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Capital India Finance Ltd.

BSE: 530879 Sector: Financials
NSE: N.A. ISIN Code: INE345H01016
BSE 00:00 | 10 Aug 106.70 0
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NSE 05:30 | 01 Jan Capital India Finance Ltd
OPEN 106.90
PREVIOUS CLOSE 106.70
VOLUME 155
52-Week high 160.70
52-Week low 92.60
P/E 71.13
Mkt Cap.(Rs cr) 829
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 106.90
CLOSE 106.70
VOLUME 155
52-Week high 160.70
52-Week low 92.60
P/E 71.13
Mkt Cap.(Rs cr) 829
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Capital India Finance Ltd. (CAPITALINDIA) - Auditors Report

Company auditors report

To the Members of Capital India Finance Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Capital IndiaFinance Limited ("the Company") which comprise the Balance Sheet as at March312021 and the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then endedand a summary of significant accounting policies and other explanatory information.

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 Companies Act 2013 ("the Act') in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 and its profit total comprehensiveincome the changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditors'Responsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.

Emphasis of Matter

We draw attention to Note 48 to the Standalone Financial Statements which describesthat the potential impact of the COVID-19 pandemic on the Company's financial statementsand particularly the impairment provisions are dependent on future developments which arehighly uncertain.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditors' Response
1. Identification of and provisioning for expected credit loss (ECL) on loans in accordance with the Company's policy (Refer Note 2.2 6 and 48 to the standalone financial statements) The Company has loans carried at amortised cost amounting to Rs. 56828.60 net of provision for ECL Rs. 1632.18 as at March 31 2021. Identification of and provisioning for ECL on loans in accordance with the Company's policy is a key audit matter due to the current processes at the Company which requires manual interventions management estimates and judgement and other stakeholders focus. The most significant judgements are: Our audit approach included testing the design operating effectiveness of internal controls and substantive audit procedures in respect of identification of and provisioning for ECL on loans in accordance with the Company's policy. In particular:
• we have evaluated the Company's internal control system in adhering to the Company's policy for identification of and provisioning for ECL on loans;
• Timely identification and classification of the loans. • Determining the probability of defaults and estimation of loss given defaults based on the relevant factors. • we have identified and tested the design and implementation as well as operational effectiveness of key controls pertaining to identification classification and staging of loans in correct maturity buckets key assumptions used for the purpose of determination of impairment provision completeness and accuracy of the data inputs used and monitoring of overdue positions by business and finance team;
• Inputs and Judgements used in determination of management overlay at various asset stages considering the current uncertain economic environment with the range of possible effects unknown to the country arising out of the COVID-19 Pandemic. • we test checked loans to examine the approval process validity of the recorded amounts loan documentation examined the statement of accounts indicators of impairment expected credit loss provision additional provisions made on loans considering the current uncertain economic environment arising out of COVID 19 pandemic and compliance with identification of and provisioning for ECL on loans;
• evaluated the management judgment governance process and review controls and discussed the process and assumptions for identification of and provisioning for ECL on loans with senior management including the Chief Executive Officer Chief Financial Officer and Head of Credit and Risk;
Accordingly the loans form a major portion of the Company's assets and due to the significance of the judgments used in classifying loans into various stages as stipulated in Indian Accounting Standard (IND AS) 109 and determining related impairment provision requirements and related disclosures this is considered to be the area that had a greater focus of our overall Company audit and a key audit matter. • assessed disclosures included in the Ind AS financial statements in respect of expected credit losses; • obtained written representations from management and those charged with governance whether they believe significant assumptions used in calculation of expected credit losses are reasonable.

Information Other than the Financial Statements and Auditors' Report Thereon

• The Company's Board of Directors is responsible for the preparation of otherinformation. The other information comprises the Directors' Report including annexures toDirectors' Report Management Discussion and Analysis Report and Report on CorporateGovernance but does not include the standalone financial statements and our auditors'report thereon.

• Our opinion on the standalone financial statements does not cover the otherinformation and accordingly we do not express any form of assurance conclusion thereon.

• In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.

• If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit 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 (including Other ComprehensiveIncome) Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act as applicable.

e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312021 from being appointed as a director in terms of Section 164(2) of theAct.

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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

g) With respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

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 contracts forwhich there were any material foreseeable losses;

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

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm's Registration No. 117366W/W-100018)
Place: Mumbai

Date: 26 May 2021

Pallavi A. Gorakshakar (Partner) (Membership No. 105035) UDIN: 21105035AAAAEZ3914

ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of CapitalIndia Finance Limited ("the Company") as of March 31 2021 in conjunction withour audit of the 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that are operating effectively for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies 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.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.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 controls based on the assessed risk. Theprocedures selected depend on the auditors' judgment including the assessment of therisks of material 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 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 and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial controls over financialreporting includes those policies and 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

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 controlssystem over financial reporting and such internal financial controls over financialreporting are operating effectively as at March 31 2021 based on the criteria forinternal financial control over financial reporting 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 DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm's Registration No. 117366W/W-100018)
Place: Mumbai

Date: 26 May 2021

Pallavi A. Gorakshakar (Partner) (Membership No. 105035) UDIN: 21105035AAAAEZ3914

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

i) In respect of the Company's Property Plant & Equipment:

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant & equipment.

b) Some of the property plant & equipment were physically verified during the yearby the Management in accordance with a regular programme of verification which in ouropinion provides for physical verification of all the property plant & equipment atreasonable intervals. According to the information and explanation given to us nomaterial discrepancies were noticed on such verification.

c) According to the information and explanations given to us the Company does not haveany immov-able properties of acquired freehold land and building. In respect of immovableproperties of building that have been taken on lease and disclosed as Right of Use Assetsin the Ind AS financial statements the lease agreements are in the name of the Company.

ii) The Company does not have any inventory and hence reporting under clause 3(ii) ofthe CARO 2016 is not applicable.

iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Companies Act 2013 ("the Act").

iv) The Company is a registered non-banking finance company to which the provisions ofSections 185 and 186 of the Companies Act 2013 are not applicable and hence reportingunder clause (iv) of CARO 2016 is not applicable.

v) According to the information and explanations given to us the Company has notaccepted any deposit during the year. Therefore the provisions of clause (v) of CARO 2016is not applicable.

vi) The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013.

vii) According to the information and explanations given to us in respect of statutorydues:

a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service TaxAct cess and other material statutory dues applicable to it to the appropriateauthorities. We are informed that the provisions of Sales Tax Value Added Tax CustomsDuty and Excise Duty are not applicable to the Company.

b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Goods and Services Tax cess and other material statutorydues in arrears as on March 31 2021 for a period of more than six months from the datethey became payable.

c) There are no dues of Income-tax Goods and Services Tax cess and other materialstatutory dues as on March 31 2021 on account of disputes

viii) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to financialinstitutions or dues to debenture holders. The Company has not taken any loans orborrowings from government.

ix) In our opinion and according to the information and explanations given to us theterm loans have been applied by the Company during the year for the purposes for whichthey were raised other than temporary deployment pending application of proceeds.

x) To the best of our knowledge and according to the information and explanations givento us no fraud by the Company and no material fraud on the Company by its officers oremployees has been noticed or reported during the year.

xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theCARO 2016 is not applicable.

xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Act. The Company has disclosedthe details of related party transactions in the financial statements as required by theapplicable accounting standards.

xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause 3 (xiv) of the CARO 2016 is not applicable

xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its subsidiary companies or persons connected with him and henceprovisions of section 192 of the Act are not applicable.

xvi) The Company has received the Authorised Dealer - Category II (AD - Cat II) licensevide no. 15/2020 under the RBI/DNBR/2016-17/45 Master DirectionDNBR.PD.008/03.10.119/2016-17 and under this licence the Company has commenced ForexOperations in the current year. Subsequently the Company has written to the Reserve Bankof India (RBI) vide letter dated January 4 2021 seeking clarification as to whether therevenue and assets from Forex business should be treated as financial income and financialasset. Pending any further clarification from the RBI the Company has continued tocompute asset income pattern without considering Income from Forex Services as a part ofTotal Income. Basis the said exclusion the Company is required to be registered undersection 45-IA of the Reserve Bank of India Act 1934 and it has obtained the registration.

For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm's Registration No. 117366W/W-100018)
Place: Mumbai

Date: 26 May 2021

Pallavi A. Gorakshakar (Partner) (Membership No. 105035) UDIN: 21105035AAAAEZ3914

.