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Escorts Finance Ltd.

BSE: 511716 Sector: Financials
NSE: ESCORTSFIN ISIN Code: INE359A01012
BSE 00:00 | 22 Oct 4.14 -0.21
(-4.83%)
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4.14

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4.14

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4.14

NSE 05:30 | 01 Jan Escorts Finance Ltd
OPEN 4.14
PREVIOUS CLOSE 4.35
VOLUME 850
52-Week high 4.86
52-Week low 1.36
P/E
Mkt Cap.(Rs cr) 17
Buy Price 4.51
Buy Qty 404.00
Sell Price 4.14
Sell Qty 2174.00
OPEN 4.14
CLOSE 4.35
VOLUME 850
52-Week high 4.86
52-Week low 1.36
P/E
Mkt Cap.(Rs cr) 17
Buy Price 4.51
Buy Qty 404.00
Sell Price 4.14
Sell Qty 2174.00

Escorts Finance Ltd. (ESCORTSFIN) - Auditors Report

Company auditors report

TO THE MEMBERS OF ESCORTS FINANCE LIMITED Report on the Audit of the StandaloneFinancial Statements Qualified Opinion

We have audited the accompanying standalone financial statements of Escorts FinanceLimited ("the Company") which comprises the Balance Sheet as at 31March 2019 the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Changes in Equity and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid standalone financial statements give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2019 and profit totalcomprehensive income the changes in equity and its cash flows for the year ended on thatdate.

Basis for Qualified Opinion

 

As detailed disclosure in Note 33 to the standalone financial statements the Companyhas matured unclaimed fixed deposit liability (including interest thereon) of Rs. 1085lacs as on 31 March 2019 (Rs. 1095.13 lacs as on 31 March 2018).

In accordance with the Hon'ble Delhi High Court's Order / Direction dated 4th March2011 Escorts Benefit Trust ('EBT') created by Escorts Limited (the "HoldingCompany") to repay matured Fixed Deposit Liability against the claims. PresentlyEBT maintains adequate funds to repay the matured unpaid fixed deposit liability in termsof the direction of Hon'ble Delhi High Court. The remaining liability towards maturedunclaimed fixed deposits is pending for deposit in Investor Education & ProtectionFund.

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's

Responsibilities for the Audit of the Financial Statements section of our report. Weare independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the standalone financial statements under the provisions ofthe Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

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

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income changes in equity and cash flows of theCompany in accordance with accounting principles generally accepted in India includingIndian

Accounting Standards (Ind AS) prescribed under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalone Ind ASfinancial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the Ind AS financial statements management is responsible for assessingthe 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 managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors are also responsible for overseeing the company's financialreporting process.

Auditor's Responsibilities for the Audit of Standalone Ind AS Financial Statement

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 auditor's 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 standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has internal financial controls with reference to Financial

Statements in place and the operating effectiveness 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 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 auditor's 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 ourauditor's 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent 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 financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified 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 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 in the audit of the standalone financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.

Emphasis of Matters

(a) the Company had accumulated losses at the close of the financial year with its networth continuing to stand fully eroded and however the financial statements have beenprepared on a going concern basis for reasons explained by the management including thepossibilities of considering various options to undertake suitable business(s) andexploring the options of revival or restructuring of the Company. We have relied on therepresentation made to us by the management and we have considered the adequacy of thedisclosure made in

Note 26 to the standalone financial statements concerning the Company's ability tocontinue as going concern.

(b) the Company is no longer registered with Reserve Bank of India (RBI) as Non-BankingFinancial Institution

(NBFI) after cancellation of it's earlier registration vide RBI letter no DNBS(NDI)S.3242/MSA/06.05.001/2015-16 dated 6th May 2016. Accordingly the related provisionspertaining to NBFI are currently not applicable to the

Company.

(c) interest on preference shares amounting to Rs. 95 lacs (previous year Rs. 1805lacs) 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.

(d) the Company had issued 10% Cumulative Redeemable Preference Shares of Rs. 10 eachmaturing on 30 March 2019. Due to liquidity crunch the discharge the said liabilitybefore or on due date of redemption has not been done. The Company has received a NoObjection Certificate from the preference share holder extending the maturity period ofsaid Preference Shares for a further period of 20 years. Accordingly the Company hasfiled a petition before National Company Law Tribunal (NCLT) on 29 March 2019 seekingissuance of 1% Cumulative

Redeemable Preference Shares in place of said Preference Shares with new terms andconditions. This aforesaid matter is pending for hearing before NCLT.

Our opinion is not modified in respect of these matters.

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 paragraphs 3 and 4 of the Order to the extent applicable.

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) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company 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 change in equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.

(d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion the aforesaid standalone financial statements comply withthe Indian Accounting Standards specified under

Section 133 of the Act.

(e) The matter described in sub-paragraph (a) under the Emphasis of Matters paragraphabove in our opinion may have an adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

(g) With respect to the adequacy of the Internal Financial Control with reference toFinancial Statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". (h) With respect to the othermatters to be included in the Auditor's Report in accordance with Rule 11 of the

Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us: i. The Company has disclosedthe impact of pending litigations on its financial position in its standalone financialstatements Refer Note 22(c) to the Standalone financial statements; ii. The Company didnot have any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses; iii. The Company has not deposited amount of Rs. 1085.00 lacsto the Investor Education and Protection Fund against unpaid fixed deposit liabilitiesincluding interest thereon as referred to in Note 33 to the Standalone financialstatements.

For Kapish Jain & Associates

Chartered Accountants Firm Registration Number 022743N

Sd/-

CA Kapish Jain

Place: Faridabad Partner

Date: 4 May 2019 Membership No. 514162

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 2019)

(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 the records examinedby us the Company does not own/hold any immovable property. Accordingly the provisionsof clause 3(i)(c) of the Order are not applicable.

(ii) 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 hold any inventory duringthe year. Accordingly the provisions of clause (ii) of the Order are not applicable.

(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) ofthe 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 M/s Escorts BenefitTrust (EBT) created by Escorts Limited maintains adequate funds to repay the maturedunpaid fixed deposit liability in terms of the direction of Hon'ble Delhi High Court.During the year ended 31 March 2019 EBT has settled the claims to the extent of Rs. 10.13lacs by repayment to respective fixed deposit holders. The remaining liability towardsunclaimed fixed deposits and interest thereon is Rs. 1085.00 lacs as on 31 March 2019 (Rs.1095.13 lacs as on 31 March 2018) and the same is pending for deposit in InvestorEducation & 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 2019 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:

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 Order is not applicable.

(ix) In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly Clause (ix) ofthe Order is not applicable. (x) To the best of our knowledge and according to theinformation and explanations given to us no material fraud by the Company or on theCompany by its officers or employees has been noticed or reported during the course of ouraudit.

(xi) In our opinion and according to the information and explanations given to us nomanagerial remuneration has been paid or provided by the Company. Accordingly Clause (xi)of the Order is not applicable. (xii) To the best of our knowledge and belief andaccording to the information and explanations given to us the Company is not a Nidhicompany. Consequently Clause (xii) of the Order is not applicable. (xiii) According tothe information and explanations given to us and based on our examination of the recordsof the

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 with directors or persons connectedwith 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

Company.

For Kapish Jain & Associates

Chartered Accountants Firm Registration Number 022743N

Sd/-

CA Kapish Jain

Place: Faridabad Partner

Date: 4 May 2019 Membership No. 514162

ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Paragraph 2 clause (h) under "Report on Other Legal and RegulatoryRequirements" section of the

Independent Auditor's Report of even date to the members of Escorts Finance Limited onthe standalone financial statements for the year ended 31 March 2019)

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 have audited the internal financial controls over financial reporting of ESCORTSFINANCE LIMITED ("the Company") as at 31 March 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

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.

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 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.

Opinion

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 2019 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: 4 May 2019 Membership No. 514162

.