TO THE MEMBERS OF
SATIN CREDITCARE NETWORK LIMITED
1. Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Satin CreditcareNetwork Limited ('the Company') which comprise the Balance Sheet as at 31st March2017 the Statement of Profit and Loss and the Cash Flow statement for the year then endedand a summary of significant accounting policies and other explanatory information.(hereinafter referred to as "Standalone Financial Statements")
2. 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 (hereinafter referred to as "the Act") withrespect to the preparation of these standalone financial statements that give a true andfair view of the financial position financial performance and cash flows of the Companyin accordance 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 for maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
3. Auditors' Responsibility
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. While conducting the audit we have taken into account the provisionsof the Act the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder.
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 of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Board of Directors as well as evaluating the overallpresentation of the standalone financial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
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 2017 its profit and its cash flows for the year ended on that date.
5. Report on Other Legal and Regulatory Requirements
A. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure "A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
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) In our opinion the Balance Sheet Statement of Profit and Loss and the Cash Flowstatement comply with the accounting standards specified under section 133 of theCompanies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of written representations received from the Director as on 31 March2017 and taken on record by the Board of Directors none of the directors of the Companyis disquali ed as on 31st March 2017 from being appointed as a director in terms ofsection 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) There are no pending litigations which would have an impact on the financialposition of the company.
(ii) The company does not have any material foreseeable losses in re spect ofoutstanding long term contracts including derivative contracts as at 31 March 2017.
(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
(iv) The company has provided requisite disclosures in the standalone statements as tothe holdings as well as dealings in Speci ed Bank Notes during the period from 8thNovember 2016 to 30th December 2016 and these are in accordance with the books of accountsmaintained by the company. Refer Note No. 24 to the Standalone financial statement.
For A.K. Gangaher & Co.
Membership No. 083674.
Firm ICAI Registration No. 004588N
Place : Delhi
Dated : 26 May 2017
Annexure A to the Independent Auditor's Report - 31 March 2017 on Standalone FinancialStatements
(Referred to our report of even date)
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets were physically veri ed during the year by the management in aphased periodic manner in accordance with a regular programme of verification which inour opinion provides for physical verification of all fixed assets at reasonableintervals having regard to the size of the company and the nature of its assets. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.
(c) According to information and explanations given to us there are certain caseswhere the title deed of immovable properties are not in the name of the Company. The fixedassets acquired on amalgamation of Satin Intellicomm Limited with the company with theappointed date of 1.4.2006 and the effective date as on 3.12.2007 are still in the name ofthe erstwhile company Satin Intellicomm Limited Refer Note No. 11(3).
(ii) The Company's business does not deal with inventories and accordingly therequirements under clause 3(ii) of the Order are not applicable to the Company and hencenot commented upon.
(iii) According to the information and explanations given to us the company has notgranted any loans secured or unsecured to companies rms Limited LiabilityPartnerships or other party covered in the register maintained under section 189 of theAct. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of the order are notapplicable to the company.
(iv) The Company has not granted any loans and provided any guarantees or security tothe parties covered under section 185 of the Act. The company has complied with theprovisions of Section 186 of the Act in respect of investments made or loans or guaranteeor security provided to the parties covered under section 186.
(v) According to the information and explanations given to us the Company has notaccepted any deposits during the year under section 73 to 76 or any other relevantprovisions of the Companies Act 2013. The company is a registered 'Non-Banking FinancialCompany-Micro Finance Institution' (NBFC- MFI) with Reserve Bank of India.
(vi) The Central Government of India has not prescribed the maintenance of cost recordsunder Section 148(1) of the Act for any of the services rendered by the company.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the company the company has been regular in depositingwith appropriate authorities undisputed statutory dues including provident fundemployees' state insurance income tax sales tax service tax custom duty excise dutyvalue added tax cess and other material statutory dues applicable to it.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax service taxvalue added tax customs duty excise duty and cess were in arrears as at 31.03.2017 for aperiod of more than six months from the date they became payable.
(c) According to the information and explanation given to us there are no dues ofvalue added tax custom duty service tax excise duty and cess which have not beendeposited on account of any dispute.
(viii) Based on our audit procedures and according to the information and explanationsgiven to us the company has not defaulted in repayment of loans or borrowings to banks orto any financial institutions or debenture holders or government.
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of public offer or further public offer and hencenot commented upon. Further the monies raised by the Company through debt instruments andterm loans (both secured and unsecured) availed by the company were prima facie appliedby the company during the year for the purposes for which they were obtained thoughidle/surplus funds which were not required for immediate utilization have been gainfullyinvested in liquid assets payable on demand.
(x) We have been informed that during the year there were four instances ofmisappropriation of cash by the employees of the company aggregating to Rs. 2816201(Previous year Rs. 8507000) out of which in the Current Year Rs. 2339000 (PreviousYear Rs. 7500000) has been recovered. For the remaining amount the company has not madeprovision in its books of account during the year being certain of recovery. The companyhas initiated legal action against the employees - Refer Note No. 30(9)(A)(xvi)(g)
(xi) Based on our audit procedures and according to information and explanations givento us the managerial remuneration has been paid/provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the CompaniesAct 2013.
(xii) In our opinion and according to information and explanations given to us thecompany is not a nidhi company. Accordingly paragraph 3(xii) of the order is notapplicable.
(xiii) Based on our audit procedures and according to information and explanationsgiven to us transactions with related parties are in compliance with section 177 and 188of the Act where applicable. The details of such related party transactions have beendisclosed in the notes to the financial statements as required by the applicableaccounting standard.
(xiv) Based on our audit procedures and according to information and explanations givento us the company has made preferential allotment / private placement of shares duringthe year under review and it has complied with requirements of Section 42 of the Act. Theamount raised have been used for the purposes for which the funds were raised.
(xv) Based on our audit procedures and according to information and explanations givento us the company has not entered into non-cash transactions with directors or directorsof its subsidiary company or persons connected with them and hence provisions of section192 of the Companies Act 2013 are not applicable to the Company.
(xvi) The company being a NBFC (MFI) is registered under section 45-IA of the ReserveBank of India Act 1934
For A.K. Gangaher & Co.
Membership No. 083674
Firm ICAI Registration no.004588N
Dated: 26 May 2017
Annexure B to the Independent Auditors' Report - 31 March 2017 on Standalone FinancialStatements
(Referred to in paragraph B(f) under "Report on Other Legal and RegulatoryRequirements" of our report of even date)
Report on the Internal Financial controls under Clause (i) of Sub-section 3 of Section143 of the Act
We have audited the internal financial controls over financial reporting of SatinCreditcare Network Limited ("the Company") as of 31 March 2017 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
The Company management is responsible for establishing and maintaining internalfinancial controls based on the internal controls over financial reporting criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India ("ICAI").These responsibilities include the design implementation and maintenance of adequateinternal financial controls that ware operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's polices thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 ("theAct").
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 andprescribed under section 143 (10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedure 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 the internal controls based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of the riskof material misstatement of the financial statement 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 controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial controls over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting andpreparation of financial statements for external purposes in accordance with generallyaccepted principles. A company's internal financial controls over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of recordsthat in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 projection of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlsystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2017 based on the internal controlsover financial reporting criteria established by the Company considering the essentialcomponents of internal controls stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by ICAI.
For A.K. Gangaher & Co.
Membership No. 083674
Firm ICAI Registration no.004588N
Dated: 26 May 2017