To the Members of Kailash Auto Finance Ltd Report on the Financial Statements
We have audited the accompanying standalone financial statements of Kailash AutoFinance Limited ("the Company") which comprises the Balance Sheet as at March31 2017 the Statement of Profit and Loss and Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Standalone Financial Statements
The Companys 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 withaccounting 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 and the Companies (Accounting Standards) Amendment Rules 2016. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial control that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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 thereunder. We conducted our audit inaccordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India as specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors 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 Companyspreparation 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 Companys Directors as well as evaluating theoverall presentation of the financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the standalone financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2017 its Loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection143 of the Act we give in the "Annexure A" a statement on the mattersSpecified in the paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; c ) The Balance Sheet Statement of Profit and Loss and theCash Flow Statement dealt with by this Report are in agreement with the books of account;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 and the Companies (Accounting Standards) Amendment Rules2016; e) On the basis of the written representations received from the directors as onMarch 31 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 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 B" to this report; g) With respect tothe other matters to be included in the Auditors Report in accordance with Rule 11of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us : i. The pending litigation ofthe Company is disclosed in Note No. 26 and 27 to the Standalone Financial Statements. ii.The Company did not have any longterm contracts including derivative contracts forwhich there were any material foreseeable losses. iii. There were no amounts which wererequired to be transferred to the Investor Education and Protection Fund by the Company.iv. The Company has provided requisite disclosures in Note 31 to these standalonefinancial statements as to the holding of Specified Bank Notes on November 8 2016 andDecember 30 2016 as well as dealings in Specified Bank Notes during the period fromNovember 8 2016 to December 30 2016. Based on our audit procedures and relying on themanagement representation regarding the holding and nature of cash transactions includingSpecified Bank Notes we report that these disclosures are in accordance with the books ofaccounts maintained by the Company and as produced to us by the Management.
For Anil Agrawal
CA Anil Agrawal
Membership No 79054
Date: May 30 2017
TO THE MEMBERS OF KAILASH AUTO FINANCE LIMITED
[REFERRED TO IN OUR REPORT OF EVEN DATE] i. (a) The company has maintained properrecords showing full particulars including quantitative details and situation of fixedassets.
(b) Fixed assets were physically verified by the management during the year and nomaterial discrepancies were noticed on such verification. (c) The Company does not haveany immovable property. ii. In our opinion and according to the information andexplanation given to us the company does not hold any inventories therefore theprovisions of this clause is not applicable. iii. According to the information andexplanation given to us the company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnership or other parties covered in the Registermaintained under section 189 of the Companies Act 2013. Accordingly the provisions ofclause 3 (iii)(a)(b)and (c) of the order are not applicable to the company and hence notcommented upon. iv. According to the information and explanation given to us the companyhas complied with the provisions of section 185 & 186 of the Act. v. The Company hasnot accepted any deposits within the meaning of Section 73 to 76 of the Act and theCompanies (Acceptance of Deposits) Rules 2014(as amended). Accordingly the provisions ofclause 3(v) of the Order are not applicable. vi. To the best of our knowledge and asexplained the Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Companies Act 2013 for the operation carried by the Company. vii.(a) According to the information and explanations given to us and on the basis of ourexamination of the records of the company amounts deducted /accrued in the books ofaccount in respect of undisputed statutory dues including Income-tax Sales-tax ValueAdded Tax Service Tax Cess and other material statutory dues have generally beenregularly deposited during the year by the Company with the appropriate authorities.
(b) According to the information and explanations given to us the dues which have notbeen deposited by the company on account of disputes are as follows
1. Interest Tax:
Assessment Years 1998-99 1999-00 and 2000-01: Cases are pending before Allahabad HighCourt by the Income Tax Department against the order of ITAT where in it is held that theFinance Charges on Hire Purchase is not interest but a profit.
2. Income Tax: a. Assessment Year 2001-02 and 2002-03: Cases are pendingbefore Allahabad High Court (by the Deptt.) against the order of the ITAT whereindepreciation is allowed at the rate of 40% on leased vehicles. b. Assessment Year 1996-97:Case is pending before Allahabad High Court against the penalty order passed by the ITAT.c . Assessment Year 2004-05: Case is pending before ITAT (u/s 254) and before High Courtagainst the legal ground that case cannot be opened u/s 148 before completion of 12 monthsin which return of income was originally filed. d. Assessment Year 2006-07: Case ispending before CIT (Appeals) Kanpur against the order of the Assessing Officer. e.Assessment Year 2007-08: Case is pending for assessment before DCIT 6 Kanpur. f.Assessment Year 1995-96: We have filed a Writ Petition before Lucknow High Court under theKAR VIVAD SAMADHAN SCHEME and matter is pending before Lucknow High Court. g. AssessmentYear 1992-93: Application is pending for appeal effect to be given before the AssessingOfficer.The quantification of above liabilities has not been done on account of casespending before the authority.
3. Legal Cases: a. Disputed Case of Bhubaneswar Branch for recovery of Rs.4.45/ - Lacs deposited in court. b. Disputed Case of Citi Corp for recovery of Rs. 3.04/-Lacs of Alwar Branch. c . Disputed Case liabilities of Rs 3.08/- Lacs repayable if claimedby the customer. viii. Based on our audit procedures and as per the information andexplanations given by the management the Company did not have any outstanding dues to afinancial institution banks and government. There were no outstanding debentures duringthe year. Accordingly the provisions of paragraph 3(viii) are not applicable to thecompany and hence not commented upon. ix. The company did not raise any money by way ofinitial public offer or further public offer (including debt instrument) and term loansduring the year. Accordingly paragraph 3(ix) of the Order is not applicable. x. Based uponthe audit procedures performed for the purpose of reporting the true and fair view of thefinancial statements and according to the information and explanations given by themanagement we report that no fraud by the Company or no fraud on the Company by theofficers and employees of the Company has been noticed or reported during the year. xi.According to the information and explanations given by the management the managerialremuneration has been paid/ provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with Schedule V to the Companies Act 2013. xii. Inour opinion the Company is not a Nidhi Company. Therefore the provisions of clause3(xii) of the order are not applicable to the Company and hence not commented upon. xiii.According to the information and explanations given by the management transactions withthe related parties are in compliance with Sections 177 and 188 of Companies Act 2013where applicable and details have been disclosed in the notes to the financial statementsas required by the applicable accounting standards. xiv. According to the information andexplanations given to us and on an overall examination of the balance sheet the Companyhas not made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review and consequently reportingrequirements under clause 3(xiv) are not applicable to the Company and not commented upon.xv. According to the information and explanations given by the management the Company hasnot entered into any non-cash transactions with directors or persons connected with him.xvi. According to the information and explanations given to us and as per our examinationof records the company is required to be registered under section 45-IA of the ReserveBank of India Act 1934 and the registration has been obtained.
For Anil Agrawal
CA Anil Agrawal
Membership No 79054
Date: May 30 2017
ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF KAILASH AUTO FINANCE LIMITED Report on the Internal FinancialControls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")
We have audited the internal financial controls over financial reporting of KailashAuto Finance Limited ("the Company") as of March 31 2017 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Managements Responsibility for Internal Financial Controls
The Companys 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). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to the Companys policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial informationas required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys 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 as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 auditors 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.
Meaning of Internal Financial Controls over Financial Reporting
A companys 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 companys internal financial control overfinancial reporting includes those policies and procedures that: i. pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; ii. 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 authorizations ofmanagement and directors of the company; and iii. provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompanys 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 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 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 2017 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 Anil Agrawal |
|Chartered Accountants |
|CA Anil Agrawal |
|Membership No 79054 |
|Place: Mumbai |
|Date: May 30 2017 |