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IFCI Ltd.

BSE: 500106 Sector: Financials
NSE: IFCI ISIN Code: INE039A01010
BSE LIVE 15:29 | 22 Aug 22.75 -0.10
(-0.44%)
OPEN

22.95

HIGH

23.25

LOW

22.65

NSE 15:58 | 22 Aug 22.75 -0.15
(-0.66%)
OPEN

23.00

HIGH

23.25

LOW

22.65

OPEN 22.95
PREVIOUS CLOSE 22.85
VOLUME 343781
52-Week high 33.40
52-Week low 20.60
P/E
Mkt Cap.(Rs cr) 3,781
Buy Price 22.65
Buy Qty 2001.00
Sell Price 22.75
Sell Qty 879.00
OPEN 22.95
CLOSE 22.85
VOLUME 343781
52-Week high 33.40
52-Week low 20.60
P/E
Mkt Cap.(Rs cr) 3,781
Buy Price 22.65
Buy Qty 2001.00
Sell Price 22.75
Sell Qty 879.00

IFCI Ltd. (IFCI) - Auditors Report

Company auditors report

TO THE MEMBERS OF IFCI LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of IFCI Limited("the Company") which comprises the Balance Sheet as at March 31 2016 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management’s Responsibility for the 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 records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgements 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.

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.

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 judgement including the assessment of the risks of material misstatementof the financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to theCompany’s preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company’s Directors as wellas evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2016 its profit and its cash flow for the year ended on that date.

Emphasis of Matter

We draw attention to note number 28 of the standalone financial statements related tolitigation with the borrower. Pending adjudication of the matter by the Honourable SupremeCourt in the opinion of the management no provision or adjustment is required in thebooks of accounts. Our report is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 (‘theOrder’) issued by the Central Government of India in terms of SubSection (11) ofSection 143 of the Act we give in the Annexure I a statement on the matters specified inparagraphs 3 and 4 of the Order.

2. As required under Section 143(5) of the Companies Act 2013 we enclose herewith asper Annexure II our report for the Company on the directions and sub-direction (Part Aand B respectively) issued by the Comptroller & Auditor General of India.

3. 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 ouropinion proper books of Accounts as required by law have been kept by the Company so faras it appears from our examination of those books; (c) The Balance Sheet and the Statementof Profit and Loss dealt with by this report are in agreement with the books of accounts;(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014; (e) On the basis of the written representations receivedfrom the directors taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2016 from being appointed as a director in terms of Section164 (2) of the Act; (f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate report in Annexure III; and

(g) 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. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements – Refer Note No. 25.1 to the financial statements; ii. TheCompany has made provision as required under the applicable law or accounting standardsfor material foreseeable losses if any on long-term contracts including derivativecontracts – Refer Note No. 25.3 to the financial statements; iii. There has been nodelay in transferring amounts required to be transferred to the Investor Education andProtection Fund by the Company.

For ASA & Associates LLP For KPMR & Associates
Chartered Accountants Chartered Accountants
FRN: 009571N/N500006 FRN: 02504N
Parveen Kumar S M Yamin Qureshi
Partner Partner
M. No. 088810 M. No. 081750
Place : New Delhi
Date : May 28 2016

Annexure I referred to in paragraph 1 of Report on Other Legal and RegulatoryRequirements of our report of even date on standalone financial statements

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets except for leased plant and machineryhaving gross block of Rs 70.92 crore which have been fully depreciated in the earlieryears.

(b) The fixed assets are being physically verified by the management at all its officesin a phased manner at reasonable intervals. According to the information and explanationgiven to us no material discrepancies were noticed on such verification. However thepolicy with regard to the verification of physical assets and the periodicity thereofneeds to be reviewed and approved by the Board.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) The Company is Non-Banking Financial Company accordingly it does not hold anyinventory. Thus paragraph 3(ii) of the Order is not applicable.

(iii) According to the information provided and explanations given to us the Companyhas not granted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register mentioned under Section 189 of theCompanies Act 2013. Accordingly paragraph 3(iii) of the Order is not applicable.

(iv) According to the information and explanations given to us the Company has notgranted any loans investments guarantees and security covered under Section 185 of theCompanies Act 2013. The provisions of Section 186 of the Companies Act 2013 is notapplicable on the Company. Accordingly paragraph 3(iv) of the Order is not applicable.

(v) According to the information provided and explanations given to us the Company hasnot accepted any deposits from the public during the year within the meaning of Section 73to 76 of the Companies Act 2013.

(vi) According to the information provided and explanation given to us maintenance ofcost records by the Company has not been prescribed by the Central Government underSection 148(1) of the Companies Act 2013. Thus paragraph 3(vi) of the Order is notapplicable.

(vii) (a) According to the information provided and explanations given to us thecompany is generally regular in depositing undisputed statutory dues including providentfund employee’s state insurance income tax sales tax wealth tax service taxduty of customs duty of excise value added tax cess and any other material statutorydues applicable to it with the appropriate authorities. There are no outstanding statutorydues existing as at the last day of the financial year for a period of more than sixmonths from the day they became payable.

(b) According to the information and explanations given to us there were no amountsdue as on March 31 2016 in respect of income tax or sales tax or wealth tax or servicetax or duty of customs or duty of excise or value added tax or cess which have not beendeposited on account of any dispute other than those indicated below:

Name of the Statute Nature of disputed dues Amount (Rs crore)* Year to which demand relates Forum where dispute is pending
Finance Act 1994 (Service Tax)# Service Tax and Penalty demanded 6.98 FY 2004-05 to FY 2007-08 CESTAT New Delhi
Finance Act 1994 (Service Tax)# Service Tax and Penalty demanded 0.30 FY 2008-09 to FY 2010-11 CESTAT New Delhi
Finance Act 1994 (Service Tax)# Service Tax and Penalty demanded 0.45 FY 2005-06 to FY 2007-08 CESTAT Bangalore
Finance Act 1994 (Service Tax) Service Tax and Penalty demanded 0.56 FY 2006-07 to FY 2010-11 An appeal is to be filed before CESTAT New Delhi
Finance Act 1994 (Service Tax) Service Tax and Penalty demanded 0.89 FY 2008-09 to FY 2010-11 Commissioner of Service Tax New Delhi
MP Commercial Tax Act 1994 Sales Tax on Lease Transactions 0.01 Board of Revenue (Commercial Transactions Tax
Tribunal) Gwalior M.P.

# Stay order has been received against the amount disputed and not deposited

(viii) According to the information provided and explanations given to us the Companyhas not defaulted in repayment of loans or borrowings to a financial institution or bankor Government or dues to debenture holders.

(ix) According to the information provided and explanations given to us no moneys havebeen raised by way of initial public offer or further public offer (including debtinstruments) and the term loans raised from different banks during the year were appliedfor the purposes for which those are raised.

(x) According to the information and explanations given to us and to the best of ourknowledge and belief no fraud by or on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations given to us and in terms of GSR 463(E) dated June 05 2015 issued by the Ministry of Corporate Affairs the provisions ofSection 197 pertaining to managerial remuneration do not apply to a Government Company.Accordingly paragraph 3(xi) of the order is not applicable.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(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 given 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.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.

(xvi) According to the information provided and explanations given to us the Companyis registered under Section 45-IA of the Reserve Bank of India Act 1934. The Company hasbeen granted certificate of registration to commence/carry on the business of non-bankingfinancial institution without accepting public deposits on August 18 2009 videregistration No. is B-14.00009.

For ASA & Associates LLP Parveen Kumar For KPMR & Associates S M Yamin Qureshi
Chartered Accountants Partner Chartered Accountants Partner
FRN: 009571N/N500006 Membership No. 088810 FRN: 02504N Membership No. 081750
Place : New Delhi
Date : May 28 2016

Annexure II referred to in paragraph 2 of Report on Other Legal and RegulatoryRequirements of our report of even date of standalone financial statements:

Part A - Directions

Sl. No. Directions Reply

1. Whether the Company has clear title/lease deed for According to the information andexplanations provided to us by the Company the Company has freehold and leaseholdrespectively? If not please clear title/lease deeds for freehold and leasehold landrespectively. state the area of freehold and leasehold land for which title/lease deedsare not available?

2. Whether there are any cases of waiver/write off of According to the information andexplanations provided to us by the Company case(s) of waiver/ debtors/loans/interestetc. If yes the reason there of write-off of debts/loan/interest etc. are as under:

and amount involved. Sl. No. Nature of Dues No. of Cases Amount
(in crore)
A. Write-off/Technical write-off of loans 28 441.08
B. Investments write-offs 232 119.40

 

It was informed that the waiver/write-off is decided on case to case basis with due assessment of the possibility of recovery/realization in each case considering the available security status of the borrower/investee and pending litigation. The outstanding in technical write-offs/wavier cases was fully provided for in the books of accounts to the extent of the amount of write-off/waiver. In investment write-offs the amount outstanding is generally fully provided for.
3. Whether proper records are maintained for inventories lying with third parties & assets received as gift/grant(s) from the Govt. or other authorities. According to the information and explanations provided to us by the Company:
(a) Being a Non-Banking Financial Institution there is no involvement of any inventories;
(b) The Company has not received any gift/grant(s) from government or any other authorities during the year.

Part B - Sub-Directions

Sl. No. Sub-Directions Reply
1. Employee Benefits: Independent verification may be made of information/inputs furnished to Actuary viz. number of employees average salary retirement age and assumptions made by the Actuary regarding discount rate future cost increase mortality rate etc. for arriving at the provision for liability of retirement benefits viz. gratuity leave encashment post-retirement medical benefits etc. According to the information and explanations provided to us by the Company independent verification has been made of information/inputs furnished to Actuary viz. number of employees average salary retirement age and assumptions made by the Actuary regarding discount rate future cost increase mortality rate etc. for arriving at the provision for liability of retirement benefits viz. gratuity and leave encashment. As informed to us there are post-retirement medical benefits.
2. Investments: Whether the titles of ownership in respect of CGS/SGS Bonds/Debentures etc. are available in physical or de-mat form and these in aggregate agree with the respective amounts shown in the Company’s books of According to the information and explanations provided to us by the Company the following bonds/debentures owned by the Company were not available in physical/de-mat form having been transferred to the repo buyer under repo transactions within the extant guidelines of Reserve Bank of India:

 

Sl. No. Bond Issuer Company Quantity Amount
(Rs crore)
1. Air India Ltd (Series 1) [9.84] 27-Sep-26 159 17.39
2. Damodar Valley Corporation Ltd [8.69] 25-Mar-28 2000 209.00
3. Food Corporation of India (Series V-B) [8.8] 22-Mar-28 465 46.50
4. India Renewable Energy Development Agency Ltd 1100 110.00
(Ser V-A) [8.44] 10-May-23
5. Indian Renewable Energy Development Agency Ltd 940 94.00
(Ser V-B) [8.49] 10-May-28
6. Mahanagar Telepone Nigam Ltd [8.57] 28-Mar-23 400 40.00
7. Power Grid Corporation of India Ltd 150 15.00
(XLIII Issue-F) [7.93] 20-May-22
8. Power Grid Corporation of India Ltd 150 15.00
(XLIII Issue-G) [7.93] 20-May-23
9. Power Grid Corporation of India Ltd 150 15.00
(XLIII Issue-H) [7.93] 20-May-24
10. Power Grid Corporation of India Ltd 150 15.00
(XLIII Issue-I) [7.93] 20-May-25
11. Power Grid Corporation of India Ltd 150 15.00
(XLIII Issue-J) [7.93] 20-May-26
12. Power Grid Corporation of India Ltd 150 15.00
(XLIII Issue-K) [7.93] 20-May-27
13. Power Grid Corporation of India Ltd 150 15.00
(XLIII Issue-L) [7.93] 20-May-28
14. 8.06% REC (Series 115) 31 May 2023 850 85.00
15. 10% Reliance Capital Ltd (F Series B-264) 03-Nov-17 100 10.05
16. 10% Reliance Capital Ltd (F Series B-272) 20-Dec-17 370 37.19

 

For ASA & Associates LLP Parveen Kumar For KPMR & Associates S M Yamin Qureshi
Chartered Accountants Partner Chartered Accountants Partner
FRN: 009571N/N500006 Membership No. 088810 FRN: 02504N Membership No. 081750
Place : New Delhi
Date : May 28 2016

Annexure III referred to in paragraph 3 of Report on Other Legal and RegulatoryRequirements of our report of even date on standalone financial statements:

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of IFCILimited ("the Company") as of March 31 2016 in conjunction with our audit ofthe financial statements of the Company for the year 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 (‘ICAI’). 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.

Auditor’s Responsibility

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 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 Company’s internal financial controlssystem over financial reporting.

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.

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 control 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For ASA & Associates LLP Parveen Kumar For KPMR & Associates S M Yamin Qureshi
Chartered Accountants Partner Chartered Accountants Partner
FRN: 009571N/N500006 Membership No. 088810 FRN: 02504N Membership No. 081750
Place : New Delhi
Date : May 28 2016