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Karnavati Finance Ltd.

BSE: 538928 Sector: Financials
NSE: N.A. ISIN Code: INE554R01012
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OPEN 25.00
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VOLUME 105
52-Week high 35.75
52-Week low 9.70
P/E 33.33
Mkt Cap.(Rs cr) 25
Buy Price 25.00
Buy Qty 297.00
Sell Price 26.00
Sell Qty 5.00
OPEN 25.00
CLOSE 25.00
VOLUME 105
52-Week high 35.75
52-Week low 9.70
P/E 33.33
Mkt Cap.(Rs cr) 25
Buy Price 25.00
Buy Qty 297.00
Sell Price 26.00
Sell Qty 5.00

Karnavati Finance Ltd. (KARNAVATIFIN) - Auditors Report

Company auditors report

To the Members of

Karnavati Finance Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Karnavati Finance Limited("the Company") which comprise the Balance Sheet as at March 31 2016 theStatement of Profit and Loss and 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. 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 controls andensuring their operating effectiveness and 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.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the accounting and auditingstandards andmatters which are required to be included in the audit report under theprovisions of the Act andthe Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan andperform the audit to obtain reasonable assurance about whetherthe 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 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 Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrols system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of 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/qualified audit opinion/adverse audit opinion on thefinancial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid 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 2016 and its profit 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) ofSection 143 of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order.

(2) 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 and the Statement of Profit and Loss dealt with by this Report arein agreement with the books of account;

d. 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;

e. On the basis of written representations received from the directors as on March 312016 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of clause (g) ofsub-section (1) of Section 164(2) of the Act.

f. 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

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. The Company does not have any pending litigations which would impact its financialposition;

ii. The Company did not have any long-term contracts including derivative contractshence the question of any material foreseeable losses does not arise;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Maharishi & Co.
Chartered Accountants
ICAI Firm Registration No.124872W
Kapil Sanghvi
Place: Jamnagar Partner
Date : May 30 2016 Memb. No. 141168

"ANNEXURE A" TO INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements’ in the Independent Auditor’s Report of even date to the members ofKarnavati Finance Limited on the financial statements for the year ended March 31 2016)

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

(b) During the year fixed assets have not been physically verified by the management.However there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature 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 company does not have any immovable properties.

ii. The Company is a Non Banking Finance Company and it does not hold any physicalinventories. Thus paragraph 3(ii) of the Order is not applicable to the company.

iii. As informed the Company has not granted any loans secured or unsecured tocompanies firms or other parties covered in the register maintained under Section 189 ofthe Act. Accordingly the provisions stated in paragraph 3 (iii)(a) and 3 (iii)(b) of theOrder are not applicable.

iv. In our opinion and according to the information and explanations given to us thecompany has neither granted any loans or guarantees to parties covered under section 185nor have any investment hence provisions of Section 185 and section 186 of act shall notapply to the company.

v. In our opinion and according to the information and explanations given to us thecompany has not accepted any deposits from the public within the provisions of section 73to 76 of the Act and rules framed there under.

vi. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the act for any of the services rendered by the company.

vii. (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generallyregular indepositing undisputed statutory dues with the appropriate authorities. According to theinformation and explanations given to us no undisputed amounts payable in respect of theabove were in arrears as at March 31 2016 for a period of more than six months from thedate on when they become payable.

(b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise value added taxoutstanding on account of any dispute.

viii. In our opinion and according to the information and explanations given to us theCompany has not obtained any loan from banks or financial institutions.

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. Accordinglyparagraph 3(ix) of the Order is not applicable.

x. Based upon the audit procedures performed and the information and explanations givenby the management we report that no fraud by the company or on the company by itsofficers or employees has been noticed or reported during the year.

xi. Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;

xii. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.

xiii. In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed intheFinancial Statements as required by the applicable accounting standards.

xiv. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.

xv. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.

xvi. In our opinion the company is Non-Banking Finance Company registered undersection 45IA of the Reserve Bank of India Act 1934 vide certificate of registration no.13.00064dated February 24 1998.

For Maharishi & Co.
Chartered Accountants
ICAI Firm Registration No.124872W
Kapil Sanghvi
Place: Jamnagar Partner
Date : May 30 2016 Memb. No. 141168

"ANNEXURE B" TO INDEPENDENT AUDITOR’S REPORT OF EVEN DATE OF KARNAVATIFINANCE LIMITED

[‘Report on the Internal Financial Controls’ under Clause (i) of Sub-section3 of section 143 of the Companies Act 2013("the Act")’]

We have audited the internal financial controls over financial reporting of KarnavatiFinance Limited("the Company") as of March 31 2016 in conjunction with ouraudit of the financialstatements 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 internalfinancialcontrols based on the internal control over financial reporting criteriaestablished by thecompany considering the essential components of internal control statedin the Guidance Noteon Audit of internal Financial Controls over Financial Reportingissued by the institute ofChartered Accountants of India ('ICAI"). Theseresponsibilities include the designimplementation and maintenance of adequate internalfinancial controls that were operatingeffectively for ensuring the orderly and efficientconduct of its business including adherenceto company's policies the safeguarding of itsassets the prevention and detection of fraudsand errors the accuracy and completeness ofthe accounting records and the timelypreparation of reliable financial information asrequired under the Companies Act 2013.

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

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles.

A company's internal financial control over financial reporting includes those policiesand 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 authorisations of management and directors of the company; and

3. provide reasonable assurance regarding prevention or timely detection ofunauthorised 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.

Opinion

According to the information and explanation given to us the company is in processofestablishment of its internal financial control over financial reporting on criteriabased on orconsidering the essential c0mponents of internal control stated in theGuidance Note on Auditof Internal Financial Controls Over Financial Reporting issued bythe Institute of CharteredAccountants of India. Because of this reason we are unable toobtain sufficient appropriateaudit evidence to provide a basis for our opinion whether theCompany had adequate internalfinancial controls were operating effectively as at March 312016.

We have considered the disclaimer reported above in determining the nature timingandextent of audit tests applied in our audit of the financial statements of the Companyand thedisclaimer does not affect our opinion on the financial statements of the Company.

For Maharishi & Co.
Chartered Accountants
ICAI Firm Registration No.124872W
Kapil Sanghvi
Place: Jamnagar Partner
Date : May 30 2016 Memb. No. 141168