TO THE MEMBERS OF ESCORTS FINANCE LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of ESCORTS FINANCELIMITED ("the Company") which comprise the Balance Sheet as at 31 March 2018the Statement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
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 Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Ind AS prescribed 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 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit of financial statements in accordance with the Standards onAuditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the 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 Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone financial statements.
Basis of Qualified Opinion
Attention is invited to the following matters in the Notes to the Standalone FinancialStatements:
(i) As detailed in Note 36 to the standalone financial statements the remainingliability towards unpaid/ unclaimed fixed deposits including interest thereon is Rs.1095.13 lacs as on balance sheet date and is pending for deposit in Investor Education& Protection Fund; (ii) As detailed in Note 37 to the standalone financial statementsthe Company has not obtained Actuarial Valuation with regards to Employee's terminalbenefits i.e. Gratuity and Leave Encashment as mandated by Ind AS-19 issued by theInstitute of Chartered Accountants of India. In the absence of the same the impactthereof on the profit and liabilities of the Company cannot be ascertained;
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described under the Basis forQualified Opinion paragraph the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including Ind AS ofthe state of affairs of the Company as at 31 March 2018 and its loss and its cash flowsfor the year ended on that date.
Emphasis of Matters
We draw attention to the following matter in the Notes to the Standalone FinancialStatements;
(i) the Company had accumulated losses at the close of the financial year and lossesfor the year with its net worth continuing to stand fully eroded and however thefinancial statements have been prepared on going concern basis for reasons explained bythe management including the possibilities of considering various ways and means to enterinto suitable business(s). We have relied on the representation made to us by themanagement.
(ii) the Company is no longer registered with Reserve Bank of India (RBI) asNon-Banking Financial Institution (NBFI) after cancellation of it's earlier registrationvide RBI letter no DNBS(NDI) S.3242/MSA/06.05.001/2015-16 dated 6th May 2016. Accordinglythe related provisions pertaining to NBFI are currently not applicable to the Company.
(iii) the Company has reviewed the position of recoverable advances of Rs. 1358.47 lacswhich had become doubtful of recovery in earlier years and were fully provided for. Thesame have been written off against provision already held wherever the prospects ofrecovery are Nil. Fresh provision of Rs. 253.82 lacs have been made during the year insuch cases where recoverability has become doubtful.
(iv) interest on preference shares amounting to Rs. 1805 lacs (previous year Rs. 1710lacs) pertaining to 10% Redeemable Cumulative Preference Shares of Rs. 10/- each for whichno provision was made in earlier years have been waived by the preference shareholders.
(v) the reconciliation of advance tax/ TDS recoverable with the related tax liabilityfor earlier year has been carried out during the year. The consequent impact of the sameRs. 178.80 lacs has been taken to statement of profit and loss under the head TaxExpense'.
Our opinion is not qualified in respect of the above matters.
The financial statements of the Company for the year ended 31 March 2017 were auditedby another auditor who had expressed a qualified opinion on those financial statementsvide their audit report dated 24 May 2017.
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 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraph 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act based on our audit we report to theextent applicable 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) except for the effects of the matters described under the Basis for QualifiedOpinion paragraph in our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.;
(e) The matter described in sub-paragraph (i) under the Emphasis of Matter paragraphabove in our opinion may have an adverse effect on functioning of the Company;
(f) On the basis of the written representations received from the directors as on 31March 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2018 from being appointed as a director in terms of Section164 (2) of the Act;
(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";
(h) 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 has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 23(c) to the standalone financialstatements; ii. The Company did not have any foreseeable losses on long term contracts andhad no derivative contracts outstanding as at 31 March 2018; and
iii. The Company has not deposited amount of Rs. 1095.13 lacs to the Investor Educationand Protection Fund against unpaid fixed deposit liabilities including interest thereon asreferred to in Note 36 to the standalone financial statements.
ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in Paragraph 1 under "Report on Other Legal and RegulatoryRequirements" section of the Independent Auditor's Report of even date to the membersof Escorts Finance Limited on the standalone financial statements as of and for the yearended 31 March
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.
(b) The Property Plant and Equipment have been physically verified by the managementduring the year and according to the information and explanation given to us no materialdiscrepancies were noticed on such verification between books records and the physicalinventories. In our opinion the frequency of physical verification of Property Plant andequipment is reasonable having regard to the size of the Company and the nature of itsassets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company does not own/hold any immovableproperty. Accordingly the provisions of clause 3(i)(c) of the Order are not applicable.(ii) In view of the nature of the operations of the Company the Company does not hold anyinventory other than stock of repossessed assets which have been verified by themanagement during the year. The carrying amount (net of provision for diminution in thevalue of such stock) have been written down on account of destruction / deterioration /non-saleability.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships (LLPs) or other parties covered in the register maintained under Section 189of the Companies Act 2013. Consequently Clause (iii)(a) (iii)(b) and (iii)(c) of theOrder are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us theCompany has not dealt with any loans guarantee investments and security under theprovision of section 185 and 186 of the Companies
Act 2013. Consequently Clause (iv) of the Order is not applicable to the Company.
(v) In respect of any deposits accepted from the public in our opinion and accordingto the information and explanation given to us the directives issued by Reserve Bank ofIndia and the provisions of Section 73 to 76 or any other relevant provisions of theCompanies Act 2013 the Company had not complied with the said norms in relation torepayment of deposit on their respective maturity dates. However in accordance with theHon'ble
Delhi High Court's Order / directions Escorts Benefit Trust (EBT) created by EscortsLimited maintains adequate funds to repay the matured unpaid fixed deposit liability.During the year ended 31 March 2018 EBT has settled the claims to the extent of Rs. 37.44lacs by payment to respective fixed deposit holders. The remaining liability towardsunclaimed fixed deposits and interest thereon is Rs. 1095.13 lacs as on 31 March 2018 (Rs.1132.57 lacs as on 31 March 2017) and is pending for deposit in Investor Education &Protection Fund.
(vi) In our opinion and according to the information and explanations given to us theCentral Government has not prescribed the maintenance of cost records under section 148(1)of the Act for any of the services rendered by the Company. Consequently Clause (vi) ofthe Order is not applicable to the Company.
(vii) a) According to the information and explanations given to us and on the basis ofour examination of the books of account the Company has been generally regular indepositing undisputed statutory dues including
Provident Fund Employees State Insurance Income-Tax Sales-Tax Service Tax CustomDuty Excise Duty Value Added Tax Cess and any other dues during the year with theappropriate authorities. No undisputed amount is payable as at 31 March 2018 for a periodof more than six months from the date they became payable except income taxliability amounting to Rs. 9.73 lacs.
b) According to the information and explanations given to us the following statutorydues (details with regard to matters under litigations have been made based upon themanagement representation) have not been deposited with the appropriate authorities onaccount of any dispute:
|S. No. ||Nature of Statutory Dues ||Period to which the amount relates ||Forum where Dispute is pending ||Unpaid Amount (in Rs. Lacs) |
|1 ||Value Added Tax ||AY 2001-02 ||AC Appeal Kolkata ||2.26 |
| || ||AY 1994-95 ||DC Appeal Noida ||0.54 |
| || ||AY 1999-01 ||AC Appeal Jaipur ||1.52 |
*disclosures have been made based upon the management representation.
(viii) In our opinion and according to the information and explanations given to usthe Company does not have any loans or borrowings from any financial institution banksgovernment or debenture holders during the year. Accordingly Clause (viii) of the Orderis not applicable. (ix) In our opinion and according to the information and explanationsgiven to us 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. AccordinglyClause (ix) of the Order is not applicable. (x) According to the information andexplanations given to us no material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the course of our audit. (xi) Inour opinion and according to the information and explanations given to us no managerialremuneration has been paid or provided by the Company. Accordingly Clause (xi) of theOrder is not applicable. (xii) To the best of our knowledge and belief and according tothe information and explanations given to us the Company is not a Nidhi company.Consequently Clause (xii) of the Order is not applicable. (xiii) According to theinformation and explanations given to us and based on our examination of the records ofthe
Company transactions with the related parties are in compliance with sections 177 and188 of the Act where applicable and details of such transactions have been disclosed inthe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the
Company the Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year; consequently therequirements of clause (xiv) of the Order are not applicable to the Company.
(xv) To the best of our knowledge and belief and according to the information andexplanations given to us the Company has not entered into non-cash transactions withdirectors or persons connected with him.
Accordingly Clause (xv) of the Order is not applicable to the Company.
(xvi) To the best of our knowledge and belief and according to the information andexplanations given to us the Company was registered under section 45-IA of the ReserveBank of India Act 1934. The approval for cancellation of its NBFC registration wasreceived vide letter no. DNBS(NDI)S.3242/MSA/06.05.001/2015-16 dated May 6 2016.Accordingly the related provisions pertaining to NBFI are currently not applicable to the
ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in Paragraph 2 clause (g) under "Report on Other Legal and RegulatoryRequirements" section of the Independent Auditor's Report of even date to the membersof Escorts Finance Limited on the standalone financial statements for the year ended 31March 2018)
Independent Auditor's Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We were engaged to audit the internal financial controls over financial reporting of ESCORTSFINANCE LIMITED ("the Company") as at 31 March 2018 in conjunction with ouraudit of the standalone 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 controlstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
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 the Institute ofChartered Accountants of India ("ICAI") and deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe ICAI. Those standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting were established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe Internal financial controls over financial reporting and their operatingeffectiveness. Our audit of Internal financial controls over financial reporting includedobtaining an understanding of Internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's Internal financial controls over financialreporting.
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 financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that 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 Alsoprojections of any evaluation of the internal financial controls over financial reportingto future period are subject to the risk that Internal financial controls over financialreporting may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects adequate internal financialcontrols systems over financial reporting and such internal financial controls systemsover financial reporting were operating effectively as at 31 March 2018 based on internalfinancial controls systems over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of internal financial controls systems over financial reporting issued by theInstitute of Chartered Accountants of India.
| ||For Kapish Jain & Associates |
| ||Chartered Accountants |
| ||Firm Registration Number 022743N |
| ||Sd/- |
| ||CA Kapish Jain |
|Place: Faridabad ||Partner |
|Date: 16 May 2018 ||Membership No. 514162 |