance with the Guidance Note and the Standardson Auditing as specified 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 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 internal financial controls system overfinancial reporting.
Concept of Internal Financial Controls Over Financial Reporting A company's internalfinancial control over financial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingincludes 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 authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized 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.
In our opinion the Bank has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31 March 2017 based on the internalcontrol over financial reporting criteria established by the Bank considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For Sridhar & Co
Firm Registration Number: 003978S.
Membership Number: 200969
Place : Thrissur
Date : 16 May 2017