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Escorts Finance Ltd.

BSE: 511716 Sector: Financials
NSE: ESCORTSFIN ISIN Code: INE359A01012
BSE LIVE 15:40 | 20 Nov 5.65 -0.28
(-4.72%)
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5.65

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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 5.64
PREVIOUS CLOSE 5.93
VOLUME 7100
52-Week high 12.83
52-Week low 4.24
P/E
Mkt Cap.(Rs cr) 23
Buy Price 0.00
Buy Qty 0.00
Sell Price 5.65
Sell Qty 2467.00
OPEN 5.64
CLOSE 5.93
VOLUME 7100
52-Week high 12.83
52-Week low 4.24
P/E
Mkt Cap.(Rs cr) 23
Buy Price 0.00
Buy Qty 0.00
Sell Price 5.65
Sell Qty 2467.00

Escorts Finance Ltd. (ESCORTSFIN) - Auditors Report

Company auditors report

TO THE MEMBERS OF ESCORTS FINANCE LIMITED

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of ESCORTS FINANCELIMITED ("the Company") which comprise the Balance Sheet as at March 312017 the Statement of Profit and Loss the Cash Flow Statement for the year then endedand a summary of the significant accounting policies and other explanatory information.

2. 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 Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

3. Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under and the order under section

143 (11) of the Act.

We conducted our audit of financial statements in accordance with the Standards onAuditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement 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 a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe 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 qualified our audit opinion on the standalone financial statements.

4. Basis of Qualified Opinion

Attention is invited to the following matters in the Notes to the Standalone FinancialStatements:

(i) Note No. 27 regarding unpaid/unclaimed matured Fixed Deposit Liabilityaggregating to Rs. 1132.57 lacs as on balance sheet date; (ii) Note No. 31 regardingnon-provision towards interest on cumulative preference shares amounting to Rs. 95.00 lacsfor the year; and (iii) Note No. 32 regarding non-determination of Employee TerminalBenefits on actuarial basis. In the absence of the same the impact thereof on the profitand liabilities of the Company cannot be ascertained.

5. Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matters described in sub-paragraphs (i) (ii)and (iii) under the Basis for Qualified Opinion above the aforesaid standalonefinancial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2017 and itsloss and its cash flows for the year ended on that date.

6. Emphasis of Matters

We draw attention to the following matter in the Notes to the Standalone FinancialStatements;

(i) the Company had accumulated losses at the close of the financial year with its networth continuing to stand fully eroded and the financial statements have been prepared ongoing concern basis for reasons explained by the management including the possibilitiesof venturing into newer business areas. We have relied on the representation made to us bythe management.

(ii) the Company was registered under section 45-IA of the Reserve Bank of India Act1934. The approval for cancellation of its NBFC registration had been received vide letterno. DNBS(NDI)S.3242/MSA/06.05.001/2015-16 dated May 6 2016. Accordingly the relatedprovisions pertaining to NBFC will no longer be applicable to the Company post receipt ofthe RBI order.

Our opinion is not qualified in respect of the above matters.

7. Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

(d) except for the effect of the matter described in sub-paragraph (i) (ii) and(iii) under the Basis for Qualified Opinion above in our opinion the aforesaidstandalone financial statements comply with the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014;

(e) The matter described in sub-paragraph (a) under the Emphasis of Matter paragraphabove in our opinion may have an adverse effect on functioning of the Company;

(f) On the basis of the written representations received from the directors as on March31 2017 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164 (2) of theAct;

(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"; and

(h) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note No. 25(c) to the financial statements;

ii. The Company did not have any foreseeable losses on long term contracts and had noderivative contracts outstanding as at March 31 2017;

iii. The Company has not deposited amounts to the Investor Education and ProtectionFund against unpaid fixed deposit liabilities including interest thereon as referred to inNote No. 27 to the financial statements; and

iv. The Company has provided requisite disclosures in the financial statements (ReferNote No 39) as to holdings as well as dealings in Specified Bank Notes during the periodfrom November 8 2016 to December 30 2016.

Based on audit procedures and relying on the management representation we report thatthe disclosures are in accordance with books of account maintained by the Company and asproduced to us by the Management.

2. As required by the Companies (Auditor’s 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 B" a statementon the matters specified in paragraph 3 and 4 of the Order.

For N. M. Raiji and Co.
Chartered Accountants
ICAI Firm Registration number: 108296W
Sd/-
CA. S. N. Shivakumar
Place: Faridabad Partner
Date: 24 May 2017 Membership No. 088113

ANNEXURE A TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OFESCORTS FINANCE LIMITED (Referred to in Paragraph 7 point (g) underthe heading of "Report on Other Legal and Regulatory Requirements" of our reportof even date)

1. Report on the Internal Financial Controls under Clause(i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")

We were engaged to audit the internal financial controls over financial reporting of ESCORTSFINANCE LIMITED ("the Company") as at March 31 2017 in conjunction withour audit of the standalone financial statements of the Company for the period ended onthat date.

2. 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 controlstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

3. Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit conducted in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing to the extent applicable to anaudit of internal financial controls both issued by the Institute of CharteredAccountants of India.

Because of the matter described in the Disclaimer of Opinion paragraph below we wereunable to obtain sufficient appropriate audit evidence to provide a basis for an auditopinion on internal financial controls system over financial reporting of the company.

4. Meaning of Internal Financial Controls over Financial Reporting

A company’s 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 company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany’s assets that could have a material effect on the financial statements.

5. Disclaimer of Opinion

According to information and explanations given to us the Company has not establishedits internal financial controls over financial reporting on criteria based on orconsidering 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 evidence to provide a basis for our opinion whether the Company had adequateinternal financial controls over financial reporting and whether such internal financialcontrols were operating effectively as at March 31 2017.

We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the standalone financial statements of thecompany and the disclaimer does not affect our opinion on the standalone financialstatements of the Company

Chartered Accountants
ICAI Firm Registration number: 108296W
Sd/-
CA. S. N. Shivakumar
Place: Faridabad Partner
Date: 24 May 2017 Membership No. 088113

ANNEXURE - B TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF ESCORTS FINANCE LIMITED (Referred to in Paragraph 2 under theheading of "Report on Other Legal and Regulatory Requirements" of our report ofeven date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner at periodic intervals. In our opinionthis periodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. As informed to us no . material discrepancies werenoticed on such verification

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company does not own any immovable propertyand accordingly this clause is not applicable.

(ii) In view of the nature of the operations of the Company the Company does not holdany inventory other than stock of repossessed assets which have been verified by themanagement during the year. Provision has been made in respect of discrepancies/diminution in the value of such stock as at the year end.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties covered inthe register maintained under Section 189 of the Companies Act 2013. Consequently Clause(iii)(a) (iii)(b) and (iii)(c) of the Order are not applicable to the

Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has not dealt with any loans guarantee investments and security under theprovision of section 185 and 186 of the Companies

Act 2013. Consequently Clause (iv) of the Order is not applicable to the Company.

(v) In respect of any deposits accepted from the public in our opinion and accordingto the information and explanation given to us the directives issued by Reserve Bank ofIndia and the provisions of Section 73 to 76 or any other relevant provisions of theCompanies Act 2013 the Company had not complied with the said norms in relation torepayment of deposit on their respective maturity dates. However in accordance with theHon’ble

Delhi High Court’s Order / direction dated March 4 2011 Escorts Benefit Trust(EBT) created by Escorts Limited repaid matured fixed deposit liability against theclaims received till March 3 2013. Claims received after said dates are also beingentertained and settled after due verification. As at March 31 2017 the unpaid/unclaimedmatured fixed deposits liability (including interest thereon) is Rs. 1132.57 lacs(Previous Year Rs. 1278.78 lacs).

(vi) In our opinion and according to the information and explanations given to us theCentral Government has not prescribed the maintenance of cost records under section 148(1)of the Act for any of the services rendered by the Company. Consequently Clause (vi) ofthe Order is not applicable to the Company.

(vii) a) According to the information and explanations given to us and on the basis ofour examination of the books of account the Company has been generally regular indepositing undisputed statutory dues including

Provident Fund Employees State Insurance Income-Tax Sales-Tax Service Tax CustomDuty Excise Duty Value Added Tax Cess and any other dues during the year with theappropriate authorities. No undisputed amount is payable as at March 31 2017 for aperiod of more than six months from the date they became payable except income taxliability amounting to Rs. 22.25 lacs.

b) According to the information and explanations given to us the following statutorydues have not been deposited with the appropriate authorities on account of any dispute:

S.No. Nature of Statutory Dues Period to which the amount relates Forum where Dispute is pending Unpaid Amount (in Rs. Lacs)*
1 Income Tax AY 2004-05 DCIT New Delhi 34.94
AY 2005-06 DCIT New Delhi 131.34
2 Value Added Tax AY 2001-02 AC Appeal Kolkata 2.26
AY 1994-95 DC Appeal Noida 0.54
AY 1999-01 AC Appeal Jaipur 1.52

* after netting off amount deposited under protest.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to financial institutions or banks. TheCompany does not have any outstanding debentures.

(ix) The Company does not have any loans or borrowings from any financial institutionbanks government or debenture holders during the year. Accordingly Clause (viii) of theOrder is not applicable. (ix) The Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments) and term loans during the year.Accordingly Clause (ix) of the Order is not applicable.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) In our opinion and according to the information and explanations given to us nomanagerial remuneration has been paid or provided by the Company. Accordingly Clause (xi)of the Order is not applicable.

(xii) To the best of our knowledge and belief and according to the information andexplanations given to us the Company is not a Nidhi company. Consequently Clause (xii)of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review; consequently the requirements of clause (xiv) of the Order are notapplicable to the Company.

(xv) To the best of our knowledge and belief and according to the information andexplanations given to us the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly Clause (xv) of the Order is notapplicable to the Company.

(xvi) To the best of our knowledge and belief and according to the information andexplanations given to us the Company was registered under section 45-IA of the ReserveBank of India Act 1934. The approval for cancellation of its NBFC registration wasreceived vide letter no. DNBS(NDI)S.3242/MSA/06.05.001/2015-16 dated May 6 2016.Accordingly the related provisions pertaining to NBFC will no longer be applicable to theCompany post receipt of the RBI order.

For N. M. Raiji and Co.
Chartered Accountants
ICAI Firm Registration number: 108296W
Sd/-
CA. S. N. Shivakumar
Place: Faridabad Partner
Date: 24 May 2017 Membership No. 088113