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DCM Financial Services Ltd.

BSE: 511611 Sector: Financials
NSE: DCMFINSERV ISIN Code: INE891B01012
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VOLUME 400
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DCM Financial Services Ltd. (DCMFINSERV) - Auditors Report

Company auditors report

TO THE MEMBERS OF DCM FINANCIAL SERVICES LIMITED REPORT ON THE AUDIT OF THE FINANCIALSTATEMENTS Opinion

We have audited the accompanying financial statements of DCM FINANCIAL SERVICESLIMITED

("the Company") which comprise the Balance Sheet as at 31stMarch 2020 and the Statement of

Profit and Loss Statement of Changes in Equity and the Cash Flow Statement for theyear then ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information. In our opinion and to the best ofour information and according to the explanations given to us except for the possibleeffects of the matter described in the Basis for Qualified Opinion paragraph theaforesaid standalone Ind AS 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 (a) In the case of the Balance Sheet of the Stateof Affairs of the Company as at March 31 2020; and

(b) In the case of Statement of Profit and Loss account of the loss for the year endedon date

March 31 2020.

(c) In the case of Cash Flow Statement for the year ended on date March 31 2020.

(d) In the case of Statement of changes in equity for the year ended on date March 312020.

Basis for Qualified Opinion

(i) Justice Anil Kumar as one man committee was appointed vide order dated:- 3rdSeptember 2015 by the Hon'ble High Court of Delhi to scrutinize the list of depositorsand other claimants and to take steps enumerated hereinafter with the view to resolveat-least some of the disputes. The one man committee submitted its report on to Hon'bleHigh Court of Delhi on 22nd April 2016. Taking cognizance of the report Hon'ble HighCourt of Delhi on 10th August 2017 accepted the recommendation of one man committeeenumerated in the report. Under Scheme of One Man Committee Interest of Rs 235 Lacs arepayable to Debenture Holders and Rs 1448 Lacs are payable to Fixed Depositors underPhase-2 of Schedule of Payments laid down by One Man Committee. Presently the saidcommittee has waived any further payment of Interest to Fixed DepositorsDebenture-holders and other lenders however on complete liquidation of properties andinvestments if any surplus remains after payment to all stakeholder creditors thenfurther payment of Interest would be decided. All stakeholders creditors which are coveredunder scheme has given its consent to the scheme. No provision of Rs. 1683 Lacs as laiddown under the the scheme towards Interest on Debentures and Fixed Deposits have beenprovided in the financial statements on the outstanding amount of Debentures and FixedDeposits.

Had interest of Rs. 1683 Lacs been provided for in the financial statements of yearending 31st March 2018 on outstanding amount of Debentures and Fixed Deposits the NetProfit before after tax would have been tax would have been lowered by Rs. 1683 Lacs andNet Profit lowered by Rs. 1340 Lacs as at 31st March 2018. The cumulative net loss aswell as Current Liabilities as at 31st March 2020 would have been higher by Rs 1340Lacs. The same has been explained in Note 17.1 and Note 17.4

(ii) For redemption of ‘B' series debentures of Rs. 2014.98 Lacs debentureredemption reserve is required to be created. Debenture redemption reserve of Rs. 2014.98Lacs has not been created due to insufficient profits. The same has been explained in Note17.1.

(iii) The value of assets charged as security in favor of banks debenture-holders& financialinstitutions have been depleted over a period of time. The depletion hasnot yet been ascertained by the Company. To the extent of shortfall if any the liabilityis unsecured whereas the same has been shown as secured. The same has been explained in Note17.1 17.2 and 17.3.

(iv) Balance confirmation of bills receivable and payable advances recoverable in cashor in kind receivables and payables relating to lease and hire purchase lease securitydeposit of which party wise details are not available. Balance confirmation ofinter-corporate deposits

FD balances with Bank interest on FD from banks balance of ex-employees marginagainst

L/C loans from institutions banks certificateon payment of loans from bank and nodues other receivables and payables have not been received from the parties/personsconcerned.

In the absence of balance confirmation the closing balances as per books of accountshave been incorporated in the final accounts and have been shown unless otherwise statedby the management about its recoverability in the financials including considering the NPAProvisions are good for recovery/payment. Time barred debts under the Limitations Acthave not been separately ascertained and written off or provided for. In the absence ofsuch confirmation & corresponding reconciliation it is not feasible for us todetermine financialimpact on the financials and the amount referred as payable in thefinancials can differ. Please refer Note No-38

(v) The subsidiary company namely Global IT Options Limited has from 1st June 2014to 31st March 2018 incurred expenditure of Rs 22.84 Lacs for & on behalf of itsHolding Company (i.e. DCM Financial Services Limited) and the same balance was outstandingas on 31st

March 2019. It comes under the category of short term funding which is in-factInter-Corporate Deposit. In case of Inter-Corporate Deposit Section 186 of Companies Act2013 stipulates to charge interest at a rate not less than the bank declared by ReserveBank of India. No Interest has been provided on outstanding balance of Rs 22.84 Lacs byCompany to its subsidiary - Global IT Options Limited with effect from 1-June-2014. It isa non-compliance of Section 186 of the Companies Act 2013 which could attract penalties.We have discounted this liability considering the borrowing with interest @10% p.a. in FY2015-16 considering that the same will be paid in FY 2019-20. However the company haspaid back the amount of Rs. 22.84 Lacs to its subsidiary in the FY 2019-20. Hence thebalance outstanding as on 31st March 2020 is NIL.

(vi) Contingent liabilities and Other Commitments

vi (a) During the year ended 30th June 2011 the company's tenant had filed a claim ofRs.

10000000 against the company due to damages suffered by the tenant which is stillpending under arbitration proceedings as on 31st March 2020.

vi (b) There is a demand of Rs. 3458900 for the Assessment Year 2006-07 and Rs.357542 for the Assessment Year 2012-13 for payment of income tax under the Income TaxAct 1961 which is disputed by the company and pending before the appropriate authoritiesas on 31st March 2020.

vi (c) There is an award passed by the arbitrator against the company in the matter ofMS

Shoes East Limited on May 28 2012 for Rs. 5128320 i.e. the claim amount along with

Rs. 30680848 towards interest cost for an underwriting given by the company in theyear

1995 for the public issue of M/s MS Shoes East Ltd. Furthermore an incidental costwhich includes arbitration venue rent record keeping cost administrative cost and stamppaper charges amounting to Rs. 549280 had been awarded to the company. The totalfinancial impact comes to Rs. 36358448 which has been contested by Company beforeHon'ble Delhi High Court.

vi (d) Due to dispute with the builder namely M/s NBCC Ltd. from which the company hadpurchased an office premises in the year 1995 regarding a claim of Rs. 28829634 onaccount of increase in super area and certain other expenditure which the builder i.e. M/s

NBCC Ltd. had incurred and the same is pending in arbitration. Breakup of the amount of

Rs . 28829634 mentioned supra is as follows:

S. No. Description Amount
1. Difference in super area Vs. provisional area 22928254/-
2. Claim of property tax 319100/-
3. Claim of ground rent 2167190/-
4. Allied charges 782210/-
5. Augmentation of Electric sub station 132880/-
6. Loss of profit 2000000/-
7. Arbitration cost 500000/-
TOTAL 28829634/-

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report:-

(i) We draw attention to Note 36 in the financial statements which indicatesthat the Company incurred a net loss of Rs. 3208547 during the year ended March 31 2020and as of that date the Company's current liabilities exceeded its total assets by Rs.413831396. The accumulated loss as on 31st March 2020 stands to Rs.857395457/-(Previous year Rs. 854886910/-). As on 31st March 2020 the Company'stotal liabilities exceeded to its total assets by Rs. 435173731/- (Previous year Rs.431965185/-).

As stated in Note 36 these events or conditions along with other matters as set forthin Note 36 which are as under :The Company is not carrying on any business as to complywith the directives of the Reserve Bank of India the company ceased to accept depositsfrom September 1997 and the company's application certificateof registration (CoR) as aNBFC had been rejected by the to RBI for

RBI in year 2004. The Company contends that the Scheme of One Man Committee shall beimplemented in full and other aspect of fresh restructuring scheme such issuance of equityto SBI Home Finance Limited and Pressman Leasing would be approved/decided upon by theHon'ble Delhi High Court and accordingly the decision on revival of Company would be takenby

Hon'ble Delhi High Court. It indicates that a material uncertainty exists that may castsignificant doubt on the Company's ability to continueasagoingconcern.Ouropinionisnotmodifiedin respect of this matter.

(ii) We draw attention to Note 26 in the financial statements regardingsuccessful implementation of scheme of One Man Committee on which continuity and revivalof the Company is completely dependent which not only includes successful implementationof Schedule of payments described under Phase-I and Phase-II but also realisability offunds from the disposal of Fixed Assets especially Building which is under dispute withTenant as well as NBCC.

(iii) We draw attention to Note 32 in the financial statements on the depositRs. 195000000 with the Hon'ble Delhi High Court. DCM Services Ltd as a promoter hadcommitted to bring in

Rs. 195000000 as a promoter contribution upon sanction of their restructuring schemeunder erstwhile Section 391 of the Indian Companies Act 1956 which is underimplementation by One Man Committee appointed with the direction of Hon'ble Delhi HighCourt. The Court vide order dated 06.05.2008 has asked DCM Services Limited to deposit Rs.195000000 with the Court and pursuant to the court order DCM Services Limited depositedRs 50000000 on 16.07.2010

Rs 67000000 on 18.11.2010 Rs. 39000000 on 21.04.2011 &Rs. 39000000 on27.04.2012 aggregating to Rs. 195000000 on behalf of the promoters with the RegistrarHon'ble Delhi High Court. All the funds are with Delhi High Court along-with accruedinterest thereon. No financial impact of this has been recorded in the financials of thecompany till 31st March 2020 as there is no clarity provided by Hon'ble High Court ofDelhi on whether Company would have to issue any shares against such contribution as perSEBI guidelines or such amount would be refundable to DCM Services Limited by company orthere would be no liability on the Company to either to pay the said amount or issue anyshares in lieu of that. Till Company gets any clarity on this matter no financial entryhas been recorded in the books of accounts.

Other Matter

We draw attention to Note 40 to the financial statements regarding management'sassessment of Covid-19 impact on the future performance of the company. Our report is notmodified in respect of the matter.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Director's Report Report on Corporate Governance and GeneralShareholders Information but does not include the financial statements and our auditor'sreport thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially 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.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

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 of thesefinancial statements that give a true and fair view of the financial position financialperformance changes in equity 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. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the

Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements the Board of Directors is responsible forassessing the

Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless the Boardof Directors 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 foroverseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal financial controls relevant to the audit in orderto 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 reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions thatmaycastsignificantdoubt 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 auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financialstatements represent the underlyingtransactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative 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 financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findingsincludinganysignificantdeficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expectedtooutweighthepublicinterestbenefitsofsuch communication.

Report on Other Legal and Regulatory Requirements

1. 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 of theCompanies Act

2013 we give in the Annexure ‘A' statement on the matters specified in paragraphs3 and 4 of the Order to the extent applicable.

2. As required by Section 143 (3) of the Companies Act 2013 we report that:

a. Except for the matters described in the Basis for Qualified Opinion and Key AuditMatters paragraph we have sought and obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purposes of our audit.

b. Except for the matters described in the Basis for Qualified Opinion and Key AuditMatters paragraph in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss the Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.;

d. Except for the matters described in the Basis for Qualified Opinion and Key AuditMatters paragraph in our opinion the aforesaid financial statements comply with theIndian

Accounting Standards prescribed under Section 133 of the Act read with rule 7of theCompanies (Accounts) Rules2014 ;

e. The matter described in the Basis for Qualified Opinion and Key Audit Mattersparagraph above in our opinion may have an qualified effect on the functioning of theCompany.

f. On the basis of the representations received from the directors as on 31st March2020 taken on the record by the Board of Directors none of the directors is disqualifiedas on

March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct. g. 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 h. with respect to the other matters to beincluded in the Auditor's Report in accordance with the requirements of section 197(16) ofthe Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

i. 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 opinion and to thebest of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition statements; inits financial Refer Note 28tothe financial

ii. The Company has made necessary provision in its financial statements under theapplicable law or Indian accounting standards wherever required;

iii. The company moved an application before the Hon'ble Company Law Board New Delhion 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing afresh repayment schedule for fixed depositors debenture-holders and other creditors ofthe Company. The company filed a Fresh Scheme of Arrangement for the reorganization of theshare capital of the company and for compromise with the secured and unsecured creditorsof the company hereinafter referred to as the "Fresh Restructuring Scheme"before the Hon'ble Delhi High Court on 24th September 2004 mentioning therein repaymentschedule. Justice Anil Kumar as one man committee was appointed vide order dated:- 3rdSeptember 2015 by the Hon'ble High Court of Delhi to scrutinize the list of depositorsand other claimants and to take steps enumerated hereinafter with the view to resolveat-least some of the disputes. The one man committee submitted its report on to Hon'bleHigh Court of Delhi on 22nd April 2016. Taking cognizance of the report

Hon'ble High Court of Delhi on 10th August 2017 accepted the recommendation of one mancommittee enumerated in the report. One Man Committee observed that that it already hassufficientfunds ready cash to repay about 70% of the deposits to all the depositorshaving deposits of more than Rs 5000 including secured creditors in the first stage.Under Phase -1 70% of the principal amount be paid to the creditors having deposits ofmore than 5000 and full amount be paid to those who have deposits of Rs. or less thanRs.5000 in the first instance to fixed depositors

Debenture-holders and banks. In the second phase which should also commence with phase1 simultaneously properties and shares and all the assets be liquidated by selling andthe realized amount is recommended to be utilized for the repayment of balance 30% ofprincipal amount and the maturity interest component only on the fixed deposits anddebentures. Other creditors such as banks financial institutions

ICD Holders shall also be paid 30% of the Principal Amount except to SBI Home

Finance Limited and Pressman Leasing which will be issued equity shares in Second

Phase. Depending upon the availability of surplus amount from disposal of assets withthe Company the Hon'ble High Court of Delhi may decide whether some additional amount ofinterest can be paid to depositors or other creditors. During the year ended 31st March2018 Company started paying the amount as per Phase-I and the company is still incontinuation of making payments as per Phase I for the year ended 31st March 2020. Alsothe company has started making payments as per

Phase II simultaneously during the current financial year.

The One Man committee earlier recommended to pay to the creditors 70% of the principalamount.

The above said arrangement was modified by the committee on 18th May 2019 andaccordingly it has been decided to pay creditors in full who have claimed amount as perprocedure set by the committee and whose documents have been verified.

As per the claims made by the creditors 100% of principal being paid to them. Alsocompany has also started paying balance 30% to creditors to whom 70% has already been paidpreviously. The balance payable to creditors is as per books and who have not claimed sofar or their documents are under verification.

The matter regarding payment to fixed depositors debenture-holders and other sums arealready covered under Phase-I and Phase-II schedule of payment decided by One ManCommittee duly appointed by Hon'ble Delhi High Court.

All the unpaid matured Public Fixed Deposits of Rs 4907.66 Lacs Unpaid MaturedDebentures of Rs. 1848.68 Lacs which was more than seven year old. Accordingly except thematter stated above there has been no delay in transferring amounts or there were noamounts which were required to be transferred to the Investor

Education and Protection Fund by the Company.

Refer Note No 17.1 and 17.4.

For Mukesh Aggarwal & Co

Chartered Accountants Firm Registration No. 011393N

Rishi Mittal

Partner

M.No. 521860

Place : Delhi Dated : 3rd July 2020

UDIN No 20521860AAAAAW6608

Annexure ‘A' To Independent Auditors' Report

Referred to in Paragraph 1 under the heading of "report on other legal andregulatory requirements" of our report of even date

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

(b) The company has a phased program of physical verification of its fixed assetswhich in our opinion is reasonable having regard to the size of the company and thenature of its assets. In accordance with such program the management has physicallyverified its fixed assets during the year and no material discrepancies were noticed bythem.

(c) The title deeds of immovable properties are held in the name of the company.

2. The company does not hold any inventory as on 31st March 2020

3. The Company has not granted any loans secured or unsecured to companies firmsLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013. Consequently sub-clauses 3 (a) (b) & (c) of thisclause are not applicable.

4. The Company has not made any transaction in respect of loans covered under section185 of the Companies Act 2013. In respect of loans investments guarantees and securitycovered under section 186 of the Companies Act 2013 the provisions of the said section186 have been duly complied except a case mentioned in our Basis of Opinion Para(v).

5. The Company has not accepted any deposits from the public during the year.

The directives issued by the Reserve Bank of India and the provision of section 73 to76 or any other relevant provision of the Companies Act 2013 are not applicable on all theunpaid matured public Fixed Deposits of Rs 4907.66 Lacs. Unpaid Matured Debentures of Rs.1848.68 Lacs standing as at 31st March 2020 which were accepted filing of Freshprior periods view Restructuring Scheme filed with Hon'ble Delhi High Court on 25th 2004.

Justice Anil Kumar as one man committee was appointed vide order dated:- 3rd September2015 by the Hon'ble High Court of Delhi to scrutinize the list of depositors and otherclaimants and to take steps enumerated hereinafter with the view to resolve at-least someof the disputes. The one man committee submitted its report on to Hon'ble High Court ofDelhi on 22nd April 2016. Taking cognizance of the report Hon'ble High Court of Delhi on10th August 2017 accepted the recommendation of one man committee enumerated in thereport. One Man

Committee observed that that it already has sufficient funds ready cash to repayabout 70% of the deposits to all the depositors having deposits of more than Rs 5000including secured creditors in the first stage. Under Phase -1 70% of the principalamount be paid to the creditors having deposits of more than 5000 and full amount be paidto those who have deposits of Rs. or less than Rs.5000 in the first instance to fixeddepositors Debenture-holders and banks. In the second phase which should also commencewith phase 1 simultaneously properties and shares and all the assets be liquidated byselling and the realized amount is recommended to be utilized for the repayment of balance30% of principal amount and the maturity interest component only on the fixed deposits anddebentures. Other creditors such as banks financial institutions ICD Holders shall alsobe paid 30% of the Principal Amount except to SBI Home

Finance Limited and Pressman Leasing which will be issued equity shares in SecondPhase.

Depending upon the availability of surplus amount from disposal of assets with theCompany the Hon'ble High Court of Delhi may decide whether some additional amount ofinterest can be paid to depositors or other creditors. During the year ended 31st March2020 Company is in continuation of paying the amount as per Phase-I and company hasstarted making payments as per Phase II simultaneously during the current financial year.The matter regarding payment to fixed depositors debenture-holders and other sums arealready covered under Phase-I and Phase-II schedule of payment decided by One ManCommittee duly appointed by Hon'ble Delhi High Court. The company contends that theaforesaid Public Deposits and payment to Debenture-holders shall be settled as perschedule laid down by the implementation of One Man Committee outcome of FreshRestructuring Scheme.

6. In accordance with the information given by the management the maintenance of costrecords has not been prescribed by the Central Government under section 148 (1) of theCompanies Act 2013.

7. (a) According to the information and explanations given to us and on the basis ofour examination of the books of account the company is regular in depositing theundisputed statutory dues including provident fund employees' state insurance incometax GST duty of customs cess and any other statutory dues as applicable with theappropriate authorities. (b) According to the information and explanations given to usthere was no undisputed amounts payable in respect of the above dues which wereoutstanding as at 31st March 2020 for a period of more than six months from the date oftheir becoming payable. (c) According to the information and explanations given to us theamounts payable in respect of income tax which have not been deposited on account of anydisputes are as under

Name of the Statue Assessment years Tax Demand in (Rs.) Forum where dispute is pending
Income Tax Act 1961 2006-2007 Rs. 34.59 Lacs ITAT
Income Tax Act 1961 2012-2013 Rs. 3.58 Lacs ITAT

8. The company had defaulted in the repayment of dues to financial institutions banksand debenture holders. Refer note 17.1 to 17.3 However the dues of Punjab and Sind Bankand SIDBI were paid in full during the current financal year i.e. 19-20 and payable as on31st March 2020 is NIL.

Although the company is continuing its default in the repayment of dues to debentureholders as explained in Note No-17.1 of Notes to Accounts.

The matter is sub-judice with Hon'ble Delhi High Court as the company had filed a Fresh

Scheme of Arrangement for the reorganization of the share capital of the company andfor compromise with the secured and unsecured creditors of the company before the Hon'bleDelhi High Court at New Delhi on 24th September 2004.

Justice Anil Kumar as one man committee was appointed vide order dated:- 3rd September2015 by the Hon'ble High Court of Delhi to scrutinize the list of depositors and otherclaimants and to take steps enumerated hereinafter with the view to resolve at-least someof the disputes. The one man committee submitted its report on to Hon'ble High Court ofDelhi on 22nd April 2016. Taking cognizance of the report Hon'ble High Court of Delhi on10th August 2017 accepted the recommendation of one man committee enumerated in thereport. One Man Committee observed that that it already has sufficientfunds ready cashto repay about 70% of the deposits to all the depositors having deposits of more than Rs5000 including secured creditors in the first stage. Under Phase -1 70% of the principalamount be paid to the creditors having deposits of more than 5000 and full amount be paidto those who have deposits of Rs. 5000 or less than

Rs.5000 in the first instance to fixed depositors Debenture-holders and banks. In thesecond phase which should also commence with phase 1 simultaneously properties andshares and all the assets be liquidated by selling and the realized amount is recommendedto be utilized for the repayment of balance 30% of principal amount and the maturityinterest component only on the fixed deposits and debentures. Other creditors such asbanks financial institutions ICD Holders shall also be paid 30% of the Principal Amountexcept to SBI Home Finance Limited and Pressman Leasing which will be issued equity sharesin Second Phase. Depending upon the availability of surplus amount from disposal of assetswith the Company the Hon'ble High Court of Delhi may decide whether some additionalamount of interest can be paid to depositors or other creditors. During the year ended31st March 2020 Company is paying the amount as per Phase-I and has simultaneouslystarted making payments under Phase-II during the current financial year.

The matter regarding payment to aforesaid Financial Institution Parties are alreadycovered under Phase-I and Phase-II schedule of payment decided by One Man Committee dulyappointed by Hon'ble Delhi High Court. The company contends that the payment to aforesaidFinancial Institution Parties shall be settled as per schedule laid down by theimplementation of One Man Committee outcome of Fresh Restructuring Scheme.

9. According to the information and explanations given to us during the year theCompany has not raised money by way of initial public offer and term loans. 10. Accordingto the information and explanations given to us no fraud by the company or no fraud onthe Company by its officers or employees has been noticed or reported during the .

11. The company has paid managerial remuneration as per provisions of section 197 readwith Schedule V to the Companies Act 2013 and on the basis of approval received fromCentral Government on 1st May 2017 which contains payment of managerial remuneration ofnot more than Rs 3.99 Lac per annum. No further order has been passed. However thecompany has made payment of Rs. 452602 during the current financial year which includespayment of Rs.

115304 pertaining to previous year 18-19.

12. The company is not a Nidhi Company and hence clause 3 (xii) is not applicable.

13. The transactions with the related parties made by the Company are in compliancewith sections

177 and 188 of Companies Act 2013 where applicable and the details have been disclosedin the Financial Statements as required by the applicable Indian Accounting Standards.

14. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year and hence clause 3 (xiv) is notapplicable. 15. During the year the company has not entered into any non- cashtransactions with directors or persons connected with him and hence provision of section192 of Companies Act 2013 is not applicable.

16. Initially the company was NBFC. However renewal of application for registrationhas been rejected by RBI in 2004. In view of rejection of NBFC license Section 45-IA ofReserve Bank of India Act 1934 is not applicable on this company.

For Mukesh Aggarwal & Co.

Chartered Accountants Firm Registration No. 011393N

Rishi Mittal

Partner

M.No. 521860

Place : Delhi Dated : 3rd July 2020

UDIN No 20521860AAAAAW6608

ANNEXURE-"B" TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 2 (f) under the heading of "report on other legal andregulatory requirements" of our report of even date 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 DCMFINANCIAL SERVICES LIMITED ("the Company") as of March 31 2020 in conjunctionwith our 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 internal policies & procedures accounting records andessential components on the internal control over financial reporting criteria establishedby the Company as per Guidance

Note on Audit of Internal Financial Controls Over Financial Reporting issued by theICAI. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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 CompaniesAct 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 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 overfinancialreporting was established and maintained and if such controls operatedeffectively 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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement 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 financialreporting is a process designed to providecontrol over reasonable assurance regardingthereliabilityoffinancialreporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financialreporting includesthose policies and procedures controlover 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 projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Disclaimer of Opinion

According to the information and explanation given to us the Company has notestablished its internal financial control over financial reporting on criteria based onor considering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over financial reporting issued by the Institute ofChartered Accountants of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for our opinion whether the company hadadequate internal financial controls over financial reporting and whether such financialcontrols were operating effectively as at March 31 2020.

We have considered the disclaimer reported above in determining the nature volume oftransactions materiality timing and extent of audit test applied in our audit of thestandalone financial statement of the company and the disclaimer does not affect ouropinion on the standalone financial statements of the company.

For Mukesh Aggarwal & Co

Chartered Accountants Firm Registration No. 011393N

Rishi Mittal

Partner

M.No. 521860

Place : Delhi Dated : 3rd July 2020

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