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Escorts Finance Ltd.

BSE: 511716 Sector: Financials
NSE: ESCORTSFIN ISIN Code: INE359A01012
BSE LIVE 14:23 | 11 Sep 7.79 -0.41
(-5.00%)
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7.79

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7.79

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7.79

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 7.79
PREVIOUS CLOSE 8.20
VOLUME 2001
52-Week high 19.18
52-Week low 6.70
P/E
Mkt Cap.(Rs cr) 31
Buy Price 0.00
Buy Qty 0.00
Sell Price 7.79
Sell Qty 40893.00
OPEN 7.79
CLOSE 8.20
VOLUME 2001
52-Week high 19.18
52-Week low 6.70
P/E
Mkt Cap.(Rs cr) 31
Buy Price 0.00
Buy Qty 0.00
Sell Price 7.79
Sell Qty 40893.00

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 31st March 2016the statement of profit and loss and the cash flow statement for the year then ended anda summary of 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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement 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 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 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 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 Financial Statements:

i. Note No. 21 regarding non-maintenance of investments in Government Securities asliquid assets in terms of Section 45-IB of Reserve Bank of India Act 1934;

ii. Note No. 22 regarding non-maintenance of minimum capital adequacy ratio workingout to -6517.79 (negative) as against 37.77 required to be maintained in terms ofNon-Banking Financial Companies requirements;

iii. Note No. 24 regarding the Company’s credit rating not sought post November2005;

iv. Note No. 25 regarding unpaid/unclaimed matured Fixed Deposit Liability aggregatingto Rs.1278.78 lakhs as on balance sheet date;

v. Note No. 29 regarding non-provision of preference dividend on cumulative preferenceshares amounting to Rs.95.00 lakhs for the year;

vi. Note No. 30 regarding non-determination of Employee Terminal Benefits on actuarialbasis. In the absence of the same the exact impact cannot be ascertained in the books ofaccounts.

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 matter described in sub-paragraph (iv) (v)and (vi) under the Basis for Qualified the aforesaid standalone financial statementsgive the information required by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2016 and its profit and its cash flow forthe year ended on that date.

6. Emphasis of Matters

We draw attention to the following matters in the Notes to the Financial Statements;

(a) Note No. 27 in the financial statements which indicates that the Company hadaccumulated losses at the close of the financial year with its net worth continuing tostand fully eroded and the financial statements have been prepared on going concern basisfor reasons explained by the management including the possibilities of venturing intonewer business areas. We have relied on the representation made to us by the management.

(b) Note No. 23 in the financial statements which states that the company had filed anapplication with the Reserve Bank of India for de-registration of its NBFC status andaccordingly Certificate of Registration (COR) had also been surrendered. Subsequent to thebalance sheet date of 31st March 2016 the approval for de-registration of the NBFC Statusof the Company has been received vide letter dated 06th May 2016.

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

7. Report on Other Legal and Regulatory Requirements

A. 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 Act we give in the Annexure A a statement on the matters specified inthe paragraph 3 and 4 of the order.

B. 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 matters described in sub-paragraph (iv) (v) and(vi) under the Basis for Qualified Opinion abovein 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 Matters 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 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164 (2) of the Act;

(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 B"; 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 made disclosure regarding pending litigations in its standalonefinancial statements as referred to in Note No. 20 to the financial statements includingclaims against the Company for which amount is presently not ascertainable;

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;

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. 25 to the financial statements.

For N.M.Raiji and Co.
Chartered Accountants
ICAI Firm Registration number: 108296W
Sd/-
CA. S. N. Shivakumar
Place: Faridabad Partner
Date: 30th May 2016 Membership No. 088113

ANNEXURE - A TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON THE STANDALONE

FINANCIAL STATEMENTS OF ESCORTS FINANCE LIMITED (Referred to in sub para A of Para 7under the heading of "Report on Other Legal and Regulatory Requirements")

We Report that:

(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 in reasonable intervals. In accordancewith this programme certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company it does not hold any immovable properties.Thus Clause (i) (c) of the Order is not applicable to the Company.

(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 end of 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 accepted of any deposits from the public in our opinion andaccording to the information and explanation given to us the directives issued by ReserveBank of India and the provisions of Section 73 to 76 or any other relevant provisions ofthe Companies 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 04 2011 EscortsBenefit Trust (EBT) created by Escorts Limited repaid matured fixed deposit liabilityagainst the claims received till March 03 2013. Claims received after said dates are . Asat March 31 2016 the unpaid/unclaimed matured fixed also being entertained and settledafter due verification deposits liability (including interest thereon) is Rs. 1278.78 lacs(Previous Year Rs. 1357.40 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 accounts the Company has been generally regular indepositing undisputed statutory dues including Provident Fund Employee State InsuranceIncome-Tax Sales Tax Service Tax Custom Duty Excise Duty value added tax cess andother statutory dues during the year with the appropriate authorities.

According to the information and explanations given to us and on the basis of ourexamination of the books of account no undisputed amounts payable in respect of ProvidentFund Employees State Insurance Income-Tax Sales Tax Wealth Tax Service Tax CustomsDuty Excise Duty Value Added Tax Cess were in arrears as at 31 March 2016 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 there are following duesof Income-Tax Value Added Tax and other material Statutory Dues which have not beendeposited 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 2004-2005 DCIT New Delhi 34.94
AY 2005-2006 DCIT New Delhi 131.34
2 Value Added Tax AY 2001-2002 AC Appeal Kolkata 2.26
AY 1994-1995 DC Appeal Noida 0.54
AY 1999-2001 AC Appeal Jaipur 1.52

(viii) The Company does not have any loans or borrowings from any financialinstitution banks government or debenture holders during the year. Accordingly Clause(viii) of the Order is not applicable.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. AccordinglyClause (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 which is registered under section 45-IA of theReserve Bank of India Act 1934. had filed an application with the Reserve Bank of Indiafor de-registration of its NBFC status and accordingly Certificate of Registration (COR)had also been surrendered. Subsequent to the balance sheet date of 31st March 2016 theapproval for de-registration of the NBFC Status of the Company has been received videletter dated 06th May 2016.

For N.M.Raiji and Co.
Chartered Accountants
ICAI Firm Registration number: 108296W
Sd/-
CA. S. N. Shivakumar
Place: Faridabad Partner
Date: 30th May 2016 Membership No. 088113

ANNEXURE - B TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF ESCORTS FINANCE LIMITED (Referred to in Clause (g) sub para B ofPara 7 under the heading of "Report on Other Legal and Regulatory Requirements"of our report of even date)

1. Report on the Internal Financial Controls under Clause (i) of Sub-section 3of Section 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 2016 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 2016.

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

For N.M.Raiji and Co.
Chartered Accountants
ICAI Firm Registration number: 108296W
Sd/-
CA. S. N. Shivakumar
Place: Faridabad Partner
Date: 30th May 2016 Membership No. 088113